Trust Beneficiaries

Who Are Beneficiaries?

Beneficiaries are the people or organizations that receive the benefits of your trust. They are the reason you created the trust in the first place. Your trust holds your property and manages it for their benefit.

A beneficiary can be a person, a group of people, a charity, or even another trust. You decide who gets what and when.

Primary vs Contingent Beneficiaries

There are two main types of beneficiaries:

Primary Beneficiaries

These are the people who are supposed to inherit from your trust. If your trust says "everything goes to my three children," your three children are primary beneficiaries.

Contingent Beneficiaries

These are backup people. They only get something if a primary beneficiary cannot. For example, if one of your children dies before you, their share might go to their children (your grandchildren) as contingent beneficiaries.

Without contingent beneficiaries, if a primary beneficiary is unavailable, that share might go through probate instead of where you intended.

How Percentage Allocations Work

When you have multiple beneficiaries, you need to decide how to split things up. Most trusts use percentage allocations.

Common ways to split:

• Equal shares — Each beneficiary gets the same percentage. If you have three kids, each gets 33.33%.
• Unequal shares — You can give different amounts to different people. Maybe one child gets 50% and two others get 25% each.
• By category — You can split assets by type. "My house goes to my daughter, my investments go to my son."

The percentages should add up to 100%. TrustForge tracks this automatically and warns you if your allocations do not add up.

Distribution Conditions

You do not have to give everything away all at once. You can set rules for when and how beneficiaries receive their inheritance.

Age-Based Distributions

The most common condition. You might say:

• "Each beneficiary receives 1/3 of their share at age 25"
• "Each beneficiary receives 1/3 of their share at age 30"
• "Each beneficiary receives the remainder at age 35"

This protects young beneficiaries from getting too much money too fast.

Milestone-Based Distributions

You can tie distributions to life events:

• "When they graduate college"
• "When they buy their first home"
• "When they get married"

Discretionary Distributions

You can give the trustee power to decide when distributions happen. The trustee looks at what the beneficiary needs and makes decisions based on that. This is useful for beneficiaries who might not handle money well or who have special needs.

Health, Education, Maintenance, and Support (HEMS)

Many trusts use a standard called HEMS. The trustee can distribute money for the beneficiary's health, education, maintenance, or support. This gives the trustee flexibility while keeping distributions reasonable.

Beneficiary Rights

Beneficiaries have legal rights that the trustee must respect:

Right to Information

Beneficiaries have the right to know about the trust. They can ask for a copy of the trust document, see accountings (financial reports), and understand how the trust is being managed.

Right to Accounting

The trustee must keep records of all income, expenses, and distributions. Beneficiaries can request these records. Most states require the trustee to provide an accounting at least once a year.

Right to Fair Treatment

The trustee must treat all beneficiaries fairly. They cannot favor one beneficiary over another unless the trust document specifically allows it.

Right to Challenge

If a beneficiary thinks the trustee is not doing their job, they can go to court to challenge the trustee's actions. This is called a trust contest.

How to Update Beneficiaries

Your life changes, and your trust should change with it. Here are common reasons to update:

• A beneficiary dies
• You have a new child or grandchild
• You get divorced or remarried
• A beneficiary's situation changes (addiction, bankruptcy, special needs)
• You want to change the percentages

For a revocable trust, you can make changes at any time. For an irrevocable trust, changes are harder but usually possible through a process called decanting or through a court order.