Discretionary vs. Fixed Trusts

When creating a trust, one of the most important design choices is whether the trust will be discretionary or fixed. These terms refer to how much control the trustee has over how and when assets are distributed to beneficiaries.

Each structure has its advantages, and choosing the right one depends on what kind of guidance you want to provide—and how much flexibility you want to give.

The Difference Between Discretionary and Fixed Trusts

Discretionary and fixed trusts define the trustee’s powers in very different ways. The choice impacts control, taxation, and how beneficiaries interact with the trust.

Feature	Discretionary Trust	Fixed Trust
Control	Trustee decides who receives what, when, and how	Beneficiaries and amounts are predetermined
Flexibility	High—useful for managing changing needs or uncertainty	Low—everything is set from the beginning
Beneficiary expectations	No guaranteed income or capital rights	Beneficiaries know exactly what they will receive
Use cases	Beneficiaries with disabilities, young heirs, asset protection	Straightforward distributions, tax planning with certainty
Disclosure requirements	More private—details are often at trustee’s discretion	Less private—beneficiaries know and can track their shares

Tip: If you are unsure how your beneficiaries’ needs may evolve, or if you want the trustee to adapt to life events, a discretionary trust provides more responsiveness and protection.

When a Discretionary Trust Makes Sense

A discretionary trust gives the trustee authority to distribute income or capital based on the changing circumstances of each beneficiary. It is especially useful when:

Beneficiaries have unstable finances or legal risks
There are concerns about divorce, lawsuits, or creditor protection
You want the trustee to adjust based on health, education, or maturity
You want to preserve long-term control over how funds are used

Important: Since distributions are not guaranteed, beneficiaries have limited power to challenge trustee decisions. This trust works best when the trustee is highly trusted and familiar with your goals.

When a Fixed Trust Is the Better Fit

A fixed trust is straightforward. Each beneficiary receives a predetermined portion of the income or capital, often on a set schedule. It is best when:

You want equal, clear distribution with no discretion
You are distributing a lump sum or closing the estate quickly
The family situation is stable and unlikely to change
You want to avoid trustee conflict or perceived favoritism

Fixed trusts are easier to manage legally, but they offer less protection against financial or personal changes.

How Optimize Helps You Choose the Right Trust

At Optimize, we help you match your trust structure to your life—not the other way around. We guide you through the decision to use a discretionary or fixed trust based on your goals, family dynamics, and the level of control or flexibility you want to retain.

We support you by:

Clarifying how each trust works under Canadian law
Helping you balance legal, financial, and emotional considerations
Aligning your trust with your overall estate, tax, and legacy plan
Reviewing and adjusting trust strategies as your needs evolve

We make the complex personal, and the personal practical.

Why Your Trust Structure Shapes Your Legacy

The type of trust you choose sends a message. A fixed trust says, “Here is exactly what I want you to have.” A discretionary trust says, “I trust you to use this wisely, as life unfolds.”

Each one has its place. Each one offers protection. The key is choosing the one that fits your intentions—and your family.

Think long term. Plan with clarity. And give your trust the structure it needs to carry your values forward.