The universe of trust distribution provisions can be divided into two large subsets: Objective and subjective provisions.
Objective provisions – These leave no room for a trustee to be over indulgent. They may be income-based or incentive-based. For example, one may distribute a fixed amount for the beneficiary to start a business or professional practice, or it may deny distributions if the beneficiary fails a drug test.
Traditional “income-only” provisions are useless in most settings because they bear no relation to any goals that the grantor might have:
They cannot adapt to the needs of a particular individual
They do not allow for changing circumstances
Subjective provisions – These require the trustee to exercise discretion in making value judgments:
The grantor’s intention should be set forth in sufficient detail to tell the trustee the trust’s deeper purpose.
The more discretion given to the trustee, the greater the likelihood that the trustee will exercise power in a manner the grantor would not have agreed with.
Discretion guarantees only flexibility, not success.
Trustee exculpation should be added, including provisions that set forth how the costs of litigation are to be paid.
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