Cannon Trust School Level II Practice Exam 2026 - Free Level II Practice Questions and Study Guide

The difference hinges on whether a trustee must pay as the trust instrument directs or may choose whether to pay. Non-discretionary distributions are mandatory or due under the instrument; the trustee has no real choice and must make the payments according to the terms, such as a fixed amount at a certain age or under specific conditions. Discretionary distributions, on the other hand, give the trustee broad authority to decide if, when, and how much to distribute, and to whom, within the trust’s rules. This allows the trustee to tailor distributions to changing circumstances and needs of the beneficiaries, while still honoring fiduciary duties and any stated objectives of the trust. Because discretion can be guided by needs, health, education, and maintenance and support standards, the idea that discretionary distributions cannot consider beneficiary needs is incorrect.