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As you create your estate plan, an important decision to be made will center on the distribution of your assets to your beneficiaries. This decision goes beyond merely deciding who gets what. You also must determine when, and under what circumstances, they should receive it. As you work to create your plan, you have several options to consider regarding distributing trust assets. Fortunately, an experienced estate planning attorney can assist you in assessing which option is right for your unique needs and goals.

The following is a brief overview of three of the more common methods for distributing trust assets:

  1. Outright distributions, where assets are given to beneficiaries without restriction following the death of the creator of the trust. Distributing trust assets outright to your beneficiaries allows for easy administration of the trust, with minimal fees.
  2. Staggered distributions involve holding the trust assets in the trust and distributing them over time, at pre-determined beneficiary ages, dates, or triggering events. Staggered distributions mean that the trust will continue existing after the death of the creator of the trust, increasing the costs of administration. They may be beneficial, however, in some situations, such as where the beneficiaries are minors.
  3. Discretionary distributions, where the decision as to when assets are to be distributed is left to the determination of the trustees. This provides ultimate flexibility for the trustee, allowing him to assess the needs of the beneficiaries when making distributions. Beneficiaries, however, may be unhappy or frustrated if they do not agree with the decisions made by the trustee. It may also result in higher administration costs if the trust continues for many years after the passing of the creators of the trust.

Making these important decisions about trust distributions in Orange County requires a basic understanding of living trusts and how they work.  View our free guide, Understanding the Revocable Living Trust – In Language that Anyone Can Understand in 8 Minutes, for a helpful overview of living trusts and their role as part of an estate plan. For more information, contact an experienced Orange County estate planning lawyer today at (714) 459-5481.

Related Links

Is a Trust Distribution Agreement Right for You?

Trust Distributions for Education

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