Three Ways Trust Beneficiaries Receive Their Inheritance

There’s a lot that goes into creating a trust, and that includes distributing the trust assets once the grantor is gone. This process is more than deciding who gets what; you have to lay out when your beneficiaries will receive the trust assets and under what circumstances

The trust can pay out in either a lump sum, incremental payments, or based on a trustee’s assessments. There is no set time frame for administering trust assets, and depending on the circumstances the process could take months to years. It’s no surprise a more complex trust will most likely take longer to distribute. And as always, the trustee must act in the best interest of the trust. There are three main ways a beneficiary can receive their inheritance.

Outright Distributions

Outright distributions are exactly what they sound like, in this instance beneficiaries are receiving funds or assets without any restrictions as an outright gift. Distributing trust assets using this method allows for easy administration with minimal fees.

Staggered Distributions

Staggered distributions involve administering the trust’s assets over time. This method is used by grantors who want to space out how the beneficiaries will receive their inheritance. There’s no standard rule book when it comes to setting up the guidelines; it’s all based on the discretion of the trust’s creator. For instance, some beneficiaries may have to wait to receive their inheritance based on their age or certain milestones like graduating college or getting married.

Discretionary Distributions

Discretionary distributions put the decision making in the hands of the trustee. That means it’s ultimately up to the trustee on how and when the assets are distributed. Discretionary distributions can result in higher administration costs depending on how long the process takes.

Once all the trust funds are distributed, the trust is typically dissolved, but time is of the essence. Remember, the longer a trust is open, the more costly it becomes due to ongoing maintenance. 

Do you have more questions about distributing trust assets?

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As the most experienced CPA in the Inland Empire who specializes in working with seniors, Marcia L. Campbell is committed to helping each client thrive by caring for their personal and financial wellbeing with genuine interest, well-established expertise, and a focus on respectful partnerships. Marcia’s team specializes in a number of services including elder & financial care, court & trust accountings as well as private fiduciary and tax services. At Marcia L. Campbell, CPA, we understand the importance of our clients’ individual needs and are committed to helping them make the best personal and financial decisions for their future.

 

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