Introductions to a Trust Grantor’s Statement of Wishes
CREATING INCENTIVES FOR BENEFICIARIES
One of the most fun things about having a quality estate plan is being able to use that estate plan to influence others’ lives for the better. There are few things more fun than giving someone you care about a carrot on a stick so that by chasing after the carrot they accomplish something of worth to them and to the rest of society. The idea behind a GRANTOR’S STATEMENT OF WISHES is a way for a Grantor of a trust to give incentives for friends and family members to enhance their life and their lifestyle and to improve themselves personally.
For instance, once upon a time there was a woman named Joan who had so much money she wanted to give away $10,000 to her 18 year old nephew, Jim. As she thought about it she decided she wanted Jim to work for his $10,000, but by doing something fun. She thought long and hard but couldn’t come up with a clever idea. About that time it was nearing the 4th of July. One day Joan began reminiscing of the time when she was a teenager and she dressed up like Uncle Sam and marched in the parade and threw candy to the kids. She remembered how much fun that was for her, how excited the kids got, and how it taught her to appreciate the great country she lived in. That gave her the idea she needed, so she hurried and called Jim and asked him to come over to her house. When Jim arrived she told him, “If you will dress up like Uncle Sam and march in this year’s 4th of July parade waving a flag and throwing candy to the kids, I will give you $1,000. If you will do that each year for the next nine years I will give you $1,000 each year. Would you like $10,000?” At first Jim just laughed, but when he realized Joan was serious, he said in a nice way, “You’re crazy, Aunt Joan.” With a big smile on her lips and a twinkle in her eye Joan said, “I know, and it’s so much fun. I’ll even pay for the suit and candy each year!”
The purpose of a GRANTOR’S STATEMENT OF WISHES is similar to the story about Joan. A grantor uses his wealth as carrots to get friends or relatives to accomplish something that will make their lives better. The trick is for the grantor to be creative and to come up with fun, off-the-wall, or even serious or difficult tasks for the family and family members to do to get the carrot. One grantor offered an incentive to a beneficiary if she would climb a high mountain, knowing that to accomplish such a task the beneficiary would have to develop discipline and would also increase her self confidence because of what she had accomplished. Another grantor offered an incentive if the beneficiary would learn to play the piano, knowing that acquiring a musical skill would build the beneficiary’s confidence and would improve his life. From a beneficiary’s perspective, wouldn’t it feel good to accomplish something really worthwhile and then get paid for it?
The GRANTOR’S STATEMENT OF WISHES lists many tasks that the grantor recommends for her beneficiaries to do. One dictionary defines a task as a definite piece of work to be done,” and “a matter of considerable difficulty.” Some of the tasks may sound funny or strange, some may sound too difficult or too easy, some may even sound idealistic and impractical, but the purpose of the list is to provide the grantor with a broad range of ideas for her or him to choose from. The other reason is that a grantor may read one of the tasks and say to herself or himself, “I would be a better person if someone would have motivated me to do that.”
There are blanks in the form so that if a task prompts a creative idea for another task, the grantor may add tasks of his own (we might even add it to our list for the next grantor to consider, as long as the grantor that thought of the idea won’t charge us a royalty fee.)
Reasons For Recommended Tasks
As the grantor marks tasks which he or she wants the beneficiaries to accomplish, the grantor should make notes as to why he or she values that task, such as demonstrates high moral standards”, or will develop character, or “will build confidence”, or “will help you maintain your health”, or “I wish I would have done that when I was younger (I’m still young, you know)”, etc.
The following sections outline the procedure for recognizing the accomplishment and completion of objectives and tasks, and for distributing funds from the estate for the tasks. Basically, the trustee helps the beneficiary adopt or select recommended tasks (those marked by the grantor). Then the beneficiary sets goals or objectives that will accomplish or help him or her progress toward accomplishment of the task. The beneficiary and trustee meet each year to review the beneficiary’s objectives, progress and accomplishments. The beneficiary also provides evidence to verify progress and accomplishments. The trustee determines if the objectives have been met or the task has been accomplished. If so, the trustee distributes funds from the trust to the beneficiary, who walks away smiling because of the thing he or she accomplished and because of the extra money he or she has.
Meetings Between Trustee and Beneficiary
The beneficiary will meet with the trustee once a year to adopt any one or more of the tasks checked by the Grantor. The trustee will also help the beneficiary consider reasons why the Grantor may have wanted the beneficiary to accomplish the chosen tasks. The beneficiary will then set goals or objectives toward completion of one or more of the tasks checked by the Grantors. The trustee will also help the beneficiary consider appropriate ways to provide evidence to verify accomplishments.
Sometimes goals will not need to be set depending on the task. For instance, if a grantor has marked “plant a tree” and the beneficiary planted a tree without previously setting that as a goal or objective, the trustee may still distribute funds for the accomplishment of the task. Not all good in the world has to be planned beforehand.
The meeting between the trustee and the beneficiary shall be held each year, on a date as near to the anniversary of the first meeting as practical, to review accomplishment of goals or objectives from the past year and to set goals or objectives for the coming year. The beneficiary may adopt different tasks from time to time as desired, but it is recommended that such changes be made only at the annual meeting with the trustee.
