Who Has Access to Money Held in a Trust Account?

Who Has Access to Money Held in a Trust Account?
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A trust is a private legal agreement between two or more parties, where a third party holds title to the trust property for the benefit of another. There are many different types of trusts that have different purposes, and the trust agreement dictates who has the authority to withdraw funds from the trust and for what purpose the funds may be used.


  • Although the specific details regarding who can withdraw money from a trust vary depending upon the trust used, there is one overriding principal regarding all trust: the trustee must always act in the best interest of the trust, and cannot withdraw funds exclusively for their personal gain.

Trustees Can Withdraw For Trust Use

Trust law varies from state to state, but under no circumstances can a trustee withdraw funds from the trust for the personal use of the trustee. The trustee of any trust has a fiduciary responsibility to adhere to the terms of the trust agreement, and to ensure disbursed funds are not contrary to the purpose stated in the trust agreement. Common trust law dictates that the trustee (or trustees) are the only parties that can disburse funds from a trust account.

Trust Grantors Can Also Withdraw

A grantor trust is an entity in which the person establishing the trust retains a current interest and control of the trust. Trust grantors retain the rights to withdraw funds for any purpose from the trust. Creation of certain types of grantor trusts can occur that have exceptions regarding fund distributions, but typically there are no restrictions on distributions from the standard grantor trust. If a physically or mentally incapacitated grantor has granted a general power of attorney to someone, the holder of the general power of attorney does not assume the rights of the grantor in the trust. The only way a general power of attorney holder may withdraw funds from a grantor trust is if there is specific reference about the trust in the power of attorney document that states funds can be withdrawn behalf of the trust grantor.

Binding Rules for Beneficiaries

A trust agreement will name individuals as current beneficiaries, and state the terms under which the beneficiaries may receive funds. The terms are binding, and only those beneficiaries named in the trust agreement may receive funds. For example, if a husband is a trust beneficiary that may receive funds and his wife needs money for a medical operation, the trust cannot disburse the funds for this purpose if the wife is not a named trust beneficiary. Many issues that arise with married couples are similar, such as assistance needed for a mortgage payment where both the husband and wife are on the mortgage deed. If the trustee determines that disbursing funds to the husband is proper under the trust agreement terms, the trustee can only distribute one-half of the mortgage payment since the wife is responsible for her half of the payment.

Remainder Beneficiaries Have Limited Rights

A remainder beneficiary is a type of beneficiary that has a future interest in the trust. In most cases, a remainder beneficiary has limited rights regarding a trust until they become a current beneficiary which happens with some form of trigger event, such as the death of a current income beneficiary. As long as the beneficiary has a remainder interest only, the remainder beneficiary generally does not have access to trust funds unless the trust agreement contains provisions allowing a distribution. Lawyers can draft trusts in a way that allows funds disbursement to the current beneficiary or their “issue”, who are the children of the current beneficiary. In this case the children that hold a remainder interest may request funds from the trustee.

Review the Trust Agreement

Every trust is different and unique, and only a complete review of the trust agreement will determine if a current or remainder beneficiary has the right to withdraw funds from the trust assets. Trusts are complex legal instruments, and it is always a good idea for a beneficiary to consult their own legal counsel if unsure of the rights retained under the trust terms.