Beneficiaries
Nomination of Beneficiaries
Distribution of Trust Property
No-Contest Clause
Nomination of Beneficiaries
The Beneficiaries are the persons who profit from the trust after the grantor has died. There can be any number of beneficiaries. Often the first point in this subchapter is one of the most significant ones: the nomination of the beneficiaries. In most instances this happens within this section, but sometimes the beneficiaries are nominated in an separate annex. In that case the declaration refers to the annex.
For the case that a beneficiary is unavailable upon the time of trust distribution, usually alternative beneficiaries are named. Alternative beneficiaries receive the specific trust property that is stated to be distributed to them, if the respective primary beneficiary is not available upon the death of the grantor.
Furthermore most trust documents contain an additional clause, that nominates a so called “residuary beneficiary”. Residuary beneficiaries receive all trust property that is not designated to a regular beneficiary or alternate beneficiary. Quite often charity organizations are chosen to be residuary beneficiary.
Distribution of Trust Property
This section covers the modalities of how the assets of the trust are distributed. Primary and alternative beneficiaries can be chosen for each item in the trust. Alternatively the trust assets in whole can be distributed on a quota basis. In this variant the declaration of trust usually stipulates that all the trust property shall be given to the beneficiaries in equal shares.
However if there is only one beneficiary, this clause can simply state that all the trust assets shall be given to the single beneficiary.
No-Contest Clause
Some grantors include a so called no-contest clause in the trust document. A no-contest clause usually stipulates, that a beneficiary who initiates an unsuccessful lawsuit challenging the trust forfeits all his rights as a beneficiary. Those clauses are used to discourage beneficiaries from claiming that they are entitled to a greater share of the estate as the trust document provides. No-contest clauses are highly effective to ensure the realization of your estate plan, yet they are rarely used. The reason for this reluctance is the implication of mistrust that could emanate from such a clause. Therefore many grantors refrain from using no-contest clauses.
Distribution of Trust Property
No-Contest Clause
Nomination of Beneficiaries
The Beneficiaries are the persons who profit from the trust after the grantor has died. There can be any number of beneficiaries. Often the first point in this subchapter is one of the most significant ones: the nomination of the beneficiaries. In most instances this happens within this section, but sometimes the beneficiaries are nominated in an separate annex. In that case the declaration refers to the annex.
For the case that a beneficiary is unavailable upon the time of trust distribution, usually alternative beneficiaries are named. Alternative beneficiaries receive the specific trust property that is stated to be distributed to them, if the respective primary beneficiary is not available upon the death of the grantor.
Furthermore most trust documents contain an additional clause, that nominates a so called “residuary beneficiary”. Residuary beneficiaries receive all trust property that is not designated to a regular beneficiary or alternate beneficiary. Quite often charity organizations are chosen to be residuary beneficiary.
Distribution of Trust Property
This section covers the modalities of how the assets of the trust are distributed. Primary and alternative beneficiaries can be chosen for each item in the trust. Alternatively the trust assets in whole can be distributed on a quota basis. In this variant the declaration of trust usually stipulates that all the trust property shall be given to the beneficiaries in equal shares.
However if there is only one beneficiary, this clause can simply state that all the trust assets shall be given to the single beneficiary.
No-Contest Clause
Some grantors include a so called no-contest clause in the trust document. A no-contest clause usually stipulates, that a beneficiary who initiates an unsuccessful lawsuit challenging the trust forfeits all his rights as a beneficiary. Those clauses are used to discourage beneficiaries from claiming that they are entitled to a greater share of the estate as the trust document provides. No-contest clauses are highly effective to ensure the realization of your estate plan, yet they are rarely used. The reason for this reluctance is the implication of mistrust that could emanate from such a clause. Therefore many grantors refrain from using no-contest clauses.
