Trustee Discretion 101: Why “Maybe” Is Better Than “Must”

One of the most important design choices in trust planning is whether distributions are mandatory or discretionary. That decision can determine whether a trust protects your beneficiary—or unintentionally enables irresponsible behavior.

A mandatory distribution requires the trustee to make distributions on a fixed schedule, regardless of circumstances. A discretionary distribution, by contrast, gives the trustee authority to decide when and how distributions are made. A trust can contain both mandatory and discretionary distributions.

That discretion is often what protects trust assets from creditors, lawsuits, divorces, and poor financial decisions.

When Mandatory Distributions Makes Sense

Let’s say a grandparent wants to fund their grandchild’s predictable needs and avoid trustee discretion (or family conflict), and the grandchild is known to be responsible.

They could set up a trust that must distribute according to a fixed rule—e.g., “$2,000 per month,” or “one-third at age 25, one-third at 30, and the rest at 35.”

Why it fits:

• Predictability for the beneficiary (and less room for trustee favoritism or prejudice)

• Good when the goal is certain milestones or incentivized behavior ( college or trade education, purchase of a first home, certain ages)

• Helpful when you don’t want the trustee making judgement calls

When Discretionary Distributions Makes Sense

Imagine a parent wants to leave money to an adult child who’s financially unpredictable or has addiction or mental-health concerns, and the parent wants the trustee to have flexibility in responding to real life challenges.

This trust could look something like: “My son gets $5,000/month, if, in the trustee’s discretion, the trustee believes the beneficiary is able to use the funds responsibly and the funds will be used promote a healthy and productive lifestyle; otherwise, the trustee may pay reasonable costs directly to a landlord or medical provider, or pause distributions altogether.”

In this case, the trustee may distribute money to the beneficiary, but doesn’t have to—and can decide when, how much, and for what purpose (these decisions are often guided by the HEMS standard: health, education, maintenance, support).

Discretionary distributions are particularly effective when beneficiaries:

• Work in high-liability professions

• Face marital instability

• Struggle with addiction or spending issues

• Receive government benefits due to disability

In situations like these, discretionary distributions allow protection and flexibility.

Choosing the Right Trustee

A critical rule to remember: in general, a beneficiary should not serve as sole trustee of their own trust. Doing so can destroy creditor protection.

Independent trustees, whether professional or trusted individuals, are essential, particularly for discretionary provisions to work as intended.

Thoughtful Control, Not Control from the Grave

Discretionary planning is not about micromanagement. It’s about equipping trustees with tools to respond intelligently to real-world challenges.

At Robert Jewett Law, PLLC, trust design starts with education—so clients understand not just what their documents say, but why they work.