Discretionary Beneficiary

AAA

DEFINITION of 'Discretionary Beneficiary'

Discretionary beneficiaries are those named in a trust or similar document to whom distributions may be made. While discretionary beneficiaries may apply for distributions, it is up to the trustees to determine whether the payment will be made. In the United States, a discretionary beneficiary has no legal proprietary interest in the trust.

INVESTOPEDIA EXPLAINS 'Discretionary Beneficiary'

There is usually a reason for a person to be named a discretionary beneficiary. For example, they may be young or have bad financial habits, or they have many unpaid creditors. While the trustees still have fiduciary responsibilities to a discretionary beneficiary, it is difficult to enforce this responsibility unless there is a specific letter of intent by the grantor of the trust.

RELATED TERMS
  1. Donee Beneficiary

    A person who is considered a non-party in a contract but still ...
  2. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  3. Trust

    A fiduciary relationship in which one party, known as a trustor, ...
  4. Trustee

    A person or firm that holds or administers property or assets ...
  5. Trustor

    An individual or organization that gifts funds or assets to others ...
  6. Laughing Heir

    A distant relative who has inheritance rights despite not having ...
Related Articles
  1. Pick The Perfect Trust
    Retirement

    Pick The Perfect Trust

  2. Designating A Trust As Retirement Beneficiary
    Retirement

    Designating A Trust As Retirement Beneficiary

  3. Special Trusts For Special Needs
    Personal Finance

    Special Trusts For Special Needs

  4. Can You Trust Your Trustee?
    Home & Auto

    Can You Trust Your Trustee?

Hot Definitions
  1. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  2. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  3. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  4. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
Trading Center