During a divorce, your attention is on things like alimony, custody, child support and property division. You're wondering what will happen to your marital home and vacation property, where the kids will live, and other challenges that come with the dissolution of a high asset marriage.
So you recently found out that you have been named trustee to a loved one's trust. You don't think this is a big deal and that trust administration just means having your name on a legal document. However, this idea is absolutely incorrect.
Trusts separate income from principal, allowing the trust instructions to distinguish between the two. This means that the trustor can instruct the fiduciary to distribute all income from the trust to a specific person and only distribute principal in certain circumstances, such as medical emergencies. This would prevent the trust from diminishing due to excessive withdrawals, ensuring that it will provide income for the rest of the beneficiary's life.
California residents often incorporate trusts into their estate plans. Contrary to some popular myths, trusts may have significant value during the life of the grantor, they do not require as much work to create as people might think and they can be useful for those of limited financial means.