

What role does a beneficiary serve?

On Behalf of | Jul 23, 2021 | Estate Planning |

In your estate plan, you will have several people filling different roles. Some of these roles serve an active purpose, such as your healthcare proxy who handles medical matters on your behalf when you no longer can.

Others serve a more passive role, such as beneficiaries. But beneficiaries can still work toward optimizing their relationship with trustees.

Understanding the trust

Forbes discusses the role of a beneficiary in an estate plan. As mentioned, their role serves a more passive purpose compared to other people, such as trustees. While trustees have a list of duties they must fulfill, this is not the same for beneficiaries.

However, as a beneficiary, there are several points a person can understand which can better their relationship and optimize interest in the trust. They must understand:

  • The objective of investment
  • The nature of their interest in the trust
  • The purpose the trust serves, as described by the grantor

On top of that, they need to understand factors that go into a trustee determining if they should make discretionary distributions. This can include resources available to them as a beneficiary, the income tax consequences of said distribution and the stated purpose of the grantor for distributions.

Building your relationship

By understanding other obligations of trustees, it can help them build a beneficial relationship as a beneficiary. This can help your beneficiaries maintain harmony and productivity, which will help keep the process of handling your estate go smoothly after your death.

You can also work with your legal team to ensure that things go as smoothly as possible, as matters involving the estate often get tricky to manage.