The authority granted to an individual, known as the donee, to designate who will receive specific assets from a trust or estate is a critical component of estate planning. This authorization offers flexibility in determining the ultimate beneficiaries of property. For example, a testator might grant a beneficiary the authority to allocate trust assets among their descendants, allowing the beneficiary to adapt the distribution based on evolving needs and circumstances.
This mechanism provides several advantages, including the ability to respond to unforeseen events and changes in family dynamics after the original estate plan is established. It also allows for potential tax benefits by strategically directing assets to those who would benefit most, minimizing estate taxes and maximizing wealth preservation. Historically, it has been employed as a tool to address complex family situations and ensure assets are managed according to the grantor’s evolving wishes, even after their passing.
