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. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center