ABSTRACT
The antithesis of a discretionary trust is a ‘fixed’ trust or trust with an interest in possession, that is, on the date of the creation of the trust the settlor has defined the interest acquired by each beneficiary with relative precision and ownership of such interest is vested in each beneficiary. Since the income and capital are acquired by each beneficiary, he or she is entitled to sell, exchange or gift away his or her interest, subject to provisions to the contrary as detailed in the trust instrument. Under a discretionary trust, however, the individual members of the class of objects have only a hope or spes of acquiring a benefit under the trust. In other words, under a discretionary trust, the members of the class of objects, prior to the exercise of the trustees’ discretion, do not enjoy an interest in the trust property but are treated as potential beneficiaries and are incapable of disposing of their potential interests by way of a trust.
