The Trust beneficiary is the person entitled to the Trust assets. In legal jargon trust, and will attorneys refers to Trust beneficiaries as “equitable owners”. The Trust document will specify that beneficiaries can receive money or other assets directly from the Trust.
How To Manage Trust Assets
The Trust assets are not managed by the beneficiaries, even though they are received by them. Trust assets are managed by the Trustee, unlike assets you own. If you own your home, for example, you will be both the legal owner (you decide when it is sold or refinanced…when it gets a new roof), and the beneficial owner (you actually live there). The Trustee is the legal owner of a home and makes all management decisions. Beneficiaries only get the enjoyment portion, living there if it is allowed by the Trust terms.
Although it may seem strange that Trust beneficiaries get the assets at some time, they do not control or manage them. This is how Trusts work. Trusts are unique because they effectively separate legal and beneficial ownership. Nearly all other contexts have the same legal and beneficial owners (with some exceptions but not many).
Although the Trustee is the manager, they must still adhere to the many duties and obligations that come with being a Trustee. Because they have the power to control assets that are beneficial to Trust beneficiaries, the law imposes duties on trustees. Trustees are expected to treat beneficiaries fairly. Trust beneficiaries are to be treated fairly by trustees. It may not always be possible, but California Trust law requires that it do so.
Bottom line: Beneficiaries will eventually be able to enjoy Trust assets, but they cannot control or manage them until that time.
This article was written by Alla Tenina. Alla is one of the best tax attorneys in Los Angeles California, and the founder of Tenina law. She has experience in bankruptcies, real estate planning, and complex tax matters. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; the ABA and its members do not recommend or endorse the contents of the third-party sites.