Valuing Discretionary Interests and Accompanying Rights

Abstract

Many modern family and commercial trusts contain trustee discretionary powers. It is through these powers that the property held in these trusts are distributed to beneficial objects. As such being the object of such a power can be an important source of funds. The desirability of such a position is enhanced if the object of the power also holds powers that enable indirect control of the trust, such as a power to remove trustees and appoint new trustees. This paper investigates whether standard legal valuation principles could be used to put a monetary value on these types of interests. The paper accepts for this purpose that such interests might be 'property' but makes no argument on this point.