For many, an important estate planning goal is to encourage children or other heirs to lead responsible, productive lives. One tool for achieving this goal is a principle trust.
By providing your trustee with guiding values and principles rather than the set of rigid rules found in an incentive trust, a principle trust may be an effective way to accomplish your objectives. However, not everyone will be comfortable with giving a trustee the broad discretion a principle trust requires.
Discretion and Flexibility
A principle trust guides the trustee’s decisions by setting forth the principles and values you hope to instill in your beneficiaries. These principles and values may include virtually anything, from education and gainful employment to charitable endeavors and other socially beneficial activities.
By providing the trustee with the discretion and flexibility to deal with each beneficiary and each situation on a case-by-case basis, it’s more likely that the trust will reward behaviors that are consistent with your principles and discourage those that are not.