Why a Statement of Intent Matters in Your Trust

The reasons you create a trust are personal and important. However, your intent or purpose for creating a trust can also have significant legal implications. Because of this, it is often critical for a trustmaker to clearly express their purpose in writing.

There are generally two ways to document a trustmaker’s intent, both commonly referred to as a statement of intent. Each serves a slightly different purpose.

Let’s look at both.

Statement of Intent Within the Trust Document

Many trust documents surprisingly do not clearly state why the trust was created. When this happens, trustees may not fully understand the trustmaker’s goals as they manage the trust.

A helpful solution is to include a separate statement of intent or purpose within the trust document itself.

Some common reasons for creating a trust include:

• Reducing or eliminating estate taxes
• Protecting assets from beneficiaries’ creditors or divorcing spouses
• Teaching beneficiaries financial responsibility
• Providing support for a disabled beneficiary
• Preserving a family home for future generations

Including this type of language can also help beneficiaries better understand your decisions. This is especially important if assets are divided unequally or if certain family members receive specific heirlooms or property.

Clear explanations can help reduce confusion, resentment, and potential family disputes.

Letters of Intent Outside the Trust Document

While a trust document outlines the legal structure, it may not be wise to include every detail of your wishes in the trust itself. Some flexibility is often needed, especially for trusts that may last for many years or even generations.

This is where a letter of intent becomes valuable.

A letter of intent is typically a nonbinding letter from the trustmaker to the trustee. It provides guidance on how the trustee should use their discretionary powers.

For example, trustees are often asked to determine what qualifies as expenses for:

• Health
• Education
• Maintenance
• Support

Different generations may interpret these terms very differently. A letter of intent can help explain what the trustmaker truly meant.

Unlike a legal document filled with formal language, a good letter of intent should be written in plain English, clearly explaining the trustmaker’s goals and values.

It can also provide guidance in delicate situations. For example, if the trustmaker has concerns about a particular beneficiary, they may prefer to explain those concerns privately in a letter rather than including them in the trust document itself.

Review and Update Your Intent Over Time

As life circumstances change, it is important to periodically review any statements of intent within your trust or letters of intent.

Doing so ensures that your documents continue to reflect your current wishes and guidance for those who will manage your trust in the future.

Learn More About Including a Statement of Intent in Your Estate Plan

If you would like to learn more about including statements or letters of intent in your estate plan, our office is here to help.