Are you planning to use a trust as part of your estate? You’re not alone. Many California residents turn to trusts for their own needs.
A clause inside of a trust document can help give you control over how much a beneficiary is entitled to withdraw. You can discuss this with your Pasadena estate planning attorney to identify the most appropriate structure for making a gift through a trust.
A five or five power clause is a popular option. This gives the beneficiary the right to withdraw 5% of the fair market value of the trust or $5,000 per year, whichever is greater. This is in addition to any other regular income payouts associated with the trust benefit. Distributions that are taken by a beneficiary under the five or five power can be written off as deductible. Since a trust is a powerful alternative to a lump-sum inheritance, this can help give you peace of mind that your intended beneficiary is eligible to withdraw funds as they need them based on these limits.
When you create a trust, you are not limited to the 5 by 5 rule and can in fact set up a trust with the needs of your beneficiaries in mind. With many options out there in terms of trust types and ways that you can distribute assets, it’s best to work with a qualified attorney in Pasadena who is familiar with all aspects of estate planning.
Our lawyers have years of experience answering key questions about using trusts and helping people structure their estate plans overall.
If you have further questions about the purpose of establishing a trust and how to do so with the needs of your beneficiaries in mind, feel free to contact our Pasadena estate planning lawyers.
