How Do I Know When to Withdraw Money From a Trust?

stack of money

When a Woodland Hills trust attorney helps you establish a trust, you get to make rules for it and determine how it is managed. There are some times when it is okay to withdraw money from a trust, and other times when it could be seen as mismanagement of a deceased’s assets.

Who Manages a Trust?

The person in charge of managing the trust is the trustee. This is often someone who is not a beneficiary of the trust. They are there to take care of the deceased’s assets and follow their instructions. Once the beneficiaries reach a certain age or milestone, they can be allowed to withdraw money for themselves. However, their decisions are still often subject to a trustee’s discretion and the trust grantor’s rules.

What Can You Withdraw Money For?

There are many reasons for a trustee to withdraw some money from the trust. These funds are often used for:

  • Property-related expenses, like repairs and insurance premiums
  • Paying off any debt of the estate
  • Funeral expenses of the trust creator and any beneficiaries
  • Paying professionals, like accountants and lawyers, who complete any work on behalf of the estate

The trustee can also withdraw money and make investments. The key is that these investments must be in the best interest of the beneficiaries. A trustee cannot try to skim money from a trust and make favorable investments for themself. Any kind of self-dealing is obviously not following the wishes of the deceased. This could make it easy for beneficiaries to sue and remove the trustee.

Of course, money can also be withdrawn when a beneficiary of the trust wants to use it. All withdrawals and other transactions do need to be properly tracked though. This is to make sure that no beneficiary gets an unfair share of the estate and that everyone gets exactly what they are owed.

What Rules Does a Trustee Need to Follow?

When the deceased made the trust, they set a series of ground rules for how the trust would operate. The trustee has to follow all of those rules set by the grantor. They are not allowed to make their own rules or ignore what the grantor would have wanted just because it has been a while since they passed away. As we mentioned, a trustee who does not follow the rules can be removed by a probate court.

These rules are important because a grantor has set them with the best interests of their beneficiaries in mind. For example, some trusts allow a beneficiary to withdraw money when they need it. However, sometimes a grantor prefers to allow a trustee to make the purchase for the beneficiary instead. This can sometimes be done to control a beneficiary that may be bad at handling money. It can also be done to allow a beneficiary with special needs to continue collecting the benefits they require without any of these assets affecting their qualifications.

Establish a Trust and Estate Plan of Your Own

If you are thinking about establishing a trust of your own, contact the Law Offices of Yacoba Ann Feldman. We would love to walk you through your options.

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