Evidence to Verify Accomplishments
All tasks require some kind of evidence to verify the achievement of the beneficiary. However, appropriate types of evidence are not explained in the GRANTOR’S STATEMENT OF WISHES. Therefore, in the annual meetings the trustee and the beneficiary will discuss what type of evidence the beneficiary will produce for each marked task to verify the progress of the achievement of the task. The trustee and the beneficiary are encouraged to use their imaginations to figure out good ways of evidencing accomplishment of the tasks.
The evidence of accomplishment of goals and objectives shall be kept in an ACHIEVEMENT NOTEBOOK. The notebook shall be purchased by the trustee using trust funds, and shall be updated from year to year by the beneficiary. The ACHIEVEMENT NOTEBOOK will contain the documents, pictures, news articles, written and signed statements of third party witnesses, diaries, or other such items showing the achievements of the beneficiary. The trustee has the right and is encouraged to contact third parties to verify the accomplishments of the beneficiary.
For an example of evidencing an achievement, suppose the Grantor recommended and the beneficiary adopted the task and goal of running a marathon. The trustee and the beneficiary may discuss ways of showing evidence of the completion of the race, such as an official certificate of completion if the race officials provide such certificates. Or perhaps a friend or family member of the racer may take pictures of the beneficiary running in the race, including the point of crossing the finish line. Those items would be included in the ACHIEVEMENT NOTEBOOK.
If the evidence includes items that do not fit easily in the notebook, such as a video tape, the notebook should contain a description and location of the items. The items should be kept in a specific place where they won’t be lost or destroyed.
It is in the best interests of the beneficiary to provide accurate, thorough, and meaningful evidence for the trustee. Better evidence may result in a larger distribution form the trustee. Appropriate evidence might include, but is not limited to, statements from instructors, membership certificates or other membership records, pictures, statements from witness or participants, statements from parents, photographs, etc.
The grantors encourage the beneficiary to save the Achievement Notebook as a history of his or her life and for later reference when he or she wants to make a statement of wishes someday.
Distributions of Funds
The trustees have discretion to distribute trust funds, over and above any other distributions which the trustees make under the trust, to beneficiaries who successfully accomplish the tasks recommended by the grantor.
The amount of the distribution from the trust to each beneficiary shall be based on the good faith progress of each beneficiary toward the goals or objectives set or the accomplishment of success in the tasks adopted. If the beneficiary has made no progress or reached no goals or objectives, it is the wish of the Grantor that the trustee give the beneficiary no distribution. However, if the beneficiary has made a good faith effort of has reached or exceeded the goals or objectives set, the trustee is encouraged to distribute income and principle as a bonus for the beneficiary’s efforts or success. It is the wish of the Grantor that the distribution be commensurate with the effort expended or success achieved. For instance, if the task is to win a competition, but the beneficiary only places third or fourth after a sincere effort, the trustee is encouraged to distribute and appropriate amount as a reward for the effort made and the degree of success achieved.
The trustee may distribute trust funds to the beneficiary for purchase of tools, equipment, or materials to pursue adopted tasks.
In forming the reason for distributions from trust funds, the trustee is encouraged to consider the goal set, the effort expended, the result achieved, and the honesty and integrity of the notebook and the beneficiary as shown by the interview (i.e. if the beneficiary almost attained the objective but provided exceptional evidence and an outstanding interview, the trustee might compensate for the shortfall with the counterbalancing strengths). It is the wish of the Grantor that the higher the standard achieved and evidenced by the beneficiary the higher the distribution to the beneficiary from the trust principal and income.
The trustee may obtain advisors to serve as an advisory committee to help the trustee administer the GRANTOR’S STATEMENT OF WISHES. The advisory committee may help adopt tasks, may help set goals, may help suggest ways to evidence accomplishment, may help determine proper amounts for distribution to beneficiaries, and may assist the trustee in any other manner deemed necessary or helpful by the trustee. The trustee has the final say over all decisions of the advisors.
For instance, if the Grantor has put an X by “Climb a 14,000 foot mountain,” and if the beneficiary adopts that task, the trustee may need advice from someone experienced in mountain climbing as to how to assist the beneficiary accomplish the goal. The advisor may suggest safety precautions, financing of the venture, travel considerations, what equipment to rent or buy, etc.
The trustee may also want help deciding on what kind of evidence to require from the beneficiary to show achievement of the goal, or what accomplishment of a certain task is worth. Advisory board members might be school teacher, coaches, instructors, close friends, religious leaders, family members, or anyone else whose experience or relationship to the beneficiary will assist the process.
The grantors are encouraged to make final comments to beneficiaries at the end of the STATEMENT OF WISHES. The comments may even take the form of a letter to be attached to the form which shares the grantor’s philosophies, experiences, lessons learned, joys, etc. It gives the grantors one last shot at a speech which the beneficiary may listen to.
Have fun, live cleanly and honestly, make money or value for your family, provide a service to society, and involve yourself in business endeavors. That’s what life is all about!
The content of this memorandum is general in nature and is meant to be used for informational purposes only. Due to possible changes in the law and its interpretation as well as the uniqueness of each individual’s situation, this memorandum should not be relied upon as an expression of legal advice. Before any action is taken by the reader, it is imperative that legal counsel or professional advisors be consulted.