Examples of Trust Beneficiary Designations

Inability

The trust can manage all the assets when the owner is physically or mentally unfit and unable to handle his responsibilities wisely. During inability, the trust, if it is authorized, can manage everything from the assets in an investment portfolio to paying utility bills. Furthermore, in the trust document, the owner can instruct the trustee how, when and to whom the assets should be distributed upon his death. The trustee is a person or entity who holds the assets and manages them on behalf of the owner. Once the assets are transferred from the owner to the trustee under the trust agreement, they are known as trust assets. However, the owner still can retain control of the trust assets.

The trust gives legal protection for the disposal of the owner’s assets. For example, if the owner has many relatives to challenge his will, a legal document that declares a person's wishes regarding the disposal of his property upon death, it is appropriate to designate a trust as a beneficiary to distribute the assets to the intended beneficiaries. It is difficult to challenge a trust document, since it is established when the owner is alive and filed with the respective county court.

A trust can act for the benefit of the beneficiary if he is a minor, mentally or physically unfit, legally incompetent or lacking of maturity to manage huge assets. The owner of the assets can instruct the trustee how the assets should be managed on behalf of the beneficiary and how and when the assets should be distributed to the beneficiary.

Trusts can be established for all types of assets including cash, marketable securities, real estate, insurance policies, bank accounts and even shares of privately held companies. The trustee who manages and distributes the owner’s assets acts upon the trust document established by the owner. An attorney who specializes in estate planning, tax and trust laws must draw this important document based on your needs. If the performance of the trust is not as expected, you will be able to revoke it and establish another trust during your lifetime.