Checklist for Trust Administration – Part 6
Distributing to the Beneficiaries
by Julie Garber with Steve Beede
Usually the first question that the trust beneficiaries will ask the successor Trustee is “When can I expect to receive my inheritance?” But unfortunately for the beneficiaries, making distributions of the trust assets to the trust beneficiaries is the very last step in settling a Revocable Living Trust.
It’s been months and while impatient beneficiaries may be pressuring you for a payday, prior to making any distributions to the trust beneficiaries, the successor Trustee must be certain that every single expense of administering the trust (and the probate estate if there is one) and all taxes have been paid or that enough assets have been set aside to pay the final bills and taxes. Otherwise, if the successor Trustee chooses to make distributions to the trust beneficiaries but expenses come up later, then the successor Trustee will have to pay these expenses out of his or her own personal assets or try to get the assets back from the beneficiaries who may have already spent what they received.
In addition, if probate of some of the decedent’s assets was necessary, then the beneficiaries will need to wait until the probate administration is complete and a probate judge has ordered that the probate assets be transferred over to the successor Trustee before the trust can be terminated and the beneficiaries can receive their inheritance.
If administration of the trust is expected to take more than a year, then the successor Trustee should work closely with the trust lawyer and accountant to also plan for setting aside enough assets to pay the ongoing trust expenses and then making distributions to the trust beneficiaries in multiple stages instead of in one lump sum.
Once everything has been paid and all remaining assets have been distributed to the beneficiaries, the successor trustee can terminate the Trust. Their job is done. For some, this point will have come none too soon, especially if there has been conflict during the administration. But for most successor trustees the experience will have proven to be a valuable and memorable time… a time when they stepped forward and carried out the wishes of a friend or loved one who trusted them.
If you have questions about Trust administration, engaging the services of an experienced attorney can help you understand what needs to get done, guide you if you are trying to do it yourself, and step in where professional assistance is required.
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The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.