Which term describes a trust in which the trustee may distribute income and principal as the trustee deems advisable?

• A. Discretionary trust
• B. Spendthrift trust
• C. Revocable trust
• D. Charitable trust

Answer: (A)

Discretionary trusts give the trustee broad authority to decide how much, when, and to whom to distribute both income and principal, within the terms of the trust. The phrase “as the trustee deems advisable” captures that freedom to exercise judgment rather than follow a fixed schedule or amount, which is the hallmark of this kind of trust. Beneficiaries in a discretionary trust don’t have a guaranteed entitlement to specific distributions; the trustee’s decisions determine who receives what and when.

A spendthrift trust focuses on protecting the beneficiary from creditors or wasteful spending, not on the general discretion to distribute. A revocable trust is defined by the grantor’s ability to revoke or amend the trust. A charitable trust is aimed at benefiting a charitable purpose rather than distributing to individual beneficiaries.