Discretionary Trust (Capital Reserved Lineal Descendant)

A Discretionary Trust is a type of Trust where no person (Beneficiary) has a definitive right to the Trust's income or capital. 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 Capital Reserved Lineal Descendant structure is a sub-type of the Discretionary Trust. This Deed limits the capital of the Trust to the ultimate benefit of specified lineal descendant Beneficiaries (i.e. each Designated/Named Beneficiary and each lineal descendant of each Designated/Named Beneficiary) - i.e. "blood" relations.

This means that income (not capital) of the Trust may be distributed to Secondary Beneficiaries including, for example, spouses of Sesignated/Named Beneficiaries. If, on establishment, a spouse is named as a Designated/Named Beneficiary, then there will be no restrictions on capital distributions to that Beneficiary.


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 (Capital Reserved Lineal Descendant): Ordering checklist

Discretionary Trust (Fully Reserved Lineal Descendants)


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