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Controlled Distribution Using a Living Trust

On Behalf of | Apr 16, 2020 | Elder Law, Estate Planning |

In Florida, there are a number of benefits of establishing a Living Trust (also called a Revocable Trust). These include avoiding probate and maintaining privacy. Another important benefit is the ability to control how and when the assets which you own are distributed to your beneficiaries. In essence, a Trust can facilitate a structured and controlled distribution based on the instructions which you leave.

The following is a simple example of the type of language which can be used in a Trust in order to accomplish the controlled distribution:

The trust share to be distributed to any beneficiary hereunder shall be distributed outright if said beneficiary has reached the age of Thirty-Five (35) years. If a beneficiary has not reached age 35 at the time for distribution then said beneficiary’s trust share shall be held in trust and distributed to said beneficiary as follows: One-Third (1/3) of said beneficiary’s trust share shall be distributed upon said beneficiary reaching age 25; One-Half (1/2) of said beneficiary’s then-remaining trust share be distributed upon said beneficiary reaching age 30; and all of said beneficiary’s then-remaining trust share shall be distributed to said beneficiary upon said beneficiary reaching age 35. Until a beneficiary under this Trust reaches age 35, the Trustee may use as much of the income and principal of said beneficiary’s trust share for the beneficiary’s health, education, maintenance and support, as the Trustee, in his or her sole and absolute discretion, determines is necessary or required.

This type of paragraph is not uncommon in a Trust. It would be particularly appropriate in a case where a person has young children. In Florida, minor beneficiaries under age 18 are not able to inherit directly—that could trigger an undesirable court guardianship. The Trust avoids this problem and does even more. If parents want to leave their assets to their children but want the children to receive the assets over time and not all at once, the Trust is the best way to do this. The age provisions allow for the beneficiaries to be more mature when they receive their inheritance. The incremental distribution allows the assets to be spread out over time. That way, if the beneficiary handles the first distribution poorly, perhaps he or she will learn by the time the next distribution comes along.

So why use this type of controlled and structured distribution? There are a number of reasons. It may be due to the age or immaturity of the beneficiary. Or it may be due to the beneficiary being financially irresponsible. Perhaps the beneficiary is in a toxic relationship or could fall prey to a greedy or spendthrift spouse or companion. The structured and controlled distribution of a Trust is an effective way to protect your beneficiaries and to assure that the inheritance which you leave is not squandered.

Some people complain that this type of planning is trying to “rule from the grave.” In other words, they’re complaining about someone who is setting forth how their beneficiaries will inherit after they’re gone. So what if this is ruling from the grave? Why is it wrong for someone to want to maximize the benefit that they leave to their beneficiaries? One of the benefits of having assets is the privilege to decide who receives those assets and how and when they receive them. Frankly, the ones who  complain the most about the Trust controlling distribution or “ruling from the grave” are probably the ones who need it!

In establishing a Trust, you should seek counsel from an experienced estate planning lawyer. While a Trust is a helpful instrument, having the right provisions can be challenging and should not be undertaken by a novice. And they surely should not be prepared by some online program. As important as is the Trust document itself, the advice that comes from an experienced estate attorney is essential in order to avoid problems down the road.


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