When Are Beneficiaries Entitled to Distributions?

beneficiariesThe process of creating a trust can be complicated, and the handling of assets can be just as difficult unless you know what to expect. As a beneficiary, you may be unsure about when you’re entitled to your inheritance. A common mistake that you may not be aware of is that all disbursements are not the same. 

What Beneficiaries Should Know

A trustor decides, based on the trust document, when beneficiaries will receive their trust assets and under what circumstances. What you should know is that there is no set time for beneficiaries to receive their inheritance as a timeline is dependent on the creator of the trust and the assets the trust holds.

Depending on the circumstances given by the trustor, it may take months or years for assets to be distributed. However, beneficiaries can receive their inheritance in several ways. See the distribution types below.

Outright Distribution

This type of distribution is just as it sounds. A beneficiary with an outright distribution will receive their assets or funds without restrictions, like a gift. This is the easiest method to administer trust assets.

Staggered Distribution

With a staggered distribution, a trustor can decide to space out how the beneficiaries will receive their inheritance. This distribution is set at the discretion of the trustor. This distribution can be short or long, as beneficiaries may need to meet age requirements or milestones before receiving their inheritance. Typical scenarios include distributions occurring after a college graduation or once the beneficiary gets married. 

Related Article: How Long Will It Take To Receive My Inheritance From a Trust?

Discretionary Distribution

This distribution may be the most complicated, depending on a family’s situation. A discretionary distribution puts the power to distribute the inheritance in the hands of a trustee. It is up to the trustee to decide when and how assets will be distributed. A trust is typically dissolved after all assets have been distributed.

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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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