Being a Strategic Trustee
What is it?
A strategic trustee goes beyond basic administration to actively optimize the trust for beneficiaries. This includes: tax-efficient distribution timing, coordinating with beneficiaries' other income, considering the impact of distributions on beneficiaries' motivation and financial habits, maintaining family harmony, investing appropriately for each beneficiary's timeline and needs, and using discretionary powers wisely.
Why is it important?
Strategic trusteeship can dramatically increase the value beneficiaries receive. Examples: timing distributions to low-income years reduces taxes; making loans instead of distributions preserves trust assets; using trust funds for experiences (education, travel) rather than just cash builds human capital; coordinating with other family trusts prevents duplication. A thoughtful trustee is an invaluable gift to beneficiaries.
Example Language
The Trustee is encouraged to consider each beneficiary's overall financial situation, tax bracket, maturity, and life circumstances when making discretionary distributions. The Trustee may make distributions for opportunities that build the beneficiary's character, education, and career rather than simply providing funds.