Distribution Clause (Net Annual Income or Fixed Amount to Beneficiary) (ON)

Summary

This distribution clause directs the trustee to keep the share of the named beneficiary invested and to pay him/her/them an amount equal to the greater of the net annual income of his/her/their share or a fixed amount. This clause includes practical guidance and drafting notes. This clause anticipates that some of the income of the trust will not be paid out to the life tenant (in this case the first beneficiary) but will instead be accumulated. Trusts cannot continue indefinitely. The Perpetuities Act, R.S.O. 1990, c. P.9 requires trust assets to vest in beneficiaries within 21 years from the death of the last life in being. Testamentary trusts for the benefit of a beneficiary can provide for division on the occurrence of an event. It is important in defining such an event, often defined in the clause itself as the "date of division" so that the date must occur at some point. It is possible to provide for grandchildren or even great-grandchildren who have not yet been born, as long as...