sprinkling trust

Sprinkling trust

A trust in which the trustee decides how to distribute trust income among a group of designated people.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Sprinkling Trust

A trust with several beneficiaries in which the trustee has the discretion to distribute funds between them. That is, the trustor gives the trustee a great deal of leeway to use the trust according to the needs of individual beneficiaries. A sprinkling trust may be a living trust or may be part of a will.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

sprinkling trust

A family trust in which the trustee has the power to distribute income to the beneficiaries according to their individual needs rather than according to a specified formula.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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An example of such a trust (in which income and principal may be distributed or accumulated at the discretion of the trustee) is a sprinkling trust. If irrevocable, this type of trust can protect beneficiaries from garnishment or attachment of their trust interests while shifting the income and estate tax burden to family members in lower marginal tax brackets.
The enactment of the Small Business Job Protection Act of 1996 (SBJPA) expanded the maximum number of eligible S shareholders to 75, added new categories of eligible shareholders, allows the IRS to waive inadvertent errors related to the making of an S election, relaxed the 2 1/2-month rule to file Form 2553, Election by a Small Business Corporation (under Section 1362 of the Internal Revenue Code), and allows sprinkling trusts, charities and pension plans to be S shareholders; also, S corporations can now be members of affiliated groups.
accumulating sprinkling trusts. Charitable organizations and Encourages charitable private foundations may hold contributions of stock; provides shares.