Ascertainable standard

How it works

An ascertainable standard defines the purposes for which a trustee may distribute trust assets. Colorado law identifies health, education, support or maintenance as the standard by reference to federal tax code provisions.

Colorado law limits a beneficiary-trustee's discretionary distributions for personal benefit to those made under an ascertainable standard. Estate planning practitioners describe a spousal lifetime access trust arrangement where one trustee handles standard distributions and another handles more extraordinary distributions.

Where it shows up for owners of businesses, real estate and private investments

An ascertainable standard can govern a beneficiary-trustee's authority over trust assets connected to an owner's private investments, real estate or business interests. The Colorado rule applies when a beneficiary who is not the settlor is also trustee and has discretionary distribution power for personal benefit.

Practitioners note a separate tax distinction. A beneficiary's discretionary power to distribute trust assets to themselves without an ascertainable standard constitutes a general power of appointment and causes estate inclusion.

Points that are easy to confuse

An ascertainable standard limits distribution discretion, while other trustee powers can involve different rules. Colorado's definition lists health, education, support or maintenance. Practitioners point to the estate inclusion consequence of a beneficiary's unrestricted discretionary power to distribute assets to themselves.

Utah law addresses a different trustee power, decanting. A restricted trustee may not decant in a way that benefits that trustee unless the benefit is limited to an ascertainable standard of health, education, maintenance or support.

Common questions