Discretionary Trust in Mauritius

A discretionary trust in Mauritius is a trust in which the trustee, not the trust deed, decides which beneficiaries receive income or capital, how much they receive and when. The deed names the people who may benefit, often as a class such as "my children and their descendants", and gives the trustee a power to choose among them. No beneficiary can claim a particular amount as of right until the trustee has exercised that power.

This page explains discretionary trust Mauritius law in plain terms: what the structure is, who holds which power, which statutory limits apply and when a family tends to choose it over a fixed arrangement. It is general information, not advice. Whether the structure suits a given family depends on residence, assets, family law and tax position, and that calls for an analysis by a qualified adviser.

What a discretionary trust is

A trust is a legal relationship in which a person, the settlor, transfers assets to a trustee, who holds them for the benefit of others or for a stated purpose. The wider framework is described in Mauritius trust law and in what a trust is. The discretionary form is a variation on how the benefit is shared.

In a fixed trust the deed states the entitlement of each beneficiary, for example half of the income to one person and half to another. In a discretionary trust the deed states only the pool of possible beneficiaries and the guidelines for the trustee. The trustee looks at needs, ages, circumstances and the settlor's wishes, then decides each year, or at longer intervals, whether and how to distribute.

Three features define the structure:

• A class of beneficiaries rather than fixed shares. A person in the class has a hope of benefit, not a vested right to a sum.
• A trustee power of selection. The trustee must exercise it in good faith, for the purposes the deed sets out, and after considering the relevant facts.
• Flexibility over time. Births, marriages, divorces, illness or a business sale can all be taken into account without redrafting the deed.

The two forms are compared side by side in discretionary trust vs fixed trust.

The legal frame: the Trusts Act 2001

Mauritius has no separate statute for the discretionary form. It is a way of drafting a trust under the general law of trusts, mainly the Trusts Act 2001. The Act came into force on 1 December 2001, and the consolidation published by the Financial Services Commission (FSC) lists later amendments through to 29 May 2019, with a cross-reference to a 2023 amendment (Act 20 of 2023, effective 29 March 2024) in the definition of "financial crime". The Trusts Act page walks through its main provisions.

Several provisions shape any discretionary trust:

• Irrevocability. Under section 11, a trust is presumed to be irrevocable by the settlor and the settlor's legal representative unless the deed expressly provides for revocation.
• The settlor's other roles. Under section 8, the settlor may also be a trustee, a beneficiary, a protector or an enforcer, but may not be the sole beneficiary of the trust the settlor has created.
• Duration. Under section 9, a trust other than a purpose trust may last for a maximum of 99 years from its creation, unless it ends earlier. A purpose trust, charitable or not, may be perpetual under section 9(2), in force since 16 July 2011.
• Accumulation. Under section 10, income may be accumulated for the whole maximum duration of the trust, but not beyond 25 years where the trust holds immovable property located in Mauritius.

Duration is examined in how long a Mauritius trust can last, and the extent of the settlor's influence in how much control a settlor can keep.

Who holds which power

The practical question for most families is not "what is a discretionary trust?" but "who decides what?" The answer depends on dividing powers between several people so that no one holds all of them.

The settlor

The settlor creates the trust and transfers the first assets. After that, the settlor's formal role is limited. Because the trust is presumed irrevocable, the settlor cannot simply take the assets back. The settlor can, however, record wishes in a non-binding letter of wishes and may reserve some powers if the deed allows it. The role and its limits are covered in the settlor.

The more control a settlor keeps, the greater the risk that the arrangement is challenged as not being a genuine trust. That issue is discussed in sham trusts.

The trustee

The trustee holds the legal title to the assets and exercises the discretion. The Trusts Act 2001 defines a "qualified trustee" in section 2 as a corporate service provider holding a Management Licence from the FSC, or another person resident in Mauritius authorised by the FSC to provide trustee services. In this text, such a firm is referred to as an FSC-licensed corporate service provider (Management Licence).

Section 28 caps the number of trustees at 4, of whom at least 1 must be a qualified trustee at all times. The trust does not become invalid or lapse only because a trustee or a qualified trustee is missing. The Financial Services Act 2007 requires a Management Licence from the FSC for anyone acting as corporate trustee or qualified trustee within the meaning of the Trusts Act.

