Discretionary Distributions, Decanting & Modification

What are the steps to provide the best liability defense?

1. Understand the legal framework. 2. Assess potential liabilities. 3. Implement risk management strategies. 4. Review and maintain documentation. 5. Seek legal counsel.

What are influential factors beyond the settlor’s intent?

Factors can include state laws, beneficiaries' needs, the purpose of the trust, and tax implications.

What is precatory language in a trust?

Precatory language refers to non-binding statements of wishes or desires made by the settlor that suggest intent but do not impose legal obligations.

What does 'absolute and uncontrollable discretion' mean in trust law?

It refers to a trustee's power to make decisions without liability or obligation to consult with beneficiaries.

What actions should be taken in the event of a wasting trust?

1. Evaluate the trust assets. 2. Consider restructuring the trust. 3. Communicate with beneficiaries. 4. Seek court intervention if necessary.

What is the definition of decanting?

Decanting is the process of transferring assets from one trust to another, often to provide for better management or to modify the terms of the trust.

Where does legal authorization to decant come from?

Authorization typically comes from state statutes or the original trust documents, allowing trustees to decant under certain conditions.

What are valid reasons to decant a trust?

Valid reasons include improving tax efficiency, addressing changes in beneficiaries' circumstances, or correcting administrative errors.

What is the primary goal of decanting a trust?

To modify the terms of a trust to better serve the interests of the beneficiaries or to adapt to changing circumstances.

What is the difference between mandatory and discretionary distributions in a trust?

Mandatory distributions are required by the trust terms; discretionary distributions depend on the trustee's judgment.