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Think About Staggered Trust Distributions

Date:  Nov 18-2013

How should your assets be distributed once you pass away?  Who should get what?  These are some of the most important decisions you make when you create an estate plan.  But if you have a Trust, or are thinking about creating one, you have another decision to make: when should the Trustee distribute your assets?

It is advantageous in many scenarios to spread out distributions over a period of time.  A common example is to distribute assets in stages until a beneficiary reaches a certain age.  We can add provisions, for example, that a beneficiary will receive one-third of your assets at age 25, one-third at age 30, and the balance at age 35.  This staggered distribution can give the beneficiary time to learn how to handle the money, and will give you peace of mind that your hard-earned money will not disappear in a matter of weeks or months.

We can draft Trust provisions that also give the Trustee discretion as to if, or when, to distribute assets.  Up to a beneficiary’s designated age such as 30 or 35, the Trustee may have the discretion to use income or principal to pay for the beneficiary’s higher education, a down payment on a house, or for medical emergencies.  But the Trustee is not required to distribute the money for this purpose if she does not think it is the beneficiary’s best interest to do so (for example, if the beneficiary just wants to stay in college to continue partying).  Many people like the idea of having the Trustee around during this extended time to provide oversight, advice, and guidance to the beneficiary.

The possibilities as to distribution patterns are almost endless.  You as the creator of your Trust design your distribution, as to the who, what and when.  And we are here to help!

By Courtney A. Martin, Esq.
Law Offices of James F. Miller, P.C.