pot trust business definition

A trust that allows the trustee discretion in distributing assets among beneficiaries. A pot trust is used when the trustor is concerned there may be substantial differences in needs among the trust's beneficiaries, especially children. For example, a parent of three children establishes a pot trust to guard against the possibility one of the children may require greater financial assistance than the other two. Establishing separate trusts for each of the children would provide less flexibility.