A trust agreement can direct the purposes for which distributions can be made. A trustee can be provided discretion to make distributions for the benefit of a child for specific purposes. These might include:
Support Distributions:
You could direct the Trustee named by you to make distributions to support the child with living expenses associated with their current standard of living. These types of distributions could include:
- Purchasing health insurance or covering health care costs, including dental expenses;
- Food and shelter expenses; and
- Transportation-related expenses, such as the purchase of a vehicle.
Other Types of Discretionary Distributions:
You could direct the Trustee named by you to make the following types of discretionary distributions to the child out of their respective shares:
- assist with the cost of a wedding;
- assist the child in entering into or maintaining a business or profession;
- assist the child with the costs associated with the purchase of a home;
- allow the child to make charitable gifts directly to tax-exempt organizations; or
- allow the child to participate in work projects, domestic or international, such as famine or hunger relief, or participate full-time in charitable causes.
“Ordering” of Discretionary Distributions
You might decide that a beneficiary is entitled to receive distributions for one of the purposes stated above, but only if other assets or income are not available to the beneficiary. In other words, a beneficiary could request a distribution from the trust only if the beneficiary does not have income or assets available to him or her to meet such expenses.
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