These allow your Trustees absolute discretion to decide which of your beneficiaries should inherit (if at all) – and if so, when; as such, this means that none of your beneficiaries actually have the “right” to receive anything at all – and that can be very useful in a number ways.
You might know whom you’d like to benefit from your assets, but be concerned about how those assets would be used, or how your money would be spent; or, you might also be uncertain as to exactly how, and to what extent, your beneficiaries should benefit
It’s quite reasonable to be concerned about the circumstances your beneficiaries may face in life, and perhaps to be a little apprehensive about actually giving them anything that could be put at risk.
There are many reasons one might worry that their hard-earned wealth could dissipate rapidly after their death. For example, some common concerns about leaving assets to one’s beneficiaries, include:
Bad relationship choices: If you want to leave your assets to your adult children, you might have concerns about their future (or current) relationship choices, and the possibility of your assets falling into the ownership of an ex-partner (for example, if there were to be a costly divorce).
Bad with money: Perhaps your intended beneficiaries lack financial prudence, and are prone to making poor business decisions or financial investments, in which case you might be concerned that your wealth may end up in the hands of creditors; or maybe their lifestyle choices are just more lavish and expensive than you’d like.
Not mature enough: It might simply be that you’re worried that one or more of your beneficiaries might be too young to inherit when you die; or not as shrewd, or as mature as you’d hope them to be, before giving them a significant inheritance. Some people are also just more easily influenced by the desires of others.
Need extra help: It could just be that you feel that one of your beneficiaries is likely to need a bit more help in life than the others; or is likely to have greater outgoings or needs. There could be many reasons for this, including physical or mental disabilities.
Long Term care: For more mature couples, there may be concerns about the health and wellbeing of the surviving partner, and the possibility of the survivor needing long-term care; in this case, assets need to be used in the most efficient way.
By giving your Trustees the discretion to decide how and when your beneficiaries are to inherit, they can make informed and practical decisions about your beneficiaries’ needs and circumstances, as time goes by; assets can be distributed to them on a case-by-case basis, over many years, if desired.
Unless and until the Trustees decide to use their discretion, your assets are kept safely in the trust, and invested wisely; and because no individual beneficiary has the “right” to anything, then – to the extent that your assets remain undistributed – your assets are also protected from any adverse claims by ex-partners and creditors, and from any other risks that your beneficiaries may face in life.