Probate & Trust Law Section Conference Manual ... - Minnesota CLE

How specific should you be?—Good question. While vagueness in
statement of purpose may give little comfort to the fiduciary, overspecification
of purpose may lead to unproductive future sparing over
the scope of the purpose statement. Consider a clear, simple
statement of purpose. Impose specific conditions as part of a
statement of administration to meet that purpose.
c. Address §2(b) factors
Even though you have expressly stated an intent to restrict the standard and
stated how that restriction serves the purpose of the trust, address all relevant
§2(b) facts.
d. Substitute Standard
If you restrict, expand or eliminate the §3 duty, failure to specify a substitute
standard does little to ensure that the action will be respected. The standard
may be simple (“don’t sell”) or more nuanced, but it should be clear. Ask
yourself whether a court could enforce the standard. For longer trusts,
assuming a fiduciary will accept, chances are that a court will eventually be
called upon to review.
e. Exculpation
Exculpate the fiduciary for following the directive. Absent specific statutory
authority respecting a broad release of liability, “good faith” is probably the
baseline duty that the fiduciary must follow to avail itself of the exculpation
provision. UTC §801 is a fair statement of the common law in this regard.
3. Short-term Estate Planning Trusts
a. Rationale for Negating: Seeking arbitrage advantage not merely compensated
market risk
b. Direct Retention
i. Always. Grantor can substitute if desired
ii. Sell if. Longer GRAT/IDGT
c. Sample Clause
i. Short-term GRAT—Two to Three Year GRAT
Provision
UPIA Reference
The Grantor hereby specifically exercises
all rights that he may have to limit, restrict
or eliminate Trustee duties under
Minnesota Statutes §510B.15, the
Uniform Prudent Investor Act, by
eliminating the duty to diversify the assets
of the Trust in light of the special
circumstances of this trust.
Calls forth the source of
authority (§1(b)) and
states the intent is to
eliminate a UPIA
provision
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