Discretionary Trust (Fully Reserved Lineal Descendants)

 

In this type of discretionary trust, the Secondary Beneficiaries do not include spouses of the Primary Beneficiaries or spouses of certain other relations of the Primary Beneficiaries. This means that spouses may not receive any distributions from the trust of income or capital. A spouse may be named on establishment of the trust as a Primary Beneficiary, and if this approach is adopted, there will be no restrictions on income or capital distributions to that beneficiary.

These two types of restricted discretionary trusts are often used:

  • to ensure that the property of the trust will remain only with the “blood relatives” of the initial nominated trust beneficiary;
  • where there is a concern that beneficiaries are likely to suffer marital problems;
  • where you wish to maximise the chances that assets will provide for the education and upbringing of children or grandchildren;

 

  • where tax planning with spouses may not be as high a priority as the protection of the assets from the Family Court’s reach.
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