Avoiding Trustee Traps: How to Write Trust Provisions That Actually Work
Creating a trust is one of the most effective ways to protect your legacy—but even a well-meaning clause can cause serious problems if it's not drafted with real-world administration in mind. Below are some of the common trust provisions that we’ve seen backfire—and how we help our clients avoid these pitfalls.
1. “Pot Trusts” and the Problem of Discretion
Many trusts authorize the trustee to distribute a single source of funds for multiple beneficiaries’ health, education, maintenance, and support (the “HEMS” standard). But when one beneficiary needs more than another, how should the trustee decide?
The problem: Balancing fairness among beneficiaries with differing needs.
The solution: Add clear preference language—for example, stating a preference for children over grandchildren, or including guidelines for major life events like education or illness.
2. Incentive Provisions: Purposeful or Problematic?
Some clients want to promote specific values—religious observance, entrepreneurship, or employment—but unclear or rigid language can make these provisions unworkable.
Examples that raise red flags:
*Requiring the beneficiary to live with specific religious values or marry within a certain religion
*Mandating full-time employment
*Conditioning distributions on business success
These provisions target very different objectives, but they all suffer from a common flaw - a lack of discernible objective measures to evaluate compliance. For example, is self-certification from a beneficiary that he lives with specific values sufficient? What constitutes business “success”? Does “full-time” employment include a stay at home parent? Tip: If you want to encourage certain behavior, focus on flexibility and give your trustee discretion to evaluate circumstances.
3. Substance Abuse Clauses: Well-Intentioned but Tricky
Trusts often restrict distributions to beneficiaries struggling with addiction—but who determines what qualifies as a problem? Who selects the treatment center? What if it fails?
We help clients draft provisions that:
*Allow the trustee to rely on third-party evaluations
*Provide funding for treatment
*Protect the trustee from liability
4. Prenup Requirements: Useful, But Legally Complex
Some trusts require beneficiaries to sign a prenuptial agreement before receiving distributions. While this can protect family wealth, it creates legal gray areas.
What makes a prenup “qualified”?
Can a trustee evaluate its effectiveness?
Consider empowering the trustee to seek a legal opinion and shielding them from liability for these complex decisions.
5. Why Definitions Matter So Much
Trustees—especially corporate trustees—rely on the definitions in your trust. Vague or conflicting definitions can delay administration or result in costly litigation.
Pro Tip: Clearly define terms like “descendant,” “disability,” or “spouse” to prevent confusion down the road.
6. Special Assets Require Special Planning
Trusts that hold unique assets—such as family businesses, real estate, art, or intellectual property—pose extra challenges.
Trustees may need:
*Specific powers to manage or sell these assets
*Appraisal waivers or valuation alternatives
*Clear directions about management and liability
We work closely with clients to draft asset-specific language that protects both the trust and the trustee.
Final Thoughts
Trustees don’t just carry out your wishes—they interpret and enforce them. The more clarity and flexibility you provide, the better your trustee can serve your loved ones.
At the Law Office of Elizabeth Roache, we bring deep experience and a practical approach to drafting and updating estate plans that stand the test of time. We serve families throughout Fairfield County, including Wilton, New Canaan, Westport, Norwalk, Darien, Weston, and Ridgefield.
Ready to get started? Schedule a consultation today to ensure your trust works for real people in real life.
