Discretionary trusts

Robert Pearce and Warren Barr

in Pearce & Stevens' Trusts and Equitable Obligations

Seventh edition

Published on behalf of © Robert Pearce, John Stevens, and Warren Barr 2018

Published in print September 2018 | ISBN: 9780198745495
Published online September 2018 | e-ISBN: 9780191807534 | DOI:
Discretionary trusts

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This chapter considers the key features of a discretionary trust. Unlike a fixed trust, which gives defined shares to the beneficiaries, a discretionary trust gives the trustees a discretion as to how to allocate the beneficial interests. They are mechanisms by which an owner of property can grant to others the power to allocate a fund among a defined class or group. As in a power of appointment, the allocator has complete discretion how the fund should be allocated, either, or both, in terms of the persons who should receive shares of the fund and the size of the shares they should receive. However, unlike mere powers of appointment, the allocator is under a mandatory duty to make allocations in accordance with the terms of the trust. The court will intervene to ensure that this duty is discharged.

Keywords: discretionary trust; discretion; beneficial interests; allocator; allocations

Chapter.  7096 words.  Illustrated.

Subjects: Trusts Law

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