In our articles, we often highlight the importance of incorporating trusts into estate plans. We have found that more and more clients seek to leave their assets (whether at a client’s death or through lifetime gifting) in trusts for their children (or other intended beneficiaries) for numerous reasons, whether it be for tax planning, creditor protection, spendthrift protection or all of the above. Our typical approach is to design trusts to last for a beneficiary’s lifetime (as opposed to terminating upon a selected age at which it is hoped financial maturity would have been attained), while permitting discretionary distributions to a beneficiary to the extent that a beneficiary may need to access the trust funds.

For those trusts that will remain in existence at the time of a beneficiary’s death, there are default provisions, as designed by the client, directing the disposition of the remaining trust funds at the beneficiary’s death. In the case of a trust for a child, clients generally choose to provide that the remaining trust assets would pass to or in continuing trusts for that child’s children (i.e., the client’s grandchildren), or if a beneficiary dies without any children, for the beneficiary’s siblings. Of course, this varies depending on the structure of a particular client’s family tree, but the key concept is that the creator of the trust sets forth who the remainder beneficiaries will be.