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

As a Grantor Retained Annuity Trust,
diversification is inconsistent with the
special purpose of the Trust, and the
potential gains to be derived from asset
concentration dominate any
considerations related to economic factors
and inflation (or deflation) during the term
of the Trust. Further, such concentration
is not inconsistent with tax considerations
applicable to the trust and beneficiaries,
liquidity demands of the Trust, or the
objectives of the Trust regarding
distributions to either the annuity or
remainder beneficiaries.
The Grantor therefore specifically directs
the Trustee to retain as a part of the Trust
[the funding asset], including any
successor entity or organization, without
regard to the value of such [funding asset]
in relation to the value of the Trust until
the expiration of the Fixed Term, and the
Grantor hereby exonerates the Trustee
from liability for continuing to retain [the
funding asset] during the Fixed Term
ii. Longer-term GRAT or IDGT
Provision
Indicates purpose of trust
(here simply asserted
without more) as
inconsistent with
diversification (§3) and
then aligns §2(b) factors
to support that assertion.
Substitute Rule: Here,
very simple—“keep
asset”
Exculpation: Direct and
complete (good faith
assumed in acceptance of
trust mandate)
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 limiting
the duty to diversify the assets of the Trust
in light of the special circumstances of
this trust.
Diversification is not a dominant need of
this Grantor Retained Annuity Trust but
may become so over the term of the Trust.
This Trust is intended to support the
annuity payment to the current beneficiary
and any interest of the remainder
beneficiary derives solely from excess
gains that may derive from asset
concentration. Economic factors,
inflation (or deflation), taxes and liquidity
are not of importance to the purpose of the
Calls forth the source of
authority (§1(b)) and
states the intent is to
limiting a UPIA
provision
Indicates purpose of
trust. As trust term
increases, purpose
elaboration increases as
does the elaboration of
how the purpose aligns
with the §2(b) factors.
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