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 Rhode Island 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, commonly known as a "Rhode Island DDT," is a type of trust established by a trust or (also known as a granter or settler) for the benefit of their children. This trust allows the trust or to exercise control and discretion over the accumulation and distribution of both principal and income within separate trusts created for each beneficiary. The Rhode Island DDT offers several variations that cater to the specific needs and preferences of the trust or and beneficiaries. Here are some potential types of Rhode Island 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: 1. Standard Rhode Island DDT: This is the most common type of trust, where the trust or establishes separate trusts for each child and grants them discretionary powers for the accumulation and distribution of principal and income. The trust or retains the ultimate authority to set guidelines and limitations for the trust's operation. 2. Rhode Island DDT with Age-Based Distributions: In this variation, the trust or may choose to include age-based distributions, where the beneficiaries gain increased control and discretion over the trust assets as they reach specific ages. For example, the trust may provide for a partial distribution of principal at age 25, followed by a more substantial distribution at age 35. 3. Rhode Island DDT with Educational Provisions: This type of trust prioritizes educational expenses. It allows the trustee to use discretion in providing funds for the beneficiaries' education, including tuition fees, books, housing, or any other related expenses. This provision ensures the trust's assets are utilized to support the beneficiaries' educational pursuits. 4. Rhode Island DDT with Special Needs Provisions: For families with beneficiaries who have special needs, this trust variation addresses their unique circumstances. It provides additional guidance and discretion for the trustee to use trust assets to support the special needs beneficiary's requirements, ensuring their well-being and quality of life are maintained. 5. Rhode Island DDT with Charitable Provisions: In certain cases, the trust or may wish to allocate a portion of the trust assets for charitable purposes. This variation would grant the trustee the discretionary power to distribute a portion of the trust's income and/or principal to eligible charitable organizations or causes, aligning with the trust or's philanthropic intent. The Rhode Island 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 flexible estate planning tool that caters to the unique needs and objectives of each trust or and their children. By incorporating discretionary powers and separate trusts for each beneficiary, this trust arrangement provides a range of options for the accumulation, distribution, and management of trust assets to best suit the beneficiaries' individual circumstances.
