Forbes’s recent article, “A Beginner's Guide To Reading A Trust,” says that as much as attorneys have tried to simplify documents, there’s some legalese that is still hanging around. Let’s look at a few tips in reviewing your trust.
First, familiarize yourself with the terms. There are basic terms of the trust that you’ll need to know. Most of this can be found on its first page, such as the person who created the trust. He or she is frequently referred to as the donor, grantor or settlor. It is also necessary to identify the trustee, who will hold the trust assets and administer them for the benefit of the beneficiaries and any successor trustees.
You should next see who the beneficiaries are and then look at the important provisions. See if the trustee is required to distribute the assets all at once to a specific beneficiary, or if she can give the money out in installments over time.
It is also important to determine if the distributions are completely left to the discretion of the trustee, so the beneficiary doesn’t have a right to withdraw the trust assets. See if the trustee can distribute both income and principal.
The next step is to see when the trust ends. Trusts will end at the death of a beneficiary.
Other important provisions include whether the beneficiaries can remove and replace a trustee, if the trustee must provide the beneficiaries with accountings and whether the trust is revocable or irrevocable. If the trust is revocable and you’re the donor, you can change it.
If the trust is irrevocable, you won’t be able to make any changes. If your uncle was the donor and he passed away, the trust is most likely now irrevocable.
In addition, you should review the boilerplate language, as well as the tax provisions.
Talk to an estate planning attorney about any questions you may have and to help you interpret the trust terms.
Reference: Forbes (June 17, 2019) “A Beginner's Guide To Reading A Trust”