Distribution provisions are the most essential provisions of trust instruments – and risk lurks everywhere. If a trustee has unbounded discretion, he or she risks a “general power of appointment,” which would cause the trust’s assets to be taxable to the holder of the power of appointment. But distribution standards – especially for “standard of living” or “emergencies” – are inherently susceptible to multiple interpretations and dispute, and potentially to litigation. Ultimately, planning and drafting these provisions is an exercise in risk management and tradeoffs. This program will provide you with a real world guide to planning and drafting distribution provisions in trust instruments, including the tradeoffs and risks.
- Risks of discretionary distributions – power of appointment, taxable inclusion, litigation
- Cost/benefit of heavily detailed v. general distribution provisions
- Ascertainable standards – health, education, maintenance, and support (HEMs)
- Drafting sole and absolute discretion, emergencies, best interests, and standard of living
- Role of fiduciary duties in making distribution decisions
- Tax considerations when making distributions
Note: This material qualifies for self-study credit only. Pursuant to Regulation 15.04.5, a lawyer may receive up to six hours of self-study credit in a reporting year. Self-study programs do not qualify for ethics, elimination of bias or Kansas credit.
Daniel L. Daniels is a partner in the Greenwich, Connecticut office of Wiggin and Dana, LLP, where his practice focuses on representing business owners, corporate executives and other wealthy individuals and their families. A Fellow of the American College of Trust and Estate Counsel, he is listed in “The Best Lawyers in America,” and has been named by “Worth” magazine as one of the Top 100 Lawyers in the United States representing affluent individuals. Mr. Daniels is co-author of a monthly column in “Trusts and Estates” magazine. Mr. Daniels received his A.B., summa cum laude, from Dartmouth College and received his J.D., with honors, from Harvard Law School.
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