A discretionary power is a fiduciary power. The trustee cannot use it for personal advantage, must keep proper records and must treat the possible beneficiaries fairly. Section 38(3) requires the trustee to keep up-to-date accounts and documents, together with an alphabetical register of the names and last known addresses of each beneficiary and settlor, and to keep accounting records for at least 5 years after the completion of the operations concerned. The wider duties are set out in duties of a trustee.

The protector

The protector is an optional office. Section 24 of the Trusts Act 2001 lets the deed provide for a protector, an adult (including the settlor) or a legal entity, whose task is to advise the trustee. Unless the deed says otherwise, the protector may remove and appoint trustees, fix the law governing the trust, change the place of administration and withhold consent to certain acts, without becoming a trustee. In a discretionary trust the protector is often the family's counterweight to a professional trustee. See trust protector in Mauritius for the full picture.

The beneficiaries

The beneficiaries are the people in whose favour the trustee may exercise the discretion. Their rights are modest but real: to have the trust properly administered, to be considered when the trustee decides, and, within the limits of the deed and the law, to obtain information. Those rights are discussed in trust beneficiaries.

The enforcer

A trust that has beneficiaries is policed by those beneficiaries. The enforcer is a different office, required for a purpose trust, which has no beneficiary to hold the trustee to account. Under section 21, the same person cannot be both trustee and enforcer of one trust. A family discretionary trust does not need an enforcer, but the distinction explains why the term appears in the Act.

Summary of the roles

How a distribution decision works

The sequence below shows how a trustee typically handles a request or a regular review. The details vary from deed to deed.

The point of the process is the record. A decision that was reasoned and written down is far easier to defend than an informal payment, and it is the trustee's best protection if a beneficiary later questions the outcome. Remedies for a trustee who falls short are covered in breach of trust.

When families choose a discretionary trust

The structure suits situations in which the family cannot, or does not want to, decide the final shares today.

• Young or uncertain beneficiaries. Where children are minors, or a family is still growing, a fixed split would be arbitrary. A discretion lets the trustee respond to actual needs. A variant is described in trust for minor children.
• Different needs among heirs. One child may need support, another may be financially independent. A discretionary trust allows an uneven result where that is fair.
• Protection of heirs from themselves or from creditors. Because no beneficiary has a fixed entitlement, there may be nothing definite for a creditor to claim. Section 18 also recognises protective or spendthrift trusts, in which a beneficiary's interest may be terminated, restricted in transfer or suspended in the event of the beneficiary's insolvency or seizure of the beneficiary's assets. See asset protection with a trust and trusts and creditors.
• Keeping a family business together. A trustee can hold shares and decide who participates in profits, without splitting the shareholding on each death.
• Cross-border families. Where family members live in several countries, a single holding structure with flexible distributions can be easier to manage than several separate inheritances.

The structure is not a fit for everyone. If a family wants a certain person to receive a certain share, a fixed trust, a will or a gift may be clearer. The comparison in trust or will helps frame that choice.

Discretionary trust and succession

A frequent motive is succession planning. Assets held by a trustee are, in principle, not part of the settlor's personal estate on death, and a discretionary trust can pass benefit to the next generation without the formalities of a succession. Whether that works depends on the facts, on the settlor's domicile and on how the transfer was made. Mauritian law on heirs with reserved shares is a sensitive area.

Section 8 states that the transfer of a non-citizen settlor cannot be set aside under the succession rules of the settlor's domicile or nationality. That provision is specific and has conditions. It does not mean a trust is immune from every claim, and it does not displace the rules that apply to Mauritian citizens. The topic is treated at length in forced heirship and trusts, and the effect of the settlor's death is described in what happens when the settlor dies.

Tax: general principles only

Tax is where a general page must be most careful. The following points reflect the Income Tax Act 1995 as consolidated up to the Finance Act 2026, and they apply to the trust itself, not to any particular family.

