On this page
- The core difference in one paragraph
- Entitlement: what a beneficiary actually holds
- Flexibility: adapting to what happens
- Protection: creditors, divorce and the heir who struggles
- Comparison table
- Roles that do not change
- Duration, accumulation and records
- Confidentiality and reporting
- Which structure fits which situation?
- Comparing with other options
- FAQ
When families compare a discretionary vs fixed trust, they are really asking one question: should the trust deed decide in advance who gets what, or should the trustee decide later, as circumstances change? Both forms are available under the Trusts Act 2001, and both can sit inside the same family plan. They behave very differently, however, once a beneficiary asks "what am I owed?", once a creditor appears, or once a family situation changes.
This page sets the two models side by side. It does not repeat how a discretionary trust is run day to day; that is covered on the discretionary trust page. Nor is it advice: the right form depends on the family, the assets and the countries involved, and should be tested with a qualified adviser.
The core difference in one paragraph
In a fixed trust, the deed names the beneficiaries and states their shares or interests. A beneficiary can read the deed and know what the trust is meant to give them. In a discretionary trust, the deed names a class or list of people who may benefit, but no one is entitled to a particular amount. The trustee decides who receives what, and when, within the limits of the deed and its duties.
Mauritius law does not require a separate statutory label for either model. Both are creatures of the trust deed, read together with the Trusts Act 2001. What matters is the drafting.
Entitlement: what a beneficiary actually holds
Beneficiary of a fixed interest trust in Mauritius
A beneficiary of a fixed interest trust holds a defined right. Typical examples are "income to the surviving spouse for life, capital to the children in equal shares" or "capital to each grandchild at a stated event". The trustee's job is mainly administrative: protect the assets, collect income, and pay out as the deed prescribes. Because the entitlement is known, the beneficiary can plan around it and can ask the trustee to account for it. The wider framework of beneficiary rights applies, but a fixed beneficiary starts from a stronger position than someone who merely hopes for a distribution.
Beneficiary of a discretionary trust
A discretionary beneficiary holds a hope, protected by the trustee's duties. They can expect to be considered properly, and to see the trustee act in good faith and for the purposes of the deed. They cannot demand a particular payment. In practice, the trustee often looks at a letter of wishes from the settlor, which explains the family's intentions without binding the trustee.
This difference in entitlement drives almost every other contrast below.
Flexibility: adapting to what happens
A fixed trust is predictable and rigid. If a child becomes ill, a marriage ends, or a grandchild is born, the shares do not move unless the deed contains a power to change them or the terms are formally altered; see changing the terms of an existing trust for what that involves.
A discretionary trust absorbs change by design. The trustee can favour the child who needs support, hold back for a beneficiary who is not ready to manage capital, or include later-born family members if the class allows it. The price of that flexibility is reliance on the trustee's judgement, and on the clarity of the deed about who belongs to the class.
Some families use a hybrid: a fixed core, such as income for a spouse, with a discretionary layer for the remainder. A life interest trust is a familiar example of a fixed element paired with a wider class for the capital.
Protection: creditors, divorce and the heir who struggles
Fixed interests are easier to reach
Where a beneficiary has a defined, vested interest, that interest is a clear asset of the beneficiary. A creditor or a spouse in a divorce can often point to it and argue it should be taken into account. Mauritian law allows protection to be built in, but it has to be provided for.
Discretionary interests are harder to value and attach
Because a discretionary beneficiary owns nothing specific until the trustee exercises a power, there is usually no defined asset for a creditor to claim. This is why discretionary drafting is often associated with asset protection. It is not a guarantee: courts look at substance, and a trust that is a mere facade can be disregarded (see sham trusts).
The statutory protective option
Section 18 of the Trusts Act 2001 recognises the protective or spendthrift trust. A beneficiary's interest can be made subject to termination, restraint on alienation or suspension if the beneficiary becomes insolvent or their property is seized. This tool is available to either model, so a fixed trust can be given a protective layer. For heirs who cannot manage money, see spendthrift trusts.
Forced heirship and succession
Neither form is a shortcut around inheritance rules in every case. The position depends on the settlor's domicile, the assets and the facts. Section 8 of the Trusts Act 2001 provides that the transfer by a non-citizen settlor cannot be set aside under the succession rules of the settlor's domicile or nationality. For the interaction with reserved shares, read forced heirship and trusts.
Comparison table
| Criterion | Discretionary trust | Fixed trust |
|---|---|---|
| Who decides distributions | The trustee, within the deed | The trust deed |
| Beneficiary's entitlement | A right to be considered, not to a set amount | A defined share or interest |
| Predictability for the family | Lower; depends on the trustee's decisions | High; set in advance |
| Flexibility if circumstances change | High | Low unless the deed gives a power |
| Exposure to creditors | Generally harder to reach, but fact-dependent | Easier to reach, as the interest is defined |
| Divorce of a beneficiary | Harder to value; courts may still look at expectations | Interest more clearly countable |
| Role of the letter of wishes | Central guidance for the trustee | Minor |
| Trustee's workload and judgement | Heavy; ongoing decisions | Mostly administrative |
| Protective features (section 18) | Can be added | Can be added |
| Typical use | Wealth across several branches or generations | Defined splits, such as a spouse and children |
Roles that do not change
Whichever model you choose, the cast stays the same. The settlor creates the trust. Section 8 of the Trusts Act 2001 lets the settlor also act as trustee, beneficiary, protector or enforcer, but not as the sole beneficiary of the trust they created. The settlor's ability to keep control is limited; see how much control a settlor can keep.
