The Case for Principle Trusts And Against Incentive TrustsThe Case for Principle Trusts And Against Incentive Trusts
The intention behind incentive trusts is excellent; the rigidity of these trusts is not. It's time to ditch the inflexible incentive trusts and instead learn how to fashion a principle trust. Rather than strict rules for distributions, a principle trust contains a flexible distribution standard (such as general welfare, best interests, sole discretion and the like) and gives the trustee a list of
David A. Handler & Alison E. Lothes
The intention behind incentive trusts is excellent; the rigidity of these trusts is not. It's time to ditch the inflexible incentive trusts and instead learn how to fashion a “principle trust.” Rather than strict rules for distributions, a principle trust contains a flexible distribution standard (such as general welfare, best interests, sole discretion and the like) and gives the trustee a list of behaviors to strive to encourage or discourage when making (or withholding) distributions under those broad standards. Here's why your client may want one, and how to put it together.
Guidance, Please
When administering a trust, a trustee generally prefers to have more, rather than less, guidance from the trust...
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