Confusing language in the Declaration of Trust

[anikolop]

What is the name of your state? Texas

I am dealing with a Declaration of Trust that has apparently conflicting language. Under the paragraph SUCCESSOR BENEFICIARIES it says: "Upon the death of the Settlor, the persons herein named as Successor Beneficiaries shall receive the following: Grandson 50%, Granddaughter 50%."

However, the very next paragraph, titled SPECIAL INSTRUCTIONS, states: "All income from Trustor's assets are to be paid to Daughter on a monthly basis during Daughter's lifetime. At Daughter's death all principal and undistributed income is to be distributed to Grandson and Granddaughter in equal shares."

My question is this... The first paragraph seems to say that once the settlor dies, then both grandchildren immediately receive half of the assets. The next paragraph states that these grandchildren have to wait until the daughter dies. Any thoughts on how to interpret this? Thanks.

 

[BlondiePB]

What is the name of your state? Texas

I am dealing with a Declaration of Trust that has apparently conflicting language. Under the paragraph SUCCESSOR BENEFICIARIES it says: "Upon the death of the Settlor, the persons herein named as Successor Beneficiaries shall receive the following: Grandson 50%, Granddaughter 50%."

However, the very next paragraph, titled SPECIAL INSTRUCTIONS, states: "All income from Trustor's assets are to be paid to Daughter on a monthly basis during Daughter's lifetime. At Daughter's death all principal and undistributed income is to be distributed to Grandson and Granddaughter in equal shares."

My question is this... The first paragraph seems to say that once the settlor dies, then both grandchildren immediately receive half of the assets. The next paragraph states that these grandchildren have to wait until the daughter dies. Any thoughts on how to interpret this? Thanks.

Income and principal are two different things. Learn the difference between the two and you will understand.

 

[anikolop]

I am aware of the difference between income and principal. What is confusing to me is the first paragraph which states that at the settlor's death the two grandchildren immediately receive 50% each. How is this possible when the next paragraph states that at the settlor's death it is the Daughter who is to start receiving income from the trust? If the Daughter starts receiving income then that must mean that the two Grandchildren must wait till she dies before they can receive the principal and any undistributed income. Please help!

 

[BlondiePB]

If the Daughter starts receiving income then that must mean that the two Grandchildren must wait till she dies before they can receive the principal and any undistributed income

This is correct. The "special intructions" ensured that the settlor's daughter received an income as long as she is alive, and the grandchildren have to wait. There's better ways to write trust documents for the same thing to happen.