“Family trust” is the general term given to a revocable or irrevocable trust which is in place for the benefit of all or certain members of a family. In some older trusts, it may be called a “residuary trust” depending on how the rest of the trust instrument is structured, but it is typically the same thing.
In practice, a family trust is usually created in one of two ways. First, a settlor/grantor (i.e., trust-maker) creates the trust for his/her benefit during his/her lifetime. After his/her death, the last expenses of the trust-maker are paid and the remainder of the trust is transferred to the successor trustee. The successor trustee will then administer the trusts in accordance with its directives, and there are few limits outside of how the trust can be structured beyond one’s own imagination. The second (less common) way a family trust is usually created is where the trust-maker creates one directly by vesting title in the trustee and providing trust instructions on how and when to use the trust assets for the benefit of the beneficiaries/family. This way is less common because there is an understandable preference for trust-makers to set up the trust for their benefit during their lifetime.
Regardless of how the family trust is created, how that trust is to be administered may vary. Based on experience, popular directives include the successor trustee distributing money, in whole or in part, to beneficiaries’ at certain intervals (e.g., college graduation, marriage, reaching a certain age), that income be distributed quarterly/annually to beneficiaries, or that the trust be fully distributed when a beneficiary reaches a certain age.
We have been involved in all aspects of the family trust: drafting and structuring, representing a trustee, and representing a beneficiary understanding his/her rights under the trust. We have also handled litigation pertaining to breach of trust and breach of fiduciary duty; in less contested, adversarial circumstances, we have also obtained clarification from the probate court regarding how the trust should be distributed when the instrument is ambiguous.
Contact with questions.