Eisen Law
May 21st, 2026
Discretionary Trusts and Beneficiary Rights in Ontario
Discretionary trusts are a cornerstone of modern estate planning in Ontario. They offer flexibility, asset protection, and the ability to tailor distributions based on changing circumstances.
For testators and settlors, discretionary trusts can be an effective way to provide for beneficiaries without granting them fixed entitlements. However, these structures can create uncertainty for beneficiaries, particularly where expectations do not align with how a trustee exercises their discretion.
Estate litigation frequently arises from this tension. Beneficiaries may feel unfairly excluded or inadequately provided for, while trustees must navigate their fiduciary duties within the scope of broad discretionary powers.
One of the most important and often misunderstood features of a discretionary trust is the nature of a beneficiary’s interest. In most cases, a beneficiary under a discretionary trust does not have a vested right to receive any portion of the trust property.
Instead, the beneficiary has a “mere expectancy” or a right to be considered by the trustee when decisions are made. This distinction is significant. It means that a beneficiary cannot simply demand a distribution or claim entitlement to a specific share of the trust.
However, this does not leave beneficiaries without recourse. While they may not have a right to receive funds, they do have enforceable rights related to how the trust is administered. These rights arise from the trustee’s fiduciary obligations and the requirement to exercise discretion properly.
