A Discretionary Distribution, governed by Texas Trust Code Chapter 113, is a distribution made at the trustee’s judgment rather than as a beneficiary’s entitlement. When a trustee has true discretionary authority, trust assets receive strong creditor protection because the beneficiary cannot compel a distribution. However, this protection is significantly weakened when the beneficiary also serves as trustee, since a person generally cannot exercise discretionary control over distributions to themselves without exposing the assets to creditor claims. To preserve protection, discretionary distributions should be made by an independent trustee, or the beneficiary-trustee must be limited to an ascertainable standard such as HEMS.
