Who’s Going to Get It: Do You Really Know the Beneficiaries of Your Trust?

Today many estate plans contain irrevocable dynasty trusts that continue for the benefit of a spouse’s lifetime and then for the benefit of future generations. Your trust must clearly define the beneficiaries at each generation.

Who Are Your Descendants?

The old definition of "descendant" was: a person traced back to a specific ancestor through bloodlines. Modern families encompasses more than just blood heirs:

• Adopted beneficiaries. Should your trust's definition of "descendant" include a minor child  legally adopted by your child, grandchild, or great-grandchild? What about an adult legally adopted by your child, grandchild, or great-grandchild? What happens if your child, grandchild or great-grandchild gives up their naturally born child for adoption? Do you include a blood heir adopted from your family as your descendant? You should consider specifically including or excluding adopted minor and adult beneficiaries in your definition of “descendant.”

• Stepchildren. Should your definition of "descendant" include your child, grandchild, or great-grandchild's stepchildren? You may have the opportunity to get to know your stepchildren (and even your step grandchildren). Knowing them allows you to choose to specifically include them or exclude them as beneficiaries (in fact, you may want to include some and exclude others). It is important to specifically communicate whether your beneficiaries include stepchildren in future generations.

• Beneficiaries conceived using "assisted reproductive technology." Should the definition of “descendant” include a child, grandchild or great-grandchild conceived using artificial insemination? What about a child, grandchild or great-grandchild conceived using a surrogate mother? What about a child, grandchild or great-grandchild conceived using an anonymous sperm or egg donor? No one knows what the future definition of "assisted reproductive technology" will encompass. Your definition of "descendant" needs to specifically include or exclude heirs conceived using assisted reproductive technology.

Carefully Defining Your Beneficiaries Will Keep Your Heirs Out of Court

Your definition of “descendant” must carefully consider who is included twenty, thirty, or even fifty years into the future. Clearly defining the beneficiaries entitled to receive distributions from your trust allows for a smooth transition between generations. All the while keeping your heirs and trustees out of court.

If you have questions about your definition of "descendant" or would like to discuss how you can clearly define your trust beneficiaries, please contact us.