fbpx Ask An Expert

Want to read more? Sign Up For Our 7-Day Free Trial

As A Trust Beneficiary, How Can I Determine What I’m Entitled To Receive From A Trust?

Businesswomen in meeting at office

Read the Trust

The first step in determining what a beneficiary is entitled to receive from a trust is to get a copy of the trust and read it.  The “intent” of the trust’s creator are what the trustee must abide by in making distributions.  The trust instrument sets forth what the creator intended.

Trustee’s Role in Determining Distributions

The trustee is the person that administers the trust in accordance with its terms.

The trust’s “distribution standard” matters.  If the trust says that a beneficiary is to receive “all the trust income”, then the beneficiary receives that amount (and the trust will often say how often – e.g., “annually).  “Income” is a technical term – it does not include capital gains – but only interest, dividends, rents and royalties.  If an all the income trust invests in bonds (as opposed to stocks), the beneficiary is likely to receive more.  “Income” really means net income – trust administration expenses properly charged to income reduce the amount of “income” that the beneficiary will receive.

It the trust says that the trustee is to make distributions (either from income or principal) for the beneficiary’s “health, education, maintenance and support” (often called a “HEMS” standard), that type of standard is what is called an “ascertainable standard”.  If the trust says the trustee “shall” make such distributions, the beneficiary can force such amounts to be paid.  If the trust says the trustee “may” make such distributions, then the ascertainable standard is the “ceiling” for amounts a beneficiary can receive, but not a mandatory right.  Other language – such as requiring the trustee to take into account a beneficiary’s “other resources” – can also give the trustee a reason not to make a distribution for HEMS.


Want To Read More? Sign Up For Our 7 Day Free Trial.

Please login below. If you don't have an account, feel free to sign up and get access to the entire WealthCAP HUB®.

Contact Us

None of the content or services offered on or through the Website are, nor are intended to be, legal, tax, accounting, investment or other professional advice or a substitute for advice of an attorney, tax advisor, accountant, investment advisor or any other professional. You agree and acknowledge that the content and services offered on or through the Website are intended only as general information and is not intended to be, and should not be relied upon as, professional advice. If professional advice or other expert assistance is required, you should obtain the services of a competent, professional person, and not rely on information provided in the content or services as a substitute for such advice or assistance. No attorney-client relationship exists or shall be deemed to exist between you and the Company. The Company is not in the business of rendering personalized investment advice.

suggestion

Feedback

This feature is for WealthCAP HUB® Members

If you would like to upgrade your membership or learn more, please contact us and a team member will reach out shortly.

Ask An Expert