Understanding Trust and Beneficiary Rights
While there are a number of different types of trusts, there are two that are most commonly used. One is called a revocable trust which means that the trustee has the right to modify or completely defund the trust. The second type of trust is an irrevocable trust which is used to gift property to a beneficiary with no rights to defund or modify the trust. There is various language associated with the creation of a trust, such as a living trust. However, this does not address the question that many beneficiaries have which is can a beneficiary can make deposits to a trust? First, it must be understood how the trust is set up and the purposes of the trust.
Registrations for a trust would look something like this:
John J. Doe, Trustee Doe Family Revocable (or irrevocable depending on the terms of the trust) Trust; FBO Catherine Doe, Beneficiary U/A/DTD 04/26/11. This form of registration shows the name of the trustee, the name of the trust, the type of trust as well as the name of the beneficiary and the date of the trust agreement. Under these terms, upon the death of John J. Doe, the assets of the trust would then become the property of Catherine Doe. Once this occurs, there would be a new registration that would read something like this:
Catherine Doe, Beneficiary; Doe Family Revocable Trust U/A/DTD 04/26/11. This form of registration clearly shows the brokerage or financial institution that the assets from the Doe Family Trust now belong to Catherine Doe. There is now distinct legal language which governs the beneficiaries rights to the assets. Because a trust is an estate-planning tool, upon the death of the trustee, the beneficiary gains control of those assets.