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Simple English definitions for legal terms
non-discretionary trust
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A quick definition of non-discretionary trust:
A non-discretionary trust is a type of trust where the person in charge of managing the trust's investments is told exactly which investments to make and how to diversify them. They don't get to make any decisions on their own, they just follow the instructions given to them.
A more thorough explanation:
A non-discretionary trust is a type of trust where the trustee is given specific instructions on how to invest the trust's assets. The trustee has no discretion or personal decision-making power in the matter.
For example, a non-discretionary trust may specify that the trustee must invest in a certain type of security, such as stocks or bonds. The trust may also require the trustee to diversify the investments among certain types of securities.
Another example of a non-discretionary trust is a trust that is set up to provide for the education of a beneficiary. The trust may specify that the trustee must use the trust's assets to pay for the beneficiary's tuition and related expenses.
These examples illustrate how a non-discretionary trust works by limiting the trustee's decision-making power and providing specific instructions on how the trust's assets should be invested or used.