Discretionary Trust (Fully Reserved Lineal Descendants)


In a Discretionary Trust, no person has a fixed or definitive entitlement to any of the Trust’s assets. Rather, the Deed defines a “pool” of potential Beneficiaries (both Named/Designated Beneficiaries and Secondary Beneficiaries) and the Trustee determines, at their discretion, which of the Beneficiaries are to receive the capital and income of the Trust and how much each Beneficiary is to receive.

The Fully Reserved Lineal Descendant structure is a sub-type of the Discretionary Trust. This Deed restricts the distribution of Trust assets (both capital and income) to the Designated/Named Beneficiaries and their lineal descendants (i.e. blood relations). This means that spouses may not receive any distributions from the Trust of income or capital - although, if a spouse is named on the establishment of the Trust as a Primary Beneficiary, there will be no restrictions on income or capital distributions to that Beneficiary.

This type of restricted Discretionary Trusts are often used:

  • to ensure that the property of the Trust will remain only with the “blood-relatives” of the Named/Designated Trust Beneficiary/ies;
  • where there is a concern that Beneficiaries are likely to suffer marital problems;
  • where you wish to maximise the chances that assets will provide for the education and upbringing of children or grandchildren;
  • where tax planning with spouses may not be as high a priority as the protection of the assets from the Family Court’s reach. 

See here for a quick guide on Beneficiaries. 

If, upon reading this article, you are unsure or not 100% confident in setting up your trust, contact legal@nowinfinity.com.au and we can refer you to our legal services provider for a quote on entering into a formal engagement for advice. 

Further Information

Discretionary Trust (Fully Reserved Lineal Descendant): Ordering checklist

Discretionary Trust (Capital Reserved Lineal Descendant)


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