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Legal Definitions - sprinkling trust

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Definition of sprinkling trust

A sprinkling trust is a type of trust where the trustee has the power to distribute funds to the beneficiaries according to their needs. Unlike other trusts, where the trustee must follow strict instructions from the creator of the trust, a sprinkling trust allows the trustee to have more flexibility in giving funds to the beneficiaries.

For example, a family pot trust created for children can be a sprinkling trust. The trustee can give different amounts of money to each child for things like college and medical bills, depending on their needs.

Sprinkling trusts have the advantage of being able to allocate trust assets flexibly, but they also have the disadvantage of possibly allowing the trustee to manage the trust against the interests of the trust creator.

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Simple Definition

Term: Sprinkling Trust

Definition: A sprinkling trust is a type of trust where the person in charge of the trust (called the trustee) can give money to the people who are supposed to get it (called the beneficiaries) in different amounts, depending on what they need. This is different from other trusts where the trustee has to follow strict rules about who gets what. Sprinkling trusts are often used for families with children, so the trustee can give them money for things like college or medical bills. While sprinkling trusts are good for giving out money in a flexible way, they can also be risky because the trustee might not do what the person who made the trust wanted them to do.

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