If the friend & trust company are the trustees, then the only control you have over the trust assets and distributions is to whatever extent the trustees accept any suggestions you may have. The exception would be if you have the ability to replace the trustee, then you have some leverage over the trustee to get them to do what you want. Or you appoint a trustee who is more amenable to your requests, so long as that replacement trustee is not a close relative or subordinate employee.Hi, Thank you for posting. These questions all got me thinking because I realized I don't know the answer to most of them.Are you also the trustee named in the trust documents? The trustee is the one legally in charge of investing the money and deciding when & how much to distribute to the beneficiary (which I'm assuming you are), or what amounts to pay someone else for your benefit (e.g. school tuition or medical bills). It is possible for there to be multiple trustees named in the trust, with varying responsibilities.Hi,
I received an inheritance from my late grandmother. It's in excess of $10m usd. I'm not sure what to do with this money. I've been trying to learn and educate my self here. It's in a trust, so based on this and my lack of experience I was thinking that a financial advisor would make sense for me. I'm not sure however how to go about finding a good one. I'm finding a lot of conflicting information online about advisors in general. I was thinking about setting up a call with Vanguard since they're very low cost.
I'm a novice here. Any and all help/guidance is greatly appreciated.
I suggest you start with getting a copy of the trust documents and consulting an estate planning attorney for legal advice about what exactly you are entitled to, and what your responsibilities are. This is doubly true if you are also named as trustee, which means you have a fiduciary responsibility to the beneficiary(s), which could include you but also possible others such as your progeny, depending on how the trust is written.
If you are not the trustee, then the person named as trustee may choose whether or not to seek your input on how to invest the money and what amounts to distribute. Certainly educating yourself about investing would only be seen in a positive light by the trustee, and would impress upon them your financial responsibility. So I think you are on a good start here.
If you are both the beneficiary and the trustee, then you may have what's called HEMS (Health, Education, Maintenance, Security) distribution authority. OR it is possible you have no authority over distributions, and that distribution authority is vested in a different trustee. OR there may be mandatory distributions of income. There are an infinite number of combinations possible here, and you should definitely seek legal representation to advise you how to proceed in your role as trustee. The cost of such legal advice for the trustee would likely be a permissible expenditure of trust funds, so if you do not have the money yourself to pay for legal advice, then consult a lawyer and/or the trustee about using the trust to pay for it.
What is the money currently invested in? Is it in a taxable account or a tax-sheltered account (IRA / 401k), or some combination of both? If taxable, were the assets stepped up in basis upon your grandmother's death? If so, there are fewer tax consequences and you may want to keep the money invested in something liquid for now, like money market funds. If there are tax consequences to selling any assets, or the money is in something illiquid like a private family business, you will have less immediate flexibility.
For better advice, post back with what the trust says about A) who the trustee(s) are and what authority they have, B) who the beneficiary(s) are, and C) what is the distribution standard.
A) The trustees are her friend and a trust company. I have no idea what their authority is. I got the document but its about 80 pages and I don't understand it. I'll be looking into finding someone to give me some advice this week.
B) I'm the beneficiary.
C) It seems about 4.2%. It's currently invested in a diverse portfolio managed by the trust company. From what I've been learning early on, their fees seem very high (1.2%—including the cost of the mutual funds we are in), and the returns seem a bit low.
You should see if distributions from the trust are mandatory or discretionary. A common mandatory distribution is income distributions. A typical discretionary distribution standard might be Health, Education, Maintenance, or Support.
Look for a section or chapter titled "Distributions", or anywhere it talks about distributions. Here is an example from the trust that would be created under my will:
This means that the trustee has discretion to distribute whatever amount they want, within the bounds of the "HEMS" standard. The HEMS standard is fairly broad, but not unlimited.4.2 Distributions
4.2.1. Distributions to Wife. My Trustee may pay so much or all of the income and principal of the Disclaimer Trust to or for the benefit of my Wife as my Trustee deems necessary or appropriate to provide for her health, education, maintenance, and support, without consideration of any outside Resources and Support otherwise available to my Wife.
Other sections you might look for include any special powers you (or others) may have, such as the power to appoint, remove, or replace trustees, or "powers of appointment", which allow the holder of the power the ability to give away assets in the trust, either during your life ("inter vivos") or upon your death ("testamentary"). I would also look for who receives the assets upon your death (in the absence of the exercise of any powers of appointment). Presumably the assets go to your issue, but you don't know without reading it.
Seeking professional advice is the right move. Definitely consult an attorney before exercising any power granted to you by the trust.
Statistics: Posted by evancox10 — Sat Aug 24, 2024 9:47 pm — Replies 101 — Views 11184