4 FAQs About Trusts, Beneficiaries, and Loans

Trusts provide their beneficiaries with funds that are guarded by a trustee until a specific appointed time, upon which they are disbursed to the recipients. Trusts are created for a variety of reasons, including for individuals who are too young to legally receive a financial account or benefit an individual at a later date. There are many caveats and conditions often attached to the creation and management of a trust. Knowing what these are may help you understand how to handle the money, whether you are a trustee or a beneficiary.


  1. What Are the Trustee’s Duties? 

If you are made the trustee of a trust, then you are essentially the guardian of the account. Your duties will likely consist of ensuring the money is not accessible to anyone but the beneficiary, that none of the funds are sent to other accounts, and that the money is handled in a way that allows it to gain interest. If the trust document allows for investing, then you will oversee those investments as well. When the beneficiary comes of age, you will release the funds to him or her in full.


  1. What Is an Irrevocable Trust? 

When an irrevocable trust is created, the particulars of the document cannot be changed or altered to suit the wants and needs of the trustee or the beneficiary. In most cases, no one — not even the author of the trust document — can make future changes. Once the trust is signed and properly created, the funds, property, and other items listed within belong to itself and not the trustee or the beneficiary.


  1. Can You Loan from a Trust? 

As a trustee, you may be able to make loans from a trust, but only if the creator of the trust allowed it in writing within the trust document. Otherwise, it will probably not be permitted. If the beneficiary asks for a loan from his or her trust, you may want to consider a few factors that may affect its future, such as the borrower’s current financial status and his or her ability to pay back the trust in a certain span of time. You may turn down the request if you believe a loan might have a negative impact on the trust.


  1. Can a Trustee Be a Beneficiary? 

In some cases, you may be one beneficiary of a trust as well as the named trustee. However, you will likely have to abide by the conditions of the trust. As such, you may not have access to the funds right away.


Handling a trust can be a puzzling affair, but there is help available. Contact a wills and trusts lawyer, like a wills and trusts lawyer in Sacramento, CA, today for further assistance.


Thanks to Yee Law Group, PC for their insight into some facts about trusts, beneficiaries, and loans.