Jargon Buster - Definition of Discretionary Trust

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Discretionary Trust

is a type of trust where the nominated beneficiaries and entitlements are not fixed. It also means that the trustees can use discretion as to how the money within the trust is used.

In a Discretionary Trust, the trustees can influence how much is paid to each beneficiary. For this reason, trustees should be chosen very carefully and in many circumstances the trustee can also be the beneficiary as it is in their own best interest to pay the money to themselves.

Please note that all definitions are intended for general guidance only. For official and current definitions you should always double check your policy wording.

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