Legal Definitions - Precatory Trust

A Precatory Trust is a type of trust that appears to be created using language that merely expresses a wish, hope, or recommendation, rather than a clear, direct command. Despite this seemingly non-binding language, a court may interpret the words as creating legally enforceable duties for the person holding the assets (the trustee).

This often happens when there is a close relationship between the person creating the trust and the trustee, such as a family connection or a professional fiduciary relationship. In such contexts, a court might conclude that a binding obligation was intended, even if not explicitly stated, thereby preventing the trust from failing due to a perceived lack of clear intent.

• Example 1: Familial Education Support

  Imagine a grandmother's will states, "I hope my son, Michael, will use the inheritance I leave him to ensure his daughter, my granddaughter Lily, attends a reputable university." While "hope" is typically a non-binding word, a court might consider the strong familial relationship between the grandmother, son, and granddaughter, along with the clear purpose of education, and interpret this as a legally enforceable instruction. Michael would then be obligated to use those specific funds for Lily's university education.

• Example 2: Care for a Vulnerable Sibling

  Consider a parent's will that leaves their primary residence to their eldest child, Sarah, with the statement, "It is my earnest desire that Sarah allows her younger brother, Tom, who has special needs, to reside in the family home for as long as he requires care and support." Despite the use of "earnest desire," a court could view this as a binding obligation on Sarah. Given the familial relationship and Tom's vulnerability, the court might conclude that the parent intended to create a legal duty for Sarah to provide housing for Tom, rather than just a suggestion.

• Example 3: Charitable Giving Through an Advisor

  A wealthy client, in their will, leaves a substantial sum of money to their long-time financial advisor, Mr. Davies, stating, "I recommend that Mr. Davies allocate these funds annually to support the local children's hospital." Due to the established fiduciary relationship between the client and Mr. Davies, and the clear charitable intent, a court might interpret this "recommendation" as a directive. This would legally obligate Mr. Davies to manage and disburse the funds to the children's hospital as intended by the client, rather than treating the money as a personal gift.