A trustee recently consulted me on a difficult decision he must 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, provides no guidance as to how the trustee is to balance their various interests.
The trust has been helping support the son who is in his 50s and unemployed, and probably unemployable. He had previously worked as a truck driver.
His son has approached the trustee seeking assistance to pay his tuition for his last year of college. The trustee is inclined to provide this assistance, but the college student’s father is strenuously objecting.
He argues (1) that his parents meant the trust to be for his primary benefit, even if the trust instrument doesn’t say so, (2) that he needs to preserve the trust funds because he’s unlikely ever to be gainfully employed again, and (3) his son has other resources, namely his ex-wife, his son’s mother, who he claims is “loaded.”
While under the trust terms, the decision is totally up to the trustee, the father has the right to replace the trustee with one more to his liking.
The trust is not unusual in the lack of direction it provides the trustee. Generally, trusts are written given the trustee 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 challenge to his decisions. However, this practice gives the trustee little guidance and depends on the trustee using his or her own judgment and values, which may be quite different from those of the trust grantor.
In this case, I advised the trustee that he must help pay the grandson’s college tuition given that he is an equal trust beneficiary and, while it’s unstated in this trust, support of education is a common trust purpose. He must do this even at the risk that the father may fire 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.
