Benefits of registering a discretionary trust: the flexibility of a discretionary trust means the appointed trustees have a lot of power over the trust income, including how it can be used and distributed. It is the trustees' decision which beneficiaries will receive payment, subject to the terms of the contract in place.
This freedom means the trustees are able to decide when payments will be made and how much will be paid. Additionally, the trustees are in a position to apply restrictions on the beneficiaries, should they decide to.
Registering a discretionary trust is especially useful in situations where the settlor creating the trust wants to benefit more than one person, and doesn't yet know which of the beneficiaries will require more financial help.
An example of this is when a settlor register the trust for their children or grandchildren. Discretionary trusts are also useful in situations where the beneficiary that the settlor wants to appoint is not ready or able, for whatever reason, to be held responsible for the money.
Another major advantage of this type of trust is that its funds will not be taken into account during the calculation of means-tested benefits. Additionally, the money from a discretionary trust is not included as part of a beneficiary's estate, due to conditions relating to inheritance tax.
With this type of trust, you are able to appoint yourself as a trustee so that you can also contribute to the trustees' decisions, and have input with regards to what happens with the money. Failure to do so will mean that the trustees are not entitled to fulfil your requests, and you are therefore not guaranteed to have the final decision over what happens to the assets.