If child is sole beneficiary and sole trustee, then child cannot make discretionary distributions to self without losing essentially all the benefits of the trust.I'm assuming having the child as the trustee is what makes the most sense.
The frequently noted workaround is to allow child to hire a co-trustee who is willing to distribute whatever child wants, after which the child can fire the co-trustee (or maybe let co-trustee retain position with no pay and no responsibilities). Well-respected attorneys describe this method, so it must work. I personally am surprised it works, because even I as a simple layman can see through the illusion.
As a layman I have no way to examine case law to identify cases where a beneficiary has exercised a co-trustee to distribute in this way, then was sued, and the judge actually believed that the trust's assets were unreachable due to lack of control by beneficiary. The majority of cases must fall this way, or it wouldn't be a suggested technique. It's possible it just "works because it works," and there isn't really a satisfying logical explanation.
Best wishes.
Statistics: Posted by senex — Sat Aug 17, 2024 8:28 pm — Replies 42 — Views 7973