Final distribution from a trust

On Mar 21, 7:29 am, "skiik" <skii...@gmail.com> wrote:
> I am having a hardish time understanding this part of a first draft.
> Could someone explain it in to me please.

First of all, you've removed this from important context.   5.1 makes reference to para. 4, which you do NOT provide for our perusal, and 5.2 references 5.1; so how can we interpret any of it without knowing what para. 4 says?   In any event, take all Usenet comments with a large grain of salt and get your own paid legal opinion from an attorney you hire, if it really makes a difference to you that you could measure in money.

That said,.

> 5 Final Distribution
>
>       5.1 The Trustees may, upon any distribution pursuant to clause 4
> to or for any Beneficiary or a descendant of a Final Beneficiary,
> direct in writing that the value (as determined by the Trustees) of
> all or any part of the property being so dealt with is to be taken
> into account in ascertaining the share of that Beneficiary on the Date
> of Final Distribution.

I'm just GUESSING, here, that para. 4 may refer to interim distributions that are made BEFORE the final distribution, e.g. if Uncle Joe needed $100k from the trust fund to go to college, that amount is taken into account as part of his share when the remaining funds are finally divvied up between all the cousins.   So if, frex, there is $1m left in the Trust Fund at Final Distribution, and there are 4 equal beneficiaries, but Joe and Aunt Sally each got $100k advanced to them before the final distribution, then Ralph and Mary will each get $300k and Joe and Sally will each get $200k from the remaining fund, making a total of $300k paid out (at various times) to each of them equally (for a total of $1.2m: $2k paid out previously, and $1m paid out now).

>       5.2 Subject to any direction given by the Trustees pursuant to
> clause 5. 1, on the Date of Final Distribution, the Trustees shall
> hold whatever then remains of the Trust Fund on trust for such of the
> Final Beneficiaries who are then alive in equal shares.

That says that whatever is left over for Final Distribution at the expiration of the Trust is divided equally among all surviving  primary beneficiares, EXCEPT where the Trustee specifically decides (under 5.1) to charge a previous cash advance against one beneficiary's total share.   Assuming, of course, that this is what para. 4 refers to.

> If any of
> the Final Beneficiaries shall fail to survive the Date of Final
> Distribution leaving Issue who are living at that date, then such
> Issue shall take per stirpes as tenants in common in equal shares the
> share that their parent would have taken in the Trust Fund had that
> parent been living at the Date of Final Distribution.

This part accounts for what happens if one of the primary beneficiaries dies before final dstribution.  In that case, the dead beneficiary's living offspring will step into his shoes and share equally "per stirpes" in what that dead parent (or grandparent) of theirs WOULD have taken, if he or she had stayed alive until the date the Trustee actually cut the final distribution check.

"Per stirpes" means that, at each generational level, the substitute beneficiaries descended from each dead primary beneficiary will take what their dead parent WOULD HAVE taken if the parent had remained alive.   This is in contrast to a "per capita" distribution, where the beneficiaries all share equally regardless of their generational level.  Per stirpes generally yields fairer results than per capita in the eyes of most people since the result for a member of a higher generation doesn't change just because one of their siblings or cousins happens to die first, and had more kids than they did; each branch of the family will get the same total share, no matter what, as long as SOME member of that branch survives.

Frex, let's say the Grantor of the Trust, Grandpa Bob, had 4 children as primary beneficiaries, Joe, Sally, Ralph and Mary.   If all 4 survive to final disitribution (FD), the result is the same under either per capita or per stirpes: each gets 1/4.

Let's say Uncle Joe had 3 kids, Aunt Sally had 2, Ralph had 4 and Mary (a nun) had none.

If Joe dies before FD, Sally, Ralph and Mary each get 1/4, same as before, and Joe's kids each get 1/12 (an equal 1/3 of their parent Joe's 1/4 share of the total).  But if it were per capita, Sally, Ralph, Mary and Joe's 3 offspring would each get 1/6 (since there are now 6 beneficiaries living at time of FD)

If Joe, Sally and Ralph all die before FD, then Mary still gets her 1/4 share, Joe's kids still get their 1/12 each as calculated above, Sally's kids each get 1/8 of the total pie (1/2 each of their late mom's 1/4 share), and Ralph's kids each get 1/16 (1/4 each of their dead dad's 1/4 share).   But if it were "per capita", with 10 surviving beneficiaries each would get an even 1/10, Mary as well as her nieces and nephews.

If Mary dies before FD, with no offspring, then only Joe, Sally and Ralph (or their offspring) share in the FD; each surviving branch of Grandpa Bob's family then gets 1/3.

Does that help?
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Mike Jacobs
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