Drafting Do’s and Don’ts, May/June 2018

This installment of “Drafting Do’s and Don’ts” pertains to inconsistent drafting. There are two basic forms of drafting inconsistency: inconsistent drafting philosophy and inconsistency in the technical aspects of a trust instrument.

The most common philosophical inconsistencies deal with the provisions governing trusts that benefit different generations. One generation may be given certain authorities or particular benefits while those same aspects are denied to subsequent generations. A certain recently reviewed trust was created that was exempt from the generation-skipping tax by benefiting a child but not a grandchild. The philosophical inconsistency would become apparent when the child would die. The instructions stipulated the income would go to the beneficiaries or the beneficiaries issue. This translates to that one generation between the two other generations may not receive any income from the trust, and that the third generation does not have to wait until the passing of the previous generation to receive distributions.

Technical inconsistencies concern mandatory income provisions that are ambiguous, repetitive, or redundant. A familiar theme is to dictate that income from the trust is to pay beneficiaries health, education, maintenance, and support, but this stipulation is unnecessary if distributions must be made at least annually.

See Stephen Liss, Drafting Do’s and Don’ts, Probate and Property Magazine, Vol. 32, No. 3, May/June 2018.