How Beneficiaries Reap The Reward of a Trust

Beneficiaries of a trust are the people or organization(s) who are named as the recipients of any benefits of the trust. The beneficiaries can be anyone you like, but will usually depend on the goals of the trust.

Choosing beneficiaries of a trust

If you're setting up a trust that is intended to avoid probate and seamlessly transfer assets to your family, you'll likely want to name your family members as the beneficiaries. If you're setting up a trust that is intended to hold assets for your grandchildren, will likely name those grandchildren as the beneficiaries. A trust that is intended to provide support for a charitable organization will likely name the charity as the beneficiary.

Beneficiary distributions

Based on the goals of your trust and the number of beneficiaries you name, you can decide how you would like those beneficiaries to receive distributions. For example, if you have three children you may name all three of your children as equal beneficiaries or you may name them as unequal beneficiaries, with each child receiving different distributions from the trust. 

Descendants

You may also decide whether or not the beneficiary designation applies to linear descendants—that is, whether or not your children’s children would become beneficiaries in the event that one of your children should die before the assets in the trust are fully depleted.

To learn about how to name trustees, see our article Trustees.

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