DOES YOUR ESTATE PLAN NEED A SPRINKLER?

Sprinkling powers are being used by many planners.

But, many more people may need them. Most people still are not aware of this excellent planning device; they still think their estate plan is controlled by the straight jacket of a simple will.

In the sessions I have with people who are planning their estates, I find most are amazed when I tell them about sprinkling powers.

But this wonderful estate planning device is coming more and more into vogue and could be useful to you.

Here's how it works.

When you have two or more heirs or charitable causes to whom you want to leave a stream of income, you can create a trust and tell your trustee to sprinkle the income among the beneficiaries.

Let's say:

1. You have two heirs, one of whom is somewhat financially disadvantaged.

2. You create a trust, either in life or in your will, which will produce an annual income.

3. You want the income to go to your two heirs.

4. You want the trust to last until your youngest heir turns 60 years of age.

Instructions in your trust can tell the trustee that you want the income, in most years, to be divided:

• Fifty percent to heir A.
• Fifty percent to heir B.

But, you can also give the trustee sprinkling powers. You can say, for example,

"I order the trustee to produce all the income that a prudent man can generate under the economic conditions of the time and to distribute all such income to the named beneficiaries every year. However, the percentages mentioned previously are for guidance purposes only.

"I give my trustee complete sprinkling powers. If one of my heirs should experience any kind of health problem or other uncontrollable financial problem, I order my trustee to use his judgment as to how much each of the beneficiaries should receive in that year. He can sprinkle the income among the named beneficiaries in any proportion he deems best."

Your prudent trustee would then, most likely, check on each beneficiary toward the end of each year to see if their circumstances were normal. Given a usual situation, he would divide the income according to the mentioned percentages.

However, if one of the heirs reported that a child was struck with a serious illness or disease that year and that the family was facing high expenses for care, he could sprinkle more of that year's income to that heir.

Estate planning methods are greatly flexible. You are not restricted by the strait jacket of a will which merely gives all away at one time in a straight division of your assets.

Your estate may need a sprinkler.