Beneficiary of a Trust
What is a beneficiary of a trust? Describes basic categories of the exercises of the beneficiaries’ rights, two main categories of sequential interests of a beneficiary, the two beneficiaries from the trustees perspective.
Beneficiary of a Trust
The Beneficiary is the reason for your Trust (contract). Your Beneficiary is the person who will enjoy the benefits of your Trust assets. They include, wives, children, grandchildren, charitable organizations of every color and variety
The length of your Beneficiary is unlimited. The Beneficiary could include the original Grantor, but that would be self-defeating. Trusts should be irrevocable. The Grantor gives-up his assets to gain asset protection, elimination of probate, elimination of estate taxes and gain certain uncommon tax advantages. Any degree of control by the Grantor will render the Trust revocable and subject to court discretion.
Categories of the Beneficiary of a Trust
- Beneficiaries of a Bare Trust (aka as a Simple Trust) is where the Beneficiary is entitled to take actual ownership and control of the Trust and has the right to the income and capital. The Trustees, in this case, act in accordance with the Beneficiaries’ wishes.
- Beneficiaries of an Express Trust are Trusts whereby the Trustee is given additional duties and powers assigned in the Trust Deed. The Express Trust can be either an Inter Vivos Trust, which is a Trust created during the life of the Grantor, or the Express Trust can be a Testamentary Trust, which is a Trust enacted after the death of the Grantor (aka as the Will Trust).
- Beneficiaries with a vested interest such as Tenants For Life. The Tenant For Life is where the Beneficiary owns the property or asset for the duration of that person’s life. However, upon the death of the Beneficiary the ownership ends. Because the property ends upon the death of the Beneficiary, he cannot leave it to heirs nor can the property be inherited from the Beneficiary.
- Beneficiaries with a contingent interest such as Remaindermen. A Remainderman is entitled to a future interest called a Remainder in the property. So a Remainderman is a person who will inherit property upon the death of the former owner which, in this case, be a Tenant For Life owner. For example, the grantor states in the Trust Deed the property will be granted to “Joe for life then to Susan.” Susan is the Remainderman.
- Fixed Beneficiaries who simply have a fixed entitlement to the income and capital from the Grantor.
- Discretionary Beneficiaries to whom the Trustees have discretionary and decision-making powers to the entitlements.
The Trust Contract
Understand These Important Facts on Trusts: