When creating a trust, some thought must be given to expressing the grantor’s wishes in writing. This precatory language is nonbinding language in a trust agreement stating preferences or purposes of a trust to help guide the trustee in making decisions.
This may include:
Primary purpose for creating the trust
A statement of distribution preference
A statement of beneficiary preference
They can also permit greater beneficiary control and involvement:
The beneficiary can have control over the trustee identity. If it isn’t appropriate for the beneficiary to become a trustee, the beneficiary should at some point have the power to remove and replace the trustee.
The beneficiary should be entitled to have as much knowledge about trustee decisions as possible.
The family conundrum – In many states, trust assets become “marital” assets. This can create tension that, at a minimum, you should discuss thoroughly with your legal adviser. One possible approach might be to require that a beneficiary, before getting married, enter into a premarital agreement as a prerequisite to receiving trust distributions. It may also make sense that legal fees for setting up such an agreement be paid from trust assets.
Newsletter Sign Up
Keep up to date on the latest news and information from Austin Capital.