A discretionary trust is one which gives the trustee the authority to exercise his own judgment in applying certain provisions contained in the trust instrument. Discretionary provisions are most prevalent in regard to the trustee's authority as to time, manner, amount, or circumstances of payment of income or principal to certain beneficiaries. The practical problems involved in drafting and administering such trusts too frequently are given insufficient consideration. Perhaps the most difficult problem connected with discretionary trusts is that of communicating the settlor's true intentions from settlor to draftsman to trustee. This article examines the meanings of the most common terms used in discretionary trusts and attempts to point out some ways in which these terms can be utilized to avoid some of the drafting problems.
Richard R. Endacott,
Problems in Drafting and Administering Discretionary Trusts,
46 Neb. L. Rev. 110
Available at: http://digitalcommons.unl.edu/nlr/vol46/iss1/7