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Using Age Provisions in a Will or Trust

Prince Harry, the younger son of Prince Charles, the Prince of Wales, and his former wife, the late Diana Spencer, turned 30 last year. This milestone means Prince Harry will receive more than $17 million from his late mother’s estate, according to the modified terms of a trust established as part of her estate plan.

Diana, Princess of Wales, made a last will and testament in 1993 and amended it in 1996. She left the bulk of her estate in trust for her two sons, Prince Harry and Prince William (now the Duke of Cambridge). Originally, the trust assets were to be paid to each prince when they turned 25. But the executors of the estate obtained a “variance” from an English probate court, modifying the terms to delay distribution until the children turned 30.

Age Provisions in Trusts

Setting aside the unusual decision by the British authorities to alter the term of a valid will, age provisions of this sort are quite commonplace in estate planning in the United States. Most trust instruments make a distinction between distributions of income and principal. For example, you might specify that a beneficiary can start receiving the trust’s income at the age of 21, while delaying distribution of principal until the person reaches the age of 25.

A common estate planning practice is to divide distribution of trust principal into thirds. Let us say you want to leave a large inheritance to a child. Your trust could specify the child will receive one-third of the inheritance at the age of 21, the second third at age 25, and the final distribution at age 30. Meanwhile, the child could still receive an annual distribution of the trust income to provide for his or her expenses.

If you have more than one child or beneficiary subject to an age-specific distribution, you should consider the nature of your present assets. It is generally easier to divide liquid assets, i.e., cash. If your estate includes a significant amount of real property or other physical assets, your successor trustee will be responsible for ensuring there is an equal distribution to all beneficiaries.

Selecting a Trustee

Remember, if you leave any assets in trust, you must also nominate a trustee to administer those assets until your children reach the designated age for final distribution. The trustee is responsible for administering all trust assets in the best interests of your beneficiaries. Your trust may also authorize the trustee to make distributions of income (or principal) at any time for the beneficiary’s benefit. It is common practice to allow such distributions for the child’s “health, support, maintenance and education,” as the trustee judges appropriate.

Establishing a trust and nominating a successor trustee is just one part of the estate planning process. Even if you will not leave a large estate like the late Princess Diana, it is still important to make sure your children and other loved ones will be provided for after your death. If you need to speak with an experienced California estate planning attorney, contact the Law Office of Scott C. Soady today.

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