Asked in Estate Planning for California

Q: Can I allocate my trust benefits to another sibling?

I want to give my benefits to another sibling without receiving distribution. Can I sign it over by filling out an alternate payee or similar form with estate attorney?

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2 Lawyer Answers
Nina Whitehurst
Nina Whitehurst
PREMIUM
Answered
  • Estate Planning Lawyer
  • Crossville, TN
  • Licensed in California

A: The easiest way for you to accomplish your goal would be to just accept distributions and then gift like amounts to your sibling. Be sure to talk with your tax advisor first about the gift tax consequences and talk to your attorney about the Medicaid penalty consequences.

Even if you were to "assign" your rights, the tax consequences would be the same.

Because you are receiving distributions, my guess is the trust is probably irrevocable, so absent a trust protector (which is relatively rare, especially in older trusts), there is likely no way to amend the trust to switch your share to your sibling. But you should explore the possibilities with an experienced estate planning attorney. There is no way to know exactly what can and can't be done without reviewing the trust.

Howard E. Kane and Julie King agree with this answer

Julie King
Julie King
Answered
  • Estate Planning Lawyer
  • Monterey, CA
  • Licensed in California

A: The answer depends on the language of the trust. In most instances, if you decline to accept a gift, the trust will say to whom the gift will go. So, to accomplish your objective, you may be required to accept the gift then give it as a gift to your sibling. There are tax consequences to doing it this way, so be sure to speak with your CPA and an estate planning attorney in your area.

Howard E. Kane agrees with this answer

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