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What’s the Difference Between a Beneficiary and a Trustee?

Two terms that can be commonly confused in estate planning are beneficiary and trustee. Trust beneficiaries are people that will be receiving the assets from the trust. Trust beneficiaries are the owners of the trust or the equitable sharers of the trust. Beneficiaries will receive money and other assets from the trust in full such as a large lump sum from investments or in smaller amounts over time based on the provisions detailed in the trust.

A trustee is the person managing the assets in the trust. Beneficiaries are receiving assets from the trust that they will not be responsible for managing and distributing these assets. This means that if you were to pass away and your will detailed that your son was to own your home, you would change your role from the beneficial owner and the legal owner of the home and pass that ownership along to the trustee. The trustee will then act as the legal owner of the home as the trust is properly dissolved and as management needs to take place for your full estate. The trustee will eventually transfer over ownership of the home as well as any other assets and funds to the people you named.

It may seem a bit odd to trust another official in the process of giving your heir your home but that is how legal trust works effectively. Trusts will effectively separate the legal ownership from the previous owner and then transfer ownership to the beneficial ownership. This helps to prevent disagreements and be sure is that the wishes of the original asset owner are carried out.

Any trustee needs to operate under a series of obligations and duties under the law. Any trustee that’s appointed will need to treat all beneficial sparsely and make sure that actions are designed to benefit the trust and not themselves.

If you have any other questions about estate planning, contact us today.

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.

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