The question of incorporating a “moral clause” into a trust, restricting the use of funds for purposes deemed unethical, is increasingly common, yet legally complex, in estate planning. Steve Bliss, as an experienced estate planning attorney in Wildomar, frequently encounters clients wanting to ensure their wealth aligns with their values even after their passing. While the law generally respects the right to dispose of property as one sees fit, courts are hesitant to enforce subjective standards like “unethical” without clear, objective definitions. This is because such clauses can easily lead to disputes and create an impossible burden on trustees to determine what constitutes acceptable behavior, or acceptable use of funds. Approximately 68% of high-net-worth individuals express a desire to incorporate socially responsible investing and philanthropic goals into their estate plans, yet fewer than 15% actually do, often due to legal concerns regarding enforceability.
What happens if my trust is considered unenforceable?
If a moral clause is deemed too vague or subjective, a court might invalidate it, leaving the trustee with broad discretion over the funds. This could lead to the very outcomes the grantor intended to avoid. For example, a clause stating funds “shall not be used for activities harmful to the environment” could be challenged if the definition of “harmful” is unclear. A trustee might then be forced to distribute funds to a company engaged in a legal, but arguably environmentally damaging, activity. The key to a potentially enforceable clause is to define “unethical” with precision. Instead of broad terms, consider specifying prohibited activities—for example, funding organizations known for human rights violations, or supporting industries specifically deemed harmful, like the manufacturing of certain weapons.
How can I draft a moral clause that will stand up in court?
Drafting an enforceable moral clause requires careful consideration and precise language. Steve Bliss recommends focusing on objective standards and avoiding subjective moral judgments. Instead of “unethical,” consider using terms like “illegal,” “fraudulent,” or “contrary to established public policy.” For instance, a clause might state that funds “shall not be used to support any organization that has been convicted of federal felonies” – a clear, objective standard. Additionally, specifying a dispute resolution mechanism—perhaps requiring an independent ethics committee to review potential violations—can increase the likelihood of enforceability. One should also understand the potential for unintended consequences. A seemingly well-intentioned clause could inadvertently restrict legitimate charitable activities or create financial hardship for beneficiaries. Consider using a “vesting” provision: funds held in trust for a specific period, and then fully distributed, effectively removing the moral restrictions.
I’ve heard stories about trusts gone wrong – can you share an example?
Old Man Hemlock was a man of strong convictions. He was a self-made man, and he wanted to be sure that his wealth didn’t fall into the hands of those who didn’t share his values. He included a clause in his trust that funds “should not be used to support activities that demean human dignity.” His grandson, a budding filmmaker, received funds from the trust to finance a documentary. The film, while artistically ambitious, explored controversial themes, and some conservative groups deemed it offensive. A dispute arose, and the trustee, unsure how to interpret “demean human dignity,” was caught in a legal battle. The courts ultimately found the clause too vague and unenforceable, leaving the grandson free to use the funds as he pleased. The legal fees ate up a significant portion of the trust assets, and Hemlock’s intention to control the use of his wealth was lost. It was a painful lesson about the importance of clarity and precision in estate planning.
How did my neighbor get it right with their trust and moral restrictions?
My neighbor, Mrs. Gable, was equally passionate about her values, but she approached her estate planning with a different strategy. She worked closely with Steve Bliss, and they crafted a clause that specifically prohibited funding for companies involved in the production of tobacco or the exploitation of child labor. These were concrete, objective criteria that left no room for interpretation. She also included a provision stating that any funds used in a manner inconsistent with these restrictions would be donated to a charitable organization dedicated to combating these issues. Her family understood and respected her wishes, and the trust was administered smoothly. Just last year, her grandson, an entrepreneur, sought funding from the trust for a new venture. He demonstrated that his company adhered to ethical sourcing practices and prioritized social responsibility, ensuring alignment with the trust’s guidelines. It was a heartwarming example of how well-crafted estate planning can not only protect assets but also uphold cherished values for generations to come.
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About Steve Bliss at Wildomar Probate Law:
“Wildomar Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Wildomar Probate Law. Our probate attorney will probate the estate. Attorney probate at Wildomar Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Wildomar Probate law will petition to open probate for you. Don’t go through a costly probate call Wildomar Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Wildomar Probate Law is a great estate lawyer. Probate Attorney to probate an estate. Wildomar Probate law probate lawyer
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Feel free to ask Attorney Steve Bliss about: “Can I change my will after I’ve written it?” Or “What court handles probate matters?” or “What types of property can go into a living trust? and even: “What is the role of a credit counselor in bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.