What It Means for Professionals and Their Clients

The Delaware Trust Act of 2024 introduces significant provisions that will impact estate planning professionals and their clients, enhancing flexibility, transparency, and beneficiary engagement in trust administration. This legislation aims to align with modern wealth management needs by introducing concepts such as the Beneficiary Well-Being Trust, updates to letters of wishes, and expanded powers for trustees to provide beneficiary education. The principles and concepts included in this legislation can be implemented in other multigenerational wealth transition planning tools and strategies beyond Delaware Trusts.

One notable aspect is the Beneficiary Well-Being Trust, which allows trustees to incorporate educational and developmental programs that prepare beneficiaries for managing inherited wealth responsibly. These programs can include financial literacy courses, family governance discussions, and philanthropic training. This provision is intended to improve communication between trustees and beneficiaries, supporting not only financial but also personal growth, and offers families a structured way to pass down values and financial stewardship skills across generations. The flexibility to customize these programs per the settlor’s preferences is particularly groundbreaking, as it enables trusts to align with each family’s unique needs and objectives.

Included in the new Act's provisions is supportive language for fostering a "culture" of financial literacy, multi-generational education, and overall well-being for trust beneficiaries. And the statute says that if the Trustmaker includes the well-being programs in the Trust, then the Trustees must pay for those programs out of the trust.

Estate planning professionals can leverage this provision to recommend strategies that enhance a beneficiary’s understanding of the trust and its purpose. For example, financial education initiatives funded by the trust can cultivate beneficiaries’ wealth management skills, promoting responsible wealth handling that is in line with the settlor’s long-term vision. This statutory change allows advisors to incorporate holistic educational elements that go beyond financial disbursements, potentially leading to more fulfilled beneficiaries who are prepared for the complexities of wealth inheritance.

Additionally, the Act revises the use of …

We will continue the Delaware Trust Act discussion in the next article.

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Rod Zeeb is the CEO & Founder of The Heritage Institute and Founder and Principal in Genacy Group.
Lori Coonen is CLO at The Heritage Institute and a Principal in Genacy Group. You may contact them at www.theheritageinstitute.com or www.genacygroup.com.