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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.

This information is of a general nature only and does not constitute professional advice. You must seek professional advice in relation to your particular circumstances before acting.

Updated — Sep 7, 2015

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