Wealth of Wisdom

CHAPTER 18Expressing Purpose in Your Trusts

John A. Warnick

For the last decade or so of his active practice as a lawyer, my mentor James “Jay” Hughes would not take on a client to write trust documents if the client did not include in his or her trust some such statement as the following: “This trust is a gift of love. Its purpose is to enhance the lives of the beneficiaries.”

Those sentences are not legal language. No court is going to seek to interpret what is meant by a “gift of love” or what sorts of distributions are necessitated by “enhancement” of a life. That said, including such a “Purpose Clause” is essential to ensuring that the trust fulfills the hopes you have for it and becomes a true benefit to your beneficiaries.

If trust creators fail to explain the why behind the creation of the trust, then beneficiaries are left to infer that purpose for themselves. Given that trusts are festooned with cold, impersonal, legal language, beneficiaries often wonder, “Did they not trust me?” “Did they think I'd blow it?” “What was more important to them—my well-being or keeping me away from the money?” These questions haunt far too many beneficiaries who struggle to see the positive side of their trust. Instead of viewing it as an opportunity, they consider it an obstacle.

The number of purposes for a trust are limitless. It is up to trust creators to decide what matters most—what they want to accomplish and what the impact of their trust will be. It can be helpful to consider ...