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When can you distribute a trust's business income when multiple beneficiaries die before the trust is terminated?  Do you have to wait until each subsequent trust/estate is terminated?

  • Say person A died in 2009, whose beneficiaries are persons B and C. Person B died in 2011, whose beneficiaries are persons D and E.  Person A's trust has not yet been terminated and receives monthly income from a business that the trust owns.  Person B's trust has not been terminated either. Do you hold A's income until the trust is terminated, or can you transfer ownership of the business sooner, and also the corresponding income?  Does the business need to go to B, and be held until B's trust is terminated, or can it go directly to D and E?

  • Answer:

    It depends on the terms of Trust A and B.  The flexibility of trusts means that there is little that is standard among then.  If there is some situation that wasn't contemplated when the various trusts and will described in your scenario, you may be apple to petition the court to interpret the intent of Trust A or Trust B as needed.

Anonymous at Quora Visit the source

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Other answers

Anon is right, it depends. Look for terms in the two trusts that would permit in-kind distributions or preliminary distributions.  Also, look at the terms under which the beneficiaries benefit from the trust. Trusts don't always hold everything until termination; some provide for distributions during the term.

Andrea Starrett

You could set up a tontine [1]. Made internet-famous by The Simpsons [2]. Disclaimer: I am not a lawyer blah blah. [1] http://en.wikipedia.org/wiki/Tontine [2] http://www.watchcartoononline.com/the-simpsons-season-7-episode-22-raging-abe-simpson-and-his-grumbling-grandson-in-the-curse-of-the-flying-hellfish

Domhnall O'Huigin

The answer here also depends on the trust statute in the particular jurisdiction.

Israel Sands

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