A discretionary trust is a trust where the beneficiaries and/or their entitlements to the trust fund are not fixed, but are determined by the criteria set out in the trust instrument by trustor. Discretionary trusts can be discretionary in two respects. First, the trustees usually have the power to determine which beneficiaries (from within the class) will receive payments from the trust. Second, trustees can select the amount of trust property that the beneficiary receives. Although most discretionary trusts allow both types of discretion, either can be allowed on its own. It is permissible in most legal systems for a trust to have a fixed number of beneficiaries and for the trustees to have discretion as to how much each beneficiary receives.
A Louisiana Discretionary Distribution Trust for the Benefit of Trust or's Children with Discretionary Powers over Accumulation and Distribution of Principal and Income is a type of trust that provides specific guidelines for the management and distribution of assets for the benefit of the trust or's children. This type of trust is typically established to protect and maintain the assets for the beneficiaries while giving the trustee discretionary powers to make decisions regarding the accumulation and distribution of both principal and income. The trust is designed to ensure that the assets are preserved and used wisely in accordance with the trust or's intentions. The trustee is given the authority to make decisions on behalf of the beneficiaries, considering their financial needs, age, education, and overall well-being. This discretionary power allows the trustee to distribute funds as and when needed, ensuring that the beneficiaries' best interests are served. There are different variations of this trust that can be established based on the specific circumstances and requirements of the trust or: 1. Single Beneficiary Trust: This type of trust is created when there is only one beneficiary who will receive the benefits of the trust. The trustee has discretion over the accumulation and distribution of principal and income solely for the benefit of that beneficiary. 2. Multiple Beneficiary Trust: In this case, there are multiple beneficiaries who will benefit from the trust. Each beneficiary has a separate trust established for their benefit, allowing the trustee discretion over the accumulation and distribution of assets specific to each beneficiary's needs. 3. Restricted Power of Accumulation Trust: This variation of the trust imposes limitations on the trustee's power to accumulate income generated by the trust assets. The trust or may specify a certain period or conditions under which the trustee can accumulate income before distributing it to the beneficiaries. 4. Hybrid Trust: This type of trust combines discretionary distribution powers with specific instructions for the trustee. The trust or may outline certain guidelines and conditions for the trustee to follow while exercising discretion over accumulation and distribution. In summary, a Louisiana Discretionary Distribution Trust for the Benefit of Trust or's Children with Discretionary Powers over Accumulation and Distribution of Principal and Income Separate Trust for each Beneficiary is a legal instrument that allows the trust or to protect and manage assets for the benefit of their children. By granting discretionary powers to the trustee, the trust ensures that the assets are used effectively while considering the unique circumstances of each beneficiary.
