What happens when beneficiary dies?

[Maryley]

What is the name of your state? CA

We had a grandmother who just passed away, she lived in AZ we live in CA. She gave each of her grandchildren a lump sum, and the majority of the trust is left to her daughter in a 5 by 5 trust. She gets 5% a year of whatever the estate worth is aprx $800,000 at the moment. It is such a dissappointing setup to those of us who could have used some help from our mother had she received the amount in a lump. The way it is set up our mother gets whatever the 5% of the estate is yearly and if she takes more, she has to pay it back at 5%. Who is she paying the money back and the interest too? Isn't it her money? Also, when she eventually passes does she have the ability to direct changes in that existing trust to be how she wants them after her death, or does the grandmothers trust stand forever? In which case what would her grandchildren do split the 5% a year?? We are all very confused.
Thank you!

 

[hexeliebe]

Who is she paying the money back and the interest too?

The trust, which is an entity in and of itself.

Isn't it her money?

Nope, see above.

Also, when she eventually passes does she have the ability to direct changes in that existing trust to be how she wants them after her death, or does the grandmothers trust stand forever?

That depends entirely on the language of the trust.

What you need to do is have a probate attorney look at the trust and give you state-specific answers. We don't have a copy of the trust document nor your mother's will.

 

[Maryley]

Thank you for your information. We don't have a copy of the trust, are we entitled to one since we are recipients in the trust?

 

[hexeliebe]

From what you posted, you are NOT a beneficiary of the trust and therefore are not entitled to a copy. However, your mother is.

 

[Maryley]

We are not beneficiarys even though she(my grandmother) left my brother and I a one time lump sum of money from the trust??

 

[hexeliebe]

Did you already get the lump sum? If so, then you are no longer a beneficary and therefore have no rights to anything more from the trust, even paperwork.

 

[Dandy Don]

If you are named in the trust, then you were a beneficiary, but if you think there is any chance that the trustee might not want to provide you with a copy it would be better for your mother to ask for it if you also think she would be willing to let you see it. She would need to first check with an Arizona trust attorney or probate attorney to find out whether Arizona state law permits a trust beneficiary to request a copy of the trust from the trustee. The trust was drawn up in Arizona and that is where your grandmother died, right?

 

[lazydaisy46]

"It is such a dissappointing setup to those of us who could have used some help from our mother had she received the amount in a lump. "

And that's exactly why your grandmother set it up this way.

 

[Dandy Don]

The bulk of the money in the trust is called the principal, and that is the amount used to calculate the interest. Your mother has rights to the interest but NOT to the principal. The principal belongs to the TRUST as long as your mother is alive, but it is a different story after your mother dies.

As you were advised previously, you would need to examine the language of the trust to see what it says. It might instruct that the trust eventually be terminated at some future date and therefore the interest would be terminated, or if it says nothing or even until the trust is terminated, your mother would be eligible to receive the interest for sure and possibly the principal too (depending on what the trust says), so your mother would need to make her own will to decide how she wants the money to be handled if she was deceased, but mother can in no way revise or amend the trust, since only your grandmother can do that.