Sprinkling Trusts

With a sprinkling trust (also known as a spray trust), trustees are given a great deal of flexibility when it comes to giving out the assets held in trust in order to provide for what beneficiaries really need. What usually happens with a trust is that the grantor (the person who makes the trust) leaves specific instructions to the trustee about how they are to run the trust and to give out its funds, instructions that must be followed. While a grantor can still outline their wishes in a sprinkling trust, the trustee is the one who gets to give the final word on how the trust will be run.

Reasons to Create a Sprinkling Trust

A spray trust can be a good idea when the grantor is confident that they can rely on the trustee to make the right decisions, and when the grantor wants there to be flexibility when it comes to giving out funds so that they genuinely help the beneficiaries instead of limiting them to rigid schedules. A typical example of a sprinkling trust is the family pot trust variety, one created by a parent or grandparent in order to meet the future needs of their children or grandkids.

How to Create a Sprinkling Trust

A grantor must write up and notarize a trust that covers the following issues:

  • Who will be the trustee
  • Which person(s) will be a successor trustee
  • Who the beneficiaries are
  • Directions for the trustee
  • Details on when the trust should expire and how

As an illustration, two parents may want to leave a sprinkling trust to their three children, who have yet to graduate high school. They cannot yet know what their financial needs will be in the future. So the parents create a sprinkling trust, a family pot trust, and they become the first trustees. They name the kid's aunt and uncle as the successor trustees. Their directions simply state that the funds must be used to help any one of the kids who requires financial help. The trustee (or trustees) can then decide when and how much to give each kid for college, tutoring, medical expenses, etc. Finally, the parents stipulate that the trust will be brought to an end once their youngest becomes 30; the trust says to then equally divide the remainder of the funds.

As there is so much flexibility with these trusts, it is sometimes possible to make one on your own. But the more directions you want to leave for the trustee(s), the more you may need an estate planning lawyer's assistance. In order to understand all the ramifications of your state's laws, and your options when it comes to creating a will or trust, be sure to consult a legal expert from our directory of qualified probate attorneys today.