• Every trust is chargeable on its taxable income at the rate set by Part IV of the First Schedule, which is 15%.
• Section 46(2) still describes a trust whose settlor is non-resident (or holds a Global Business Licence) and whose beneficiaries are all non-resident (or holders of a Global Business Licence), as well as a purpose trust whose purpose is carried out outside Mauritius. Such a trust is nevertheless taxed at the same 15% rate.
• The Finance Act 2021 repealed section 46(3), the exemption for a non-resident trust that filed a declaration of non-residence within 3 months of the end of the income year, with deemed effect from 1 July 2021. That exemption no longer exists in the consolidated text.
• Under section 46(4), any distribution to a beneficiary of a trust is deemed to be a dividend in the hands of the beneficiary.
• Charitable trusts are listed among the exempt bodies in Part I of the Second Schedule.

Those rules are conditions and limits, not a promise of any outcome. The treatment of a beneficiary depends on where that person lives and on the rules of that country. Further reading: how trusts are taxed in Mauritius and tax on distributions to beneficiaries.

Transparency, registers and confidentiality

A discretionary trust is private, but not secret. Several layers of record-keeping apply.

The FSC register

Section 26A of the Financial Services Act 2007 requires the FSC to keep a register of domestic trusts and of foreign trusts that have at least 1 qualified trustee. The register includes the name and characteristics of the trust, the trust deed and its amendments, the identity and addresses of beneficiaries, trustees, settlors, protectors and enforcers, the purpose, the governing law, the place of administration and the service providers. The qualified trustee must send the FSC the information and documents it needs, within the time and in the form the FSC sets. The consolidated version at 1 September 2026 notes that Act 13 of 2026, in force on that date, repealed paragraph (g) of the list of register information in section 26A(2). The register is not public. See is there a register of trusts in Mauritius.

Beneficial ownership

Section 29 of the Financial Services Act requires each licence holder to keep a register of the beneficial owners of its clients, and each qualified trustee to keep a register of every trust it administers, available to the FSC on request. These duties cover existing as well as new clients and trusts.

Under the FIAMLA 2002, the beneficial owner of a trust-type legal arrangement includes the settlor, the trustee, any protector, each beneficiary (or the class of beneficiaries and the objects of a power) and any other natural person exercising ultimate effective control, including through a chain of control. For a discretionary trust, that means the class of possible beneficiaries is itself identified, even though no one has a fixed share.

When a trustee of an express trust opens a business relationship, or carries out an occasional transaction of at least Rs 500 000 or the equivalent in foreign currency, with a reporting person such as a bank, section 17C(5A) requires the trustee to declare that status. Qualified trustees are themselves reporting persons, so they must apply customer due diligence and report suspicious transactions. Knowingly giving false due diligence information is punishable by a fine of up to Rs 500 000 and imprisonment of up to 5 years.

Confidentiality

Under section 33 of the Trusts Act 2001, as rewritten by Act 9 of 2019 with effect from 29 May 2019, the trustee keeps 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 a prosecution relating to financial crime. The scope of that duty is explained in are Mauritius trusts confidential.

Foreign settlors and foreign law

A discretionary trust is often set up by someone who does not live in Mauritius. Section 60 of the Trusts Act 2001 provides that a foreign trust is governed by its terms and its own law, but is not enforceable in Mauritius to the extent that it would amount to an offence, be contrary to public policy or apply directly to immovable property located in Mauritius. Foreign trust recognition and choosing the governing law deal with the topic.

How it differs from a foundation

A Mauritian foundation can also be used for discretionary family planning, but it is a different legal object. Under section 5 of the Foundations Act 2012, a foundation has legal personality only once it is registered with the Registrar of Companies (also the Registrar of Foundations) and holds a certificate of registration. A trust has no legal personality; the trustee holds the title. A foundation is run by a council, of which at least 1 member must habitually reside in Mauritius under section 17. Section 49A of the Income Tax Act applies the same 15% rate to a foundation and treats a distribution to a beneficiary as a dividend. For a direct comparison, see trust vs foundation and the Foundations Act.

Questions to ask before choosing

• Who should be able to benefit, and is a class description enough?
• Which decisions must remain flexible, and which should be fixed?
• Is a protector wanted, and who could hold that role independently?
• How will the trustee learn the family's wishes, and where are they recorded?
• Which countries' tax and family law rules touch the settlor and the beneficiaries?
• What happens to the trust if the settlor dies, divorces or loses capacity?
• Is a review planned each year? See the annual trust review checklist.

Setting-up steps, fees and documents are handled elsewhere, and this page does not cover them. A family that wants to discuss its own situation can use the contact form.