A Discretionary Trust can be set up via a person or a couple and has 2 or more trustees that manage the items within the trust (assets for example) for a number of beneficiaries (people who receive the benefits of the trust).
A discretionary trust can be set up during the lifetime of a person or by a Will.
If a settler (person that creates the trust) creates a Discretionary Trust in their lifetime, a Trust Deed form must be signed by settlor and all the trustees. After signing the trust deed form, the assets that are held in trust are transferred into the trustee’s names. The trustees then own what’s been given to them and they then decide how the beneficiaries are to be given the assets.
If a Discretionary Trust is created by a Will, the assets are held on trust until the death of the settlor. The will states the terms of the trust and so acts as the trust document. Assets held on trust are transferred into the trustees names on the death of the settlor.
A settlor usually prepares a Letter of Wishes for the trustees setting out how the Discretionary Trust should be dealt with. Although not legally binding, the Letter of Wishes states the settlors wishes and purpose of the trust.