A few years ago, a trustee consulted me on a difficult decision he had to make concerning the conflicting interests of different trust beneficiaries: a father and his son.
Grandparents left a trust for the benefit of their son and his children. The trust, unfortunately, provided no guidance as to how the trustee was to balance their various interests.
The trust had been helping support the son who was in his 50s and unemployed, and probably unemployable. He had previously worked as a truck driver.
His son approached the trustee seeking assistance with paying the tuition for his last year of college. The trustee felt inclined to provide this assistance, but the college student’s father strenuously objected.
He argued (1) that his parents meant the trust to be for his primary benefit, even if the trust instrument didn’t say so, (2) that he needed to preserve the trust funds because he was unlikely ever to be gainfully employed again, and (3) his son had other resources, namely his ex-wife, his son’s mother, who he claimed was “loaded.”
Though under the trust terms the decision was totally up to the trustee, the father had the right to replace the trustee with one more to his liking.
This trust was not unusual in the lack of guidance it provided the trustee. The way trusts are generally written, the trustee is given full discretion over trust distributions. They are drafted this way both to allow for flexibility in the face of a future no one can foretell and to protect the trustee from legal challenges to their decisions. However, this practice gives the trustee little guidance and depends on the trustee using their own judgment and values, which may be quite different from those of the trust grantor or the beneficiaries.
In this case, I told the trustee that he should help pay the grandson’s college tuition given that he is an equal trust beneficiary and, though it was unstated in this trust, support of education is a common trust purpose. I told him that he should do this even though the father may replace him as trustee.
This situation, however, illustrates the need for attorneys to inquire into their clients’ hopes and wishes for their children and grandchildren when doing their estate planning. Guidance, whether in the trust instrument itself or through ancillary discussions, letters, or memoranda, can be crucial to the trust being used to carry out the wishes of the grantor or grantors.