ABSTRACT
A discretionary trust exists where the trustees are given discretion to pay or apply property to or for the benefit of all or anyone selected from a group or class of objects on terms and conditions as the trustees may see fit. In tax law this type of trust is known as a trust without an interest in possession. The trust is created in accordance with the express intention of the settlor. The alternative type of express trust that may be created is a ‘fixed’ trust or a trust with an interest in possession. This is the case if, on the date of the creation of the trust, the settlor has not only identified the beneficiaries under the trust but also quantified the interest vested in each beneficiary. A discretionary trust may be either ‘exhaustive’ or ‘non-exhaustive’. This is determined by reference to the intention of the settlor.
