Sprinkling trust

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Sprinkling trust is a trust where the trustee is allowed to disperse funds according to the needs of the beneficiaries. Unlike many trusts where the trustee must follow strict instructions from the creator of the trust, sprinkling trusts allow almost unlimited flexibility for the trustee to give funds to the beneficiaries as needed, sometimes only to one beneficiary. Often, sprinkling trusts appear in the form of family pot trusts created for children, allowing the trustee to give the children differentiated amounts of money for things like college and medical bills. Sprinkling trusts have great advantages for flexibly allocating trust assets, but they come with the disadvantage of possibly allowing a trustee to manage the trust against the interests of the trust creator. 

[Last updated in August of 2021 by the Wex Definitions Team]