There are several common phrases and words often referenced in a trust document to describe the purposes for discretionary distributions. These usually fall under the category of standard of living, emergencies, welfare, support and maintenance, education and health.
When the creator of the trust has included provisions for the trustee to make their own calls about what applies for trust distribution, it’s helpful for a trustee to get up to speed on the expenses generally included. When a trust is vague, this leaves more room for interpretation by the trustee. For example, “living expenses” could include many different kinds of costs and a beneficiary of a trust might be prepared to argue the same.
A trustee should always be familiar with the terms of the trust as well as these general situations that could apply for discretionary distributions.
Standard of living refers to the quality of life that the beneficiary lived immediately prior to the death of the creator of the trust; emergencies, as you might anticipate, have to do with unexpected occurrence; welfare relates to the comfort and wellbeing of a person physically; support and maintenance refer to normal living expenses like food, insurance premiums, medical care, housing and clothing, education refers to preschool, primary and secondary education and health refers to mental health care and hospitalization, medical supplies and devices, routine medical services, ancillary health care and even premiums for health insurance.
Reading through the terms of the trust and understanding the trustor’s purpose in creating this tool can give you a great window into what they intended for the purposes of the trust. If you still have further questions, schedule a consultation with an New Hampshire or Maine estate planning firm.