What Happens When a Trust Is Broken?
If you don’t think you’ll be able to handle your property alone in the future, trusts are an excellent option. On the other hand, trust comes to an end sooner or later. Financial planning aims to establish some level of predictability and stability, and you can avoid unwanted consequences by learning about the termination of trusts.
Basic Terminology and Trust Establishment
When talking about trusts, a few terms are commonly used. Remember, a belief is a unique sort of property arrangement in which the property’s original owner, known as the “grantor,” places some property in trust and names someone to look after it, known as the “trustee,” for the benefit of another person, known as the “beneficiary.” The guidelines for using and caring for the property are spelled out in a written agreement known as the “trust instrument.”
A Trust Can Be Broken in a Variety of Ways
The first and most straightforward way for a trust to end is when the trust property is depleted. When all of the money, plus interest, is paid to the beneficiary, this can happen if the trust property is cash or stocks. If the property was anything else, such as a house, the trust might end when the house is destroyed, or the trust itself expires.
Trusts can come to an end when the grantor specifies an end date or condition that is met. For example, the grantor can provide that a child benefits from monies in a trust until they are 18 or until the child graduates from college, whichever comes first.
What Happens When a Trust Is Broken
If there is any remaining property in the trust, the trustee will negotiate with the beneficiary to distribute it. Some grantors (wisely) put distribution instructions in the trust instrument. If there are no instructions, the trustee and beneficiaries must decide how to divide the assets fairly.
While lawyers are not necessary for this process, you should consult with an estate planning attorney if you have any issues about your rights regarding the termination of a trust. A lawyer’s aid is even more vital in circumstances where possible beneficiaries are at odds with one another because disagreements enhance the likelihood that litigation will be required to resolve the issue. Read FindLaw’s articles on the various forms of trusts for further information.
Allow an attorney to assist you with any trust-related concerns.
Finances can be managed and directed in a variety of different ways. When creating a trust or other financial instrument, an experienced professional can take all of your concerns into account and point out factors you might overlook, such as the trust’s tax implications or your capacity to amend the terms later. Contact a local estate planning attorney to discuss your trust-related needs and learn how a local estate planning attorney can assist you.