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Pros and cons of an irrevocable beneficiary Naming someone as an irrevocable beneficiary has its advantages, but it also comes with a few challenges. Here’s a breakdown of the key pros and cons ...
A donee beneficiary can sue the promisor directly to enforce the promise. (Seaver v. Ransom, 224 NY 233, 120 NE 639 [1918]). A donee beneficiary is when a contract is made expressly for giving a gift to a third party, the third party is known as the donee beneficiary. The most common donee beneficiary contract is a life insurance policy.
The most infamous example would be beneficiaries who clamor against the trustee to "bust the trust" based on the strict limits the trust (or the trustee) may impose on the trust assets. In many of these cases, the UTC provides beneficiaries (and trustees) relief to provide the flexibility needed to dispose of trust property under certain rules.
beneficiaries under a bare trust (including a constructive or resulting trust), to whom the trustee owes basic duties arising by law; and; beneficiaries under an express trust (either an inter vivos trust or a testamentary trust), where the trustee owes additional duties and has additional powers specified by the trust instrument.
4. Take the tax break if you’re entitled to it. An inherited IRA may be taxable, depending on the type. If you inherit a Roth IRA, you’re free of taxes.
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Most well-drafted irrevocable trusts contain spendthrift provisions even though the beneficiaries are not known to be spendthrifts. This is because such a provision protects the trust and the beneficiary in the event a beneficiary is sued and a judgment creditor attempts to attach the beneficiary's interest in the trust.
Using the same scenario with three beneficiaries (A, B and C) set to receive a $300,000 death benefit, if beneficiary C dies, the death benefit would now be split equally between the two remaining ...