Why Use a Trust?
One benefit of a trust that applies to all trust makers is probate avoidance. Staying out of court is SUCH a gift to leave your loved ones, that will save them time, money, and stress.
If funded properly (link to video of Cristyn explaining trust funding), your trust does not need an attorney to keep making changes as you grow. Over time, if you start to spend your assets or sell properties, your trust still does not need to be updated!
Whether your beneficiaries are minors, young adults, or folks who you don’t want to inherit everything all at once, you can set up customizable rules for your beneficiaries to protect them and their inheritance!
How can I use a trust to distribute assets?
A mandatory distribution is a distribution that must be made upon the occurrence of some event. For example, if you have a rule where a beneficiary is to receive 25% of their trust at age 25, the trustee must distribute 25% of the trust to the beneficiary once he or she reaches age 25. Nothing else needs to happen for the beneficiary to receive this distribution.
Mandatory Distribution based on Ages
Many trusts with minor or young adult beneficiaries are set up where the beneficiary receives his or her inheritance spread out over several distributions over the course of several years. A very common example is a third each at ages 25, 30, and 35.
Mandatory Distribution based on Passage of Time
Families creating a trust for older beneficiaries may choose to have a certain percentage doled out every so many years with a final distribution at the time of their choosing. For example, parents leaving an inheritance for a child over 35 could release 10% upon the parents passing, and 10% more distributed every two years with the accrued interest to be paid out at the final distribution.
Discretionary distributions are distributions left up to the trustee to decide whether to distribute the funds for a specific purpose or not.
HEMS (health, education, maintenance, and support) is included in trusts for minor beneficiaries, but frequently in other trusts as well. This gives the trustee the choice to say yes or no to living expenses, medical expenses, and educational expenses.
Some trust makers may choose to allow for other distributions to be made, with requirements around them, such as: