How to Withdraw Funds From a Family Trust


A family trust can be either irrevocable or revocable. An irrevocable trust can't be modified or changed once it's created. A revocable trust can be changed, modified or dissolved during the grantor's lifetime. Upon the grantor's death, it becomes irrevocable. Regardless of which type of trust your family member has established, the beneficiaries can't touch the funds in the trust. The trustee is the person in charge of distributing the trust assets. If you're named as a beneficiary of the trust, you'll need to communicate with the trustee to withdraw your assets after the grantor's death.

Review the Trust Documents

If you ask the trustee for a copy of the trust document, he is required to provide you with a copy, along with any amendments that were made to it. You're entitled to annual trust reports, which include financial account statements, interest earnings, bills paid, attorney fees and any commissions the trustee pays himself. Look for any restrictions that specify when you can receive assets, such as when you reach a minimum age or annually. The trust orders may allow you to make withdrawals for designated needs, like educational or medical expenses. In some cases, the trust orders may grant the trustee discretionary powers, which means the trustee uses his discretion to determine how and when assets are distributed.

Meet With the Trustee

Generally, the trustee will meet with the beneficiaries to discuss distributing the assets. If you are not local, you can email or communicate over the phone. The trustee will pay creditors and settle debts as specified in the trust terms. Remaining assets are distributed to each beneficiary. The trust orders may instruct the trustee to sell or liquidate the assets and divide among the beneficiaries or assign certain assets to beneficiaries. It can also take some time for the trust to collect all the assets, especially if they're life insurance policies or annuities. Generally, the trustee will need to submit death certificates and complete paperwork before the disbursement of funds.

Request a Withdrawal

To request a withdrawal from the trust, put the request in writing, so you'll have a record of it. The trustee is required to fulfill his fiduciary duty, which includes complying with the trust terms and acting fairly and honestly. If the trustee refuses to give you assets you're legally entitled to receive, you can petition the court to have him removed and replaced with another trustee.

Possible Probate Complications

Although trusts are designed to avoid probate, establishing one doesn't guarantee assets stay out of court. Complications can arise when assets aren't transferred properly. The legal title of the assets must be changed to the legal name of the trust. Any payable-on-death accounts, such as checking accounts, have to list the trust or a beneficiary to bypass probate. If assets you're supposed to receive weren't properly titled, they may be subject to probate. Before you can receive those assets, you'll need to wait for the estate to be settled. If there are debts, non-exempt assets can be sold to cover the debts. The length of time the probate process takes varies among states.

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