How Do Trust Funds Pay Out To Beneficiaries?

There are very few sources of literature for good guidance on the selection of a “trustee” for someone who wants to start a trust fund. This is an often overlooked problem, as it is the ongoing administration of a trust fund that ultimately determines whether or not the individuals that set up the trust fund accomplish what they intend for their beneficiaries.

In my review of publicly available trust documents, I have been surprised at how much litigation exists concerning the payments under a trust fund to the beneficiaries. Typically, a trust fund will include a provision that states all of the income will be paid out to beneficiaries, but the trust document itself will be silent on when the income must be paid out.

At a minimum, the Uniform Trust Code requires the distributions of income to be paid annually. The problem is that the trustee (especially if it … Read the rest of this article!