chapter  6
18 Pages

Discretionary trusts

ByMohamed Ramjohn

The Law Commission analysed the policy behind the rule against excessive accumulations and decided that the application of the current principles were disproportionate and unnecessarily complex, and ought to be abolished, except for charitable purposes, where the period ought to be modified. It may be recalled that there are two kinds of discretionary trusts: exhaustive and non-exhaustive discretionary trusts. In Pitt v Holt and Futter v Futter (2013) the Supreme Court reviewed the law concerning the rule in Hastings-Bass and clarified the scope of the rule. It follows that if an object assigns his rights under a discretionary trust to a third party or becomes bankrupt, the assignee or trustee-in-bankruptcy can be in no better position than the object. Moreover, it is not accurate to say that individual objects under a discretionary trust do not have rights under the trust.