Section 11 presumes that a trust is irrevocable by the settlor unless the deed expressly provides for revocation. This presumption applies equally to both forms.
Trustees must meet the statutory framework. A qualified trustee under section 2 is a FSC-licensed corporate service provider (Management Licence) or another Mauritius-resident person authorised by the FSC to provide trustee services. Section 28 caps the number of trustees at four, with at least one qualified trustee at all times, although the trust is not invalidated merely because a trustee or qualified trustee is missing.
A protector is optional under section 24 of the Trusts Act 2001. The protector can advise the trustee and, unless the deed says otherwise, can remove and appoint trustees, change the governing law, move the place of administration and withhold consent to certain acts, without becoming a trustee. In a discretionary trust, a protector is a common counterweight to the trustee's wide powers; see the trust protector.
Duration, accumulation and records
Section 9 of the Trusts Act 2001 sets the maximum duration of a trust, other than a purpose trust, at 99 years from creation, unless it ends earlier. That ceiling applies to both forms. In a fixed trust the interests will usually vest or end well before then. In a discretionary trust, the trustee's powers may run for much longer.
Section 38(3) requires the trustee to keep up-to-date accounts and records and an alphabetical register of the names and last known addresses of each beneficiary and settlor. This is easy for a fixed trust. For a discretionary trust with a broad class, the trustee still has to be able to identify the people who may benefit.
Confidentiality and reporting
Section 33 of the Trusts Act 2001 requires the trustee to keep information about the trust confidential. A court orders disclosure only on the application of an investigating authority, where the information is required in good faith for an investigation or proceedings relating to financial crime. See whether Mauritius trusts are confidential.
Confidentiality is not secrecy from regulators. Under section 26A of the Financial Services Act 2007, the FSC keeps a register of domestic trusts and foreign trusts that have at least one qualified trustee. The register includes, among other items, the trust deed and its amendments and the identity and addresses of the beneficiaries, trustees, settlors, protectors and enforcers. See the trust register.
For anti-money-laundering purposes, the FIAMLA 2002 treats the beneficial owner of a trust-type arrangement as including the settlor, the trustee, any protector, each beneficiary (or the class of beneficiaries and the objects of a power), and any other individual with ultimate effective control. This wording matters for a discretionary trust: even when no one has a fixed share, the class of beneficiaries is still taken into account.
Which structure fits which situation?
Do you want the deed to set each beneficiary's share in advance?
Is it acceptable that shares cannot easily be adjusted later?
Do you have a trustee you trust to exercise wide judgement?
This is a way to frame the discussion, not a recommendation. Cross-border families, blended households and business assets can change the answer. For example, a blended family often wants fixed protection for a surviving spouse alongside discretionary room for the children.
Comparing with other options
If the real question is whether a trust is the right vehicle at all, see trust or foundation and trust or will. If your question is about whether the settlor can undo the arrangement, read revocable vs irrevocable trusts. The wider menu of structures is on types of trust available in Mauritius.
To discuss which model suits your situation, you can send a request through the site's contact form; it is passed on to an FSC-licensed corporate service provider (Management Licence).
FAQ
What is the main difference between a discretionary and a fixed trust?
In a fixed trust the deed sets each beneficiary's entitlement. In a discretionary trust the trustee decides who receives what and when, within the deed. The first favours certainty; the second favours flexibility.
Is a fixed interest trust in Mauritius a separate legal category?
Not in the sense of a distinct statute. The Trusts Act 2001 governs all trusts, and "fixed" or "discretionary" describes how the deed is drafted. The deed's wording determines the beneficiaries' rights.
Which gives better protection against creditors?
A discretionary trust tends to be harder for a creditor to reach because the beneficiary has no defined asset. That is a tendency, not a promise. Courts can look through arrangements that lack substance, and protection also depends on timing and on the settlor's own position. A fixed trust can be given protection under section 18, which allows an interest to be restrained or suspended on a beneficiary's insolvency.
Can a trust be partly fixed and partly discretionary?
Yes. Many deeds give one person a fixed right, such as income for life, while leaving the capital to the trustee's discretion among a wider group. Careful drafting is essential so that the two layers do not conflict.
Does the settlor lose all control in a discretionary trust?
The settlor can keep some roles under section 8, including that of protector, but cannot be the sole beneficiary. A settlor who keeps too much control risks the trust being challenged. See how much control a settlor can keep.
Can beneficiaries see the trust deed?
It depends on the deed and on the beneficiary's position. A beneficiary with a defined interest usually has a stronger claim to information than a discretionary object. Information rights are discussed on the page on how a beneficiary can request trust information.
Does either form avoid forced heirship?
Not automatically. Each case turns on the facts, the settlor's connections and the law involved. Seek advice before relying on either structure for this purpose.
Can a discretionary trust be turned into a fixed trust later?
Only if the deed allows it or the terms can be formally varied. Check this at the drafting stage rather than assuming it will be possible later.