Keeping It All in the Family

James Creevy and Mitchell Harding, current as of: 17 March 2025.

Why a Lineal Descendants Discretionary Trust is Important 

Insolvency, bankruptcy, family breakdown, and death are just some of the common concerns that arise in the context of asset protection, estate planning, and investment or business structuring. The challenges of this decade have compounded many of these concerns, leading to increased enquiries regarding the Acis Lineal Descendants Discretionary Trust (LDDT). 

The Acis LDDT is, as its name suggests, a type of discretionary trust. The trustee of the trust, in both standard discretionary trusts and LDDTs, has the discretion to determine which of the beneficiaries receive distributions of income and/or capital and in what amounts. Where the LDDT differs from a standard discretionary trust is who qualifies as a beneficiary and is therefore eligible to receive any distributions of income and/or capital from the Trust. 

Beneficiaries in a Standard Discretionary Trust vs LDDT 

Standard Discretionary Trust: 

A standard discretionary trust has a broad list of potential beneficiaries, including extended family members, companies, and other trusts. This might include spouses, aunts, uncles, cousins, nieces, nephews, stepchildren, and their spouses. Find more information about Beneficiaries in a Discretionary Trust here.

Lineal Descendants Trust: 

In comparison, the beneficiaries of the LDDT are generally limited to the direct descendants of the Primary Beneficiaries (e.g. children, grandchildren and remoter issue). This would ensure, depending on the protection requested, that the trust’s benefits stay within the lineage of the Primary Beneficiary.  

Two Types of Acis Lineal Descendants Discretionary Trusts

Acis offers two types of LDDT, depending on how much protection is needed: 

1. Income and Capital Protected:
   • Only direct family members can receive income and capital from the trust. 
   • New beneficiaries can only be added in very limited circumstances. 
2. Capital Protected Only:
   • Income can be distributed more broadly, with a similar beneficiary pool to a standard discretionary trust. 
   • Capital (the main assets of the trust) can only go to lineal descendants of the Primary Beneficiaries that are named. 
   • The list of capital beneficiaries is more restrictive and can only be expanded in very specific cases. 

Income and Capital Protected Trust – Who Can Benefit?

Primary Beneficiaries 

The people named in the trust at the time it is set up. 

Secondary Beneficiaries 

The direct descendants of the Primary Beneficiaries, including children and grandchildren (but not stepchildren or foster children). 

Tertiary Beneficiaries 

Companies and trusts that are entirely owned by the other beneficiaries. 

Changing Beneficiaries 

While the trustee can remove beneficiaries, adding new ones is very limited. In some cases, a sibling of a Primary Beneficiary or their descendants may be included, but only if there are no other direct descendants remaining. 

The trust cannot be changed in a way that allows non-family members to benefit from the income or capital of the trust.

Capital Protected Only Trust – Who Can Benefit? 

Primary Beneficiaries 

The people named in the trust at the time it is set up. 

Secondary Beneficiaries 

A broader group, which is applicable for the income of the Trust, which includes children, grandchildren, stepchildren, siblings, nieces, nephews, spouses, and parents of the Primary Beneficiaries. This also includes trusts or companies they are involved in, as well as charities. 

Capital Beneficiaries 

The Primary Beneficiaries and their direct descendants (children and grandchildren, but not stepchildren or foster children). 

Changing Beneficiaries 

For income distributions, the trustee has flexibility in adding or removing beneficiaries. However, for capital distributions, new beneficiaries can only be added in very limited cases, such as when a sibling or their descendants need to be included due to a lack of direct descendants flowing from the Primary Beneficiary. 

The Trust cannot be modified to allow non-blood relatives to receive capital. 

Why Consider a Lineal Descendants Discretionary Trust? 

Life circumstances change, and people often want to ensure their family’s financial security. Whether it’s due to a child’s divorce, concerns about in-laws, or blended family dynamics, an LDDT helps ensure that the wealth you’ve built stays within your family. 

If you’re setting up a new trust, the Acis Lineal Descendants Discretionary Trust might be the right option. Contact the Acis Legal Services Team to discuss whether these types of trust may be appropriate for your clients. 

Here are the order forms that you can complete straight away to establish one of these trusts today:

Lineal Descendants Discretionary Trust Order Form

Acis does not provide advice in relation to commercial law, taxation, duty, company law or any other matter. We do not purport to provide advice nor should you construe anything in any correspondence with us, or material provided by us, as advice of any kind.