What is the key difference between a discretionary trust and a unit trust?

One is discretionary and the other is fixed.

In a discretionary or family trust the trustee has the power to select which of the beneficiaries will receive a benefit and how much they stand to gain. The trustee does not have to direct a benefit to all beneficiaries.

In a unit trust the choice rests with the beneficiaries or rather, unit holders who subscribe to a specific number of units. This is essentially a fixed trust to the extent that the trustee has no discretion and any profit/dividend is distributed proportionally according to the amount of units held.

All information provided on this webpage is general information about our products and services. Nothing on this webpage is intended to be professional advice of any kind and should not be relied on as such. You should obtain specific financial, legal or other professional advice before relying on the content of this webpage. By not seeking such advice, you accept the risk that the information on this webpage may not meet the specific needs of your business. Our liability is limited to the maximum extent permitted by applicable law in accordance with our website terms and conditions.

Updated — Sep 7, 2015