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.
The Hawaii Discretionary Distribution Trust for the Benefit of Trust or's Children with Discretionary Powers over Accumulation and Distribution of Principal and Income is a legal instrument that allows a trust or (or settler) to distribute and manage their assets for the benefit of their children. This type of trust provides flexibility and control over the accumulation and distribution of both principal and income. In this trust, the trust or can create a separate trust for each beneficiary, allowing for individual management and distribution of assets. This helps ensure that each beneficiary's needs and circumstances are considered separately. The discretionary powers granted to the trustee allow for flexibility in managing and distributing the trust assets, ensuring that they are used efficiently and effectively to benefit the children. Different types of Hawaii Discretionary Distribution Trusts for the Benefit of Trust or's Children with Discretionary Powers over Accumulation and Distribution of Principal and Income may include: 1. Irrevocable Discretionary Trust: This type of trust cannot be modified or revoked once it is established. It provides long-term and durable asset protection for the beneficiaries, as well as potential tax benefits. 2. Revocable Discretionary Trust: Unlike the irrevocable trust, this type of trust can be modified or revoked by the trust or during their lifetime. It offers flexibility and allows for changes to be made as the trust or's circumstances or desires change. 3. Testamentary Discretionary Trust: This trust is established through the trust or's last will and testament and takes effect upon their death. It allows for the accumulation and distribution of assets to the trust or's children according to their wishes, while also providing potential tax benefits. 4. Generation-Skipping Discretionary Trust: This trust is designed to benefit not only the trust or's children but also future generations, such as grandchildren. It can help minimize estate taxes and provide a lasting legacy for the family. 5. Special Needs Discretionary Trust: This type of trust is tailored specifically for a beneficiary with special needs or disabilities. It aims to ensure that the beneficiary's government assistance benefits are not jeopardized while providing additional financial support and quality of life enhancements. These different types of Hawaii Discretionary Distribution Trusts offer various benefits and cater to different objectives and circumstances of the trust or and their children. It is important to consult with an experienced attorney or estate planner to determine the most suitable type of trust for your specific needs and goals.
