In today’s fast-paced world, where legal disputes, inheritance confusion, and tax burdens are common, high-net-worth individuals (HNIs) and families are turning to one powerful tool for long-term security: the Private Discretionary Trust.
But what exactly is it? And why are the wealthy using it to protect their assets, manage succession, and reduce stress for the next generation?
Let’s break it down.
What is a Private Discretionary Trust?
A Private Discretionary Trust (PDT) is a legal arrangement where a person (called the Settlor) transfers their wealth—like cash, shares, real estate, or business assets—into a trust, to be managed by a Trustee for the benefit of certain people, called Beneficiaries.
What makes it “discretionary” is that the trustee has full control over:
- Who among the beneficiaries receives the Assets
- How much they receive
- When they receive it
This gives the trust unmatched flexibility and control compared to traditional wills or fixed trusts.
Key Parties in a Private Discretionary Trust
| Role | Description |
| Settlor | The person who creates the trust and places assets into it |
| Trustee | The individual or institution responsible for managing the trust |
| Beneficiaries | The people or entities who may benefit from the trust (can be family, dependents, or others) |
Why Choose a Private Discretionary Trust?
Here’s why successful individuals often opt for a PDT:
1. Wealth Protection
Assets in a trust are generally safe from lawsuits, creditors, or marital disputes. The trust acts as a legal firewall around your estate.
2. Smooth Succession Planning
Skip the court hassles! PDTs ensure that your wealth passes to the right people without delays, conflicts, or probate.
3. Tax Efficiency
When structured properly, discretionary trusts can offer income-splitting and inheritance tax advantages, depending on the country’s tax laws.
4. Protection of Vulnerable Heirs
Do you have a minor child, someone with a disability, or a financially irresponsible heir? A PDT allows controlled distributions that suit each beneficiary’s needs.
5. Privacy
Unlike wills, trusts are not public documents. Your estate remains confidential and protected from unnecessary attention.
Real-Life Example (Simplified)
Mr. Kapoor, a successful entrepreneur, has ₹50 crore in assets. He has three children—one is responsible, one is still a minor, and one is careless with money.
Instead of writing a simple will, he creates a Private Discretionary Trust and appoints a trusted legal advisor as the trustee. Now:
- The trustee decides how much each child receives.
- The irresponsible child doesn’t get direct access to large sums.
- The minor child gets support as needed until adulthood.
- Mr. Kapoor’s family is protected from legal battles.
Smart, right?
Important Considerations
Before creating a PDT, keep these in mind:
- Choose your trustee carefully — they hold real power.
- Get proper legal and tax advice based on your country’s laws.
- Understand that beneficiaries cannot demand money from the trust—it’s up to the trustee’s discretion.
When Should You Set Up a Private Discretionary Trust?
You should consider setting one up if you:
- Own substantial personal or business assets
- Want to secure your family’s financial future
- Want to avoid inheritance disputes
- Have dependents with special needs
- Need a reliable system to manage wealth after your lifetime
Final Thoughts
A Private Discretionary Trust isn’t just for the ultra-rich — it’s for anyone who wants to protect their assets, secure their family’s future, and plan succession responsibly. In today’s uncertain world, it’s not just a smart financial move — it’s peace of mind.
If you’re planning for your family, your legacy, or your business, a PDT may be the missing link. Consult with a trust expert or financial advisor to explore how it can work for you.
Ready to take control of your wealth?
Start exploring trust options today — because smart planning is the best inheritance you can leave.
Are you interested to set up a Private Discretionary trust? Please contact us for step wise procedure.