Sprinkling Trust Definition:
Discretion given to a trustee to distribute income from a trust fund disproportionately between beneficiaries.
Also sometimes referred to as a spray trust.
In Friedman, Justice Fletcher of the Supreme Court of Georgia adopted this definition:
"A spray or sprinkling trust is one in which the trustee has the discretion to either accumulate or distribute income."
Generally, without contrary instruction, a trustee must keep an even hand between beneficiaries of a trust, such as an executor and child beneficiaries.
In the case of child beneficiaries, the discerning settlor (in the case of an estate, more commonly referred to as the testator) will delay giving the child his or her share until they at least reach the age of majority.
During that time, in the event that there are more than one such minor beneficiary, the executor/trustee must keep an even hand and distribute any income from invested trust funds evenly between the beneficiaries.
But a testator may direct the executor and trustee to use his or her discretion in sprinkling the income proceeds to one particular and preferred child/beneficiary who in the mind of the testator, has greater need (eg. may be handicapped or economically disadvantaged) or is more deserving for such advantageous treatment. Or the testator may not designate any particular beneficiary but simply leave the trustee with "sprinkling discretion", as she or he sees fit and not otherwise bound to an "even hand" as regards income.
According to one Canadian jurist1, a sprinkling trust is the same device otherwise known to other common law jurisdictions as a discretionary trust.
- Friedman v Teplis, 492 SE 2d 885 (1997; at footnote #1)
- Waters, D., Gillen, Mark and Smith, L., Waters' Law of Trusts in Canada, 3rd Ed. (Toronto: Thomson-Carswell, 2006), pages 1145-1148 [note 1]
Categories & Topics: