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Aug. 04 2015

Should Trust Funds Be Distributed to Beneficiaries at Certain Ages?

By Steve Elville | Posted in Estate Planning | Comments Off on Should Trust Funds Be Distributed to Beneficiaries at Certain Ages?

By: Olivia R. Holcombe-Volke, Esq. – Elville and Associates – 443-393-7696, olivia@elvilleassociates.com


A common understanding of testamentary trusts (that is, trusts that come into existence after a testator’s death in order to hold the assets inherited by a beneficiary) is that the beneficiary of a trust will receive her trust funds at a particular age (or staggered over several ages). For example, there is the somewhat stereotypical idea of a “trust funder” receiving her trust funds when she turns twenty-five (25). This is logical, thinking that a trust to hold the inheritance for one’s beneficiary is intended for young beneficiaries, and only until they reach a certain, more financially responsible age. This is one option for testamentary trusts. However, it is not the only option, and, arguably, not the best one.


Often, the motivation for setting up testamentary trusts to hold inherited assets for one’s beneficiaries is the idea of protecting those beneficiaries from themselves – to protect a potentially financially irresponsible nineteen (19) year old from blowing all of the money she inherits. This is an excellent and sound motivation. Relying purely on this logic, it makes sense to set up the trust to distribute at ages when one is presumed to become more financially responsible, such as half at age twenty-five (25), and half at age thirty (30).


However, the receipt of inherited funds in trust can provide for additional protections, above and beyond protecting a beneficiary against her own financial irresponsibility. Inheriting funds in a properly drafted trust can also protect those funds from the beneficiary’s creditors, from the beneficiary’s potential bankruptcy, and from potential division in a divorce. A method for providing these protections, while also allowing the beneficiary to have access to and use of the funds held in trust, is to keep the funds in trust (rather than providing for outright distributions at certain ages), while also providing for the beneficiary to be able to serve as co-trustee of her trust at a certain age, and/or sole trustee of her trust at a certain age.


Ultimately, one option may not be the right option for all estate plans. Discussing what the options are, and the potential for providing lifelong protection for one’s beneficiaries, is the responsibility of a worthwhile estate planning attorney.

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Elville & Associates engages clients in a multi-step educational process to ensure that estate and elder law planning works from inception, throughout lifetime, and at death. Clients are encouraged to take advantage of the Planning Team Concept for leading edge, customized planning. Legal Services Include: Wills, Trusts, Estate Tax Planning, Powers of Attorney, Living Wills/Advance Medical Directives, Medicaid Asset Protection Trusts, Medicaid Planning and Qualification, Estate Administration, Fiduciary Representation, Nursing Home Selection, Guardianships, Special Needs Planning for children and adults, Social Security Disability Income (SSDI), Supplemental Security Income (SSI), and IRS tax controversy.

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