The Terms for Trusts Created for Residuary Beneficiaries tab configures the administrative and distribution provisions for any testamentary trusts selected on:
The Disposition of Remaining Estate tab (Entire Residue), or
The Disposition of Remaining Estate tab (Percentage Shares) tab
The structural type of trust (Age Certain, Lifetime, or Lifetime Dynasty) is selected on the Disposition of Remaining Estate tab. This tab defines how that selected trust operates. The options available vary depending on which trust structure was chosen.
Definition of “Primary Beneficiary”
Throughout this tab, the term Primary Beneficiary refers to the individual for whom a residuary testamentary trust is created.
In most plans, the Primary Beneficiary will be:
The named individual receiving a residuary share, or
Each member of a residuary class (for example, each child or grandchild) for whom a separate trust is established
The term “Primary Beneficiary” is a defined term in the Definitions section of the governing document and is used consistently throughout the trust provisions.
Terms for an Age Certain Trust
An Age Certain Trust is designed to terminate at one or more specified ages selected on the Disposition of the Remaining Estate tab.
This tab configures how the trust operates before termination and what occurs if the Primary Beneficiary dies before reaching the final age.
Distribution Until Final Age
The drafter selects the standard governing distribution of trust income and principal during the trust term and prior to final distribution.
If the beneficiary of the trust is also receiving tangible personal property, this tab determines whether that property is distributed into the trust.
If the Primary Beneficiary Dies Before Final Age
If the Primary Beneficiary dies before the final age of distribution, this tab determines how the remaining trust property passes to contingent beneficiaries. Options may include:
Outright regardless of age
Outright to UTMA accounts for beneficiaries under age 25
Distribution to contingent trusts for beneficiaries under a selected age
This section also determines whether the Primary Beneficiary holds a testamentary limited power of appointment and, if so, the permissible class of appointees (for example, descendants only, descendants and charities, or a broader limited class).
Terms for a Lifetime Trust (Non-Dynasty)
A Lifetime Trust continues for the Primary Beneficiary’s lifetime and does not terminate at a fixed age. At the Primary Beneficiary’s death, the remaining trust assets distribute to the next generation in accordance with the selected remainder provisions.
Distribution During the Primary Beneficiary’s Lifetime
The drafter selects the distribution standard governing trust income and principal. Available standards generally mirror those available for Age Certain trusts (mandatory income with discretionary principal, discretionary HEMS, fully discretionary, etc.).
Additional optional distribution provisions may include:
Adding the Primary Beneficiary’s descendants as discretionary, subordinate beneficiaries under a HEMS standard
Authorizing the trustee to purchase, retain, or maintain a residence within the trust
Authorizing the Primary Beneficiary to appoint trust income annually to charity
If applicable, the drafter determines whether tangible personal property passing to the beneficiary is distributed into the trust.
At the Primary Beneficiary’s Death
This section of the tab determines:
Whether the Primary Beneficiary holds a testamentary limited power of appointment and the permissible class of appointees
How unappointed trust assets will be distributed by default. Default options include:
Outright regardless of age
Outright to UTMA accounts for beneficiaries under age 25
Distribution to contingent trusts for beneficiaries under a selected age
Terms for a Lifetime Dynasty Trust
A Lifetime Dynasty Trust continues for the Primary Beneficiary’s lifetime and may continue for successive generations. Under Washington’s rule against perpetuities, this trust may continue for up to 150 years from its creation.
Distribution During the Primary Beneficiary’s Lifetime
The drafter selects the distribution standard governing trust income and principal. Available standards generally mirror those available for Age Certain trusts (mandatory income with discretionary principal, discretionary HEMS, fully discretionary, etc.).
Additional optional distribution provisions may include:
Adding the Primary Beneficiary’s descendants as discretionary, subordinate beneficiaries under a HEMS standard
Authorizing the trustee to purchase, retain, or maintain a residence within the trust
Authorizing the Primary Beneficiary to appoint trust income annually to charity
- Inclusion of GST-specific language creating GST-Exempt and GST-Non-Exempt shares and allocating distribution priorities between exempt and non-exempt shares
If applicable, the drafter determines whether tangible personal property passing to the beneficiary is distributed into the trust.
At the Primary Beneficiary’s Death
This section of the tab determines:
Whether the Primary Beneficiary holds a testamentary limited power of appointment and the permissible class of appointees
Whether a general power of appointment should apply to GST-non-exempt assets
- How unappointed trust assets will be distributed by default. By default, unappointed assets pass by representation to the Primary Beneficiary’s descendants, with each resulting share held in a Lifetime Dynasty Trust for that descendant.