When you create a trust as part of your estate plan, you get to decide how much discretion the trustee is actually going to get. In some cases, they get almost none at all. For instance, you may set up an educational trust fund with instructions that the money is only used for college expenses and nothing else. There is some level of discretion in determining what a college expense is, but nothing outside of that.
However, a trust like this can be a bit limiting. Why would it be wiser to use a discretionary trust that gives the trustee a wide range of decision-making powers?
Adjusting to your heir’s needs
Perhaps the biggest benefit is that this allows the trustee to adjust to the trust’s focus if necessary. They can consider what your heir actually needs and how the money could be used to help them. This may not be the same as the idea you had in mind when you created the trust.
One example of this could be if your heir comes down with a serious disease or some sort of other health complication. Medical care can be incredibly expensive, and they may not be able to go to college while they’re getting that care.
It’s clear that, at a time like this, you would like your heir to be able to use the money to pay for their medical bills rather than college tuition. They couldn’t do that in the first example, but a discretionary trust would allow them to do so.
Examining all of your options
These are just a few different ways that you can use trusts to benefit your heirs and yourself as you do your estate planning. Make sure that you take the time to examine all of your options, determine what will work best for your family and then get that plan in place.