Trust funds are essential estate planning tools used by many individuals to house and protect their assets. However, those associated with these funds, whether as a manager or beneficiary of the trust, may have many questions about accessing the money in these accounts. One of the most common things many wonder about is when they can withdraw money from a trust fund. To learn more about this and additional questions regarding trusts, you’ll want to keep reading. You’ll also discover how a Washtenaw County trusts attorney can help you through these complex times.
What Is a Trust Fund?
A trust fund is an account that houses different assets and funds to provide legal and financial protection. The trust is created by a grantor or trustor, who appoints an entity to oversee the management and distribution of funds. This person is known as the trustee, who follows the written wishes of the trustor when handling the assets left in the trust. Those who receive the assets from the trust are known as beneficiaries.
Who Is Allowed to Withdraw Money From a Trust Fund?
It’s important to understand that only authorized individuals are permitted to withdraw funds from an account. Generally, this is the trustee of the fund.
The trustee is allowed to withdraw funds from the trust to cover legitimate costs associated with the fund or to follow the wishes of the trustor. To give funds to beneficiaries, trustees will generally adhere to one of three options:
- Scheduled: These occur when the assets are distributed on a scheduled basis. This could be every few years or when the beneficiary reaches a certain age or milestone.
- Discretionary: The trustor leaves the distribution of assets up to the trustee. As such, they can decide when to withdraw and distribute funds according to the wishes of the trustor and the needs of the fund.
- Lump-sum: The beneficiaries receive one large inheritance, generally without restrictions, all at once.
If you are a beneficiary, you are not permitted to access the account. If you wish to withdraw funds, you must submit a written request to the trustee, who has the ultimate decision about whether or not to grant the request.
It’s also important to note that if a trustee is found mismanaging funds or using assets in the trust for their own benefit, they can be removed from their position.
What Should I Do if I Need Assistance With a Fund?
Whether you are the beneficiary of a trust dealing with a trustee who refuses to release funds or you’re looking to establish a trust fund for your loved ones, you must contact an experienced attorney as soon as possible.
At Collis, Griffor & Hendra, we understand how complex these circumstances can be. As such, our devoted estate planning attorneys are dedicated to helping those across Michigan achieve peace of mind by helping them plan their estates with ease. Contact us today to learn how we can assist you during these times.