During the administration of a trust, you are likely focused on the many responsibilities that lay before you. However, unexpected issues can, and often will, arise. One such issue is when a beneficiary dies during or just before a trust administration. The answer as to what happens in this case depends on various factors unique to the facts and circumstances surrounding the particular trust. In some situations you ma have to determine what happens to trust shares when a beneficiary passes away.
Trust Shares When a Beneficiary Passes Away
What are some of the possible outcomes if a beneficiary dies before receiving some or all of his share under the terms of a trust? Following is an overview:
- The beneficiary’s share may pass to his surviving spouse.
- The beneficiary’s share may pass to his surviving children.
- The beneficiary’s share may pass to his surviving siblings.
- The beneficiary’s share may pass to a charitable organization named by the decedent.
- The beneficiary’s share may revert to a common pot for the benefit of multiple beneficiaries.
- The beneficiary’s share may be divided and distributed among a variety of individuals.
- The beneficiary’s share may pass to the individuals who would have received the decedent’s assets under the laws in California if the decedent died without a will.
While the above options are applicable to many assets in an estate or trust, some other types of assets may pass differently in the event of the death of a beneficiary. For example, if the decedent owned real estate in Orange County, it would depend on whether the asset was held in trust and whether there were explicit instructions as to the form of ownership with multiple beneficiaries, as to what would happen if a beneficiary died.
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