Three Reasons a Beneficiary Would Want to Terminate a Trust EarlyMay 1, 2012 — 1,365 views
The establishment of a financial trust is generally performed so beneficiaries can receive funds for quite some time. However, there are occasional situations in which it might make sense to engage in an early trust termination.
Beneficiaries might bring a trust to an end by performing assignment termination. This involves restructuring a trust so different individuals receive funds from it. For example, this might be necessary if adults who receive finances from a trust that was set up by their parents want their own children to benefit in the future.
Trusts are sometimes structured to take advantage of annuities, mutual funds and other types of investments. However, if an actuary or financial planner believes this sort of income will soon be far less than the total value of a trust, it may make sense to liquidate or sell it to prevent financial losses.
The legal basis of a trust is to serve the best interests of a beneficiary. However, early trust termination is necessary when a financial instrument is a burden on a person rather than a boon. For instance, if a person inherits a trust but cannot afford the taxes that must be collected on the income received from it, terminating the trust is often a good idea.