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Determining Appropriate Trust Distributions for Your Heirs

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If you’ve spent decades setting aside assets for your heirs, you want to be sure that those assets are managed and distributed with care, offering as much help and support to your loved ones as possible. One way to make your hard-earned savings into a more effective gift for your loved ones is by creating a trust to protect those assets.

However, not just any distribution will be sufficient to ensure that trust funds are well-used by your beneficiaries. There are several options below for how trust funds can be distributed so that your beneficiaries’ best interests are protected. Trust distribution schedules can—and should—be as unique as the beneficiaries themselves, and a skilled New York estate planning attorney can walk you through the options for creating the right trust distribution structure for your family.

Distribution upon the occurrence of a certain event: Many trusts provide for assets to be distributed when the beneficiary becomes a certain age, or when the beneficiary achieves some milestone event, such as graduating from college. This can help ensure that funds are not distributed to an immature beneficiary who will be overwhelmed by a large cash gift and prone to making unwise spending choices.

A similar option would be to set an age at which the beneficiary may withdraw trust funds or to give the trustee discretion to continue to hold funds if the beneficiary suffers from a disability. This option allows the trustee to continue the trust if the beneficiary has some form of incapacity which makes them unable to manage the trust funds personally.

Donors may also choose to stagger distributions of trust funds over the course of several years rather than make an all-out distribution of funds. This approach can encourage beneficiaries to develop their money management skills with each successive distribution.

When a grantor knows that a trust beneficiary will have difficulty managing distributions, such as a beneficiary with a history of substance use, mental illness, or criminal behavior, the grantor may choose to place specific conditions on trust fund distributions. For example, trust distributions can be conditioned on the beneficiary having regular employment, passing a drug test, or showing a clean criminal history for a given period.

If you are in need of detailed, insightful, and effective estate planning assistance in New York’s Hudson Valley, contact Rusk, Wadlin, Heppner & Martuscello, LLP in Kingston at 845-331-4100 or in Marlboro at 845-236-4411.

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