Generation to Generation

Most of the “cautionary” attention is being garnered by Burden’s prenuptial agreement with James. There were certainly missteps in the prenup process: The drafting, disclosure, and negotiation began closer to the wedding date than most attorneys would like. Burden introduced the idea to James, driven solely by a long-ago promise to her mother and not by any conviction that she could benefit from it herself. The terms most disadvantageous to Burden were introduced by James late in the process, after urgency had set in. And then Burden signed the agreement with those terms, against her legal counsel’s advice.

But there is another estate planning vehicle Burden mentions that deserves equal, if not greater, attention: the trusts for her benefit, one created by her mother’s stepfather and the other by her father’s father. According to Burden, these two trusts – her Descendant’s Trusts – “could be accessed, with the trustees’ consent, for a legitimate purpose.” I am not privy to the trust agreements themselves, nor can I know all the factors the trustees considered when making their distribution decisions. However, descendants’ trusts are utilized in many estate plans, so it is worth exploring ways these Descendant’s Trusts could have been heroes in Burden’s story.

• The Descendant’s Trusts might have obviated the need for the prenuptial agreement.

Under current law, trusts created for a beneficiary by a parent or grandparent are generally not subject to the claims of the beneficiary’s creditors, including a divorcing spouse. Thus, the type of family money that Burden’s mother sought to protect when she urged Burden to have a prenup was probably already protected by the terms of the Descendant’s Trusts. When I read Burden’s comment on the prenup, “I didn’t think I needed it,” I found myself nodding in agreement, assuming she allowed the lion’s share of the assets to remain in trust.

• The trustees of the Descendant’s Trusts could have been less liberal in their outright distributions to Burden.

Trustees of discretionary trusts like the ones Burden describes are always to be guided by the intent of their original creators, in this case the maternal step-grandfather and paternal grandfather. If the trustees had understood – either from their own knowledge of the creators’ thinking, a side letter from the creator, or otherwise – that they were to be cautious in distributing funds to Burden, they may have preserved a greater share of assets in the Descendant’s Trusts for a time when Burden’s fortunes might turn.

• The trustees of the Descendant’s Trusts might have required that Burden use the trust distributions to take title to the real estate in her sole name.

During the marriage, Burden and her husband acquired an apartment in New York City and a home on Martha’s Vineyard thanks to substantial distributions to Burden from the Descendant’s Trusts. At each closing, Burden asked that the title to the property be placed in joint name with James. This was a risk, as the prenup required that assets owned jointly at the time of a divorce be divided between them. Who could have disrupted this chain of events? The trustees. For example, if consistent with donor intent, they could have conditioned the distributions to Burden on her promise to take title to the properties in her name alone.

• The Descendant’s Trusts might have purchased the two residences as trust investments.

Trustees often have the option of acquiring a residence for a beneficiary (and the beneficiary’s family) as an investment of the trust, instead of paying out trust funds for the beneficiary to buy the property on their own. In this case, the trustees might have chosen to invest in the New York City apartment and/or the Martha’s Vineyard home for Burden’s (and her family’s) use. There’s complexity and not every trust situation can accommodate such an investment, but if conditions were right, it could have kept one or both residences under the umbrella of the Descendant’s Trusts, outside of the reach of Burden’s creditors and, eventually, James.

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Burden shared that writing Strangers helped her to take responsibility for the points “when I hadn’t protected myself, when I had chosen comfort over conflict, not knowing over knowing.” As it has turned out, her unsparing self-reflection can help others, too, consider what steps might be wise to take in their own estate planning, including planning for how their children will inherit. Burden leaves us to ponder: “doesn’t it all look different, wouldn’t your own story look different, if you knew how it was going to end?”