Making Your Intent Clear

Ensuring that your wishes are carried out after your death is the main purpose of estate planning. Figuring out exactly what your wishes are is the first step. The process often involves brainstorming, weighing a variety of goals and practical considerations, and finally shaping a particular plan. Once you have figured out your wishes, expressing those wishes in a clear manner can often be more challenging than you might think.

When planning for young children or grandchildren, clients often become concerned that their beneficiaries will foolishly spend their inheritances before they become mature enough to properly manage their finances. Clients will commonly say, “Until my beneficiary is 30 years old, I only want her to be able to use her inheritance for education.” While this appears to be a well thought out and clear idea, upon further review, a great deal of ambiguity remains.

What does “education” mean? Does it include vocational training or is it limited to academic pursuits? Is it limited to tuition or can it include books, room, and/or board? How do internships or study abroad programs factor into the equation?

What appeared to be clear in the client’s mind is vague and open to debate once it is time for the trustee to respond to requests from the beneficiary for use of the trust assets. These practical questions might be issues that the client never even considered. Without more detailed instruction, a simple clause can be open to great debate which can result in litigation.

The beneficiary might insist that “education” necessarily includes a backpacking trip to Europe and tuition for an underwater basket weaving class. The trustee, worried about liability, might insist that “education” is strictly limited to tuition for a Bachelor’s degree. If they end up in court, the intent of the client will be the key factor.

It is therefore a good idea to flesh out in detail exactly what you are thinking when you express your ideas in your estate planning. Sometimes a separate writing that provides guidelines to the trustee can be very helpful. The guidelines can serve as an explanation as to how the trustee should interpret the instructions of the trust. An experienced trustee will readily agree that anything that sheds light on the thinking behind your estate planning documents can be very helpful in understanding how to carry out your wishes.