Are you a beneficiary expecting to receive an asset distribution? Are you wondering how long you can expect it to take the trustee to administer distributions? Or are you a trustee tasked with distributing trust assets? This article will serve to provide you with valuable information.
Let’s look at a trustee’s role, the distribution of trust assets, and what to do if you are a beneficiary who has not received a distribution in a timely manner.
What is the Purpose of a Trustee?
Having an appointed trustee ensures that assets are distributed according to the wishes of the trustor (trust creator). Per the California probate code, the trustee has a fiduciary duty to manage assets and administer the distribution to beneficiaries and heirs in line with the terms outlined in the trust document. This responsibility may last until beneficiaries reach the determined age when they are able to receive the distributions and be entrusted with assets themselves.
Understanding the Term “Trust Distribution”
The term trust distribution simply means the process of the trustee distributing assets from a trust to the trust beneficiaries. The administration process must be done in line with the terms outlined in the trust instrument (trust document). That way the trustee can be sure they are handling the distributions in line with the trust creator’s wishes.
What Steps are Required Before Assets are Distributed?
A trustee cannot begin distributing assets as soon as the trust creator has passed. The trust administration process requires several action items be completed before distributions are made, including:
- Filing the will with the courts and getting the death certificate
- Providing notification of the deceased’s passing to creditors and social security, as well as taking care of taxes
- Inventorying and reviewing trust assets and investments, as well as selling personal assets
- Locating all heirs and beneficiaries
These are just some of the responsibilities a trustee must fulfill before distributions can be made.
How Long Does a Trustee have to Distribute the Assets to Beneficiaries?
A trustee is responsible for distributing assets within a reasonable amount of time. However, there are many factors that can play into how long it will take. Generally, the full distribution for a revocable living trust is about 12-18 months. The time frame can be even less, down to 4-5 months, if the distribution is straightforward.
So what can cause delays when it comes to trust asset distribution, making the time frame even longer than 18 months? Taxes to be paid and debts that are owed can cause delays. Here are a few things to consider:
There can be a time delay if there is real estate that needs to be sold prior to making distributions. Property that has issues that need to be fixed or proves to be hard to sell can cause delays. These delays can even be multiplied if there is more than one piece of property to be sold.
Estate Tax Return
There can certainly be a delay if it is necessary to file an estate tax return prior to making distributions. However, the need to file an estate tax return only applies in the administration for trust estates that are multi-million dollar.
Trust Terms that Involve Staggered Distributions
The trust administration will not be fully complete until all distributions are made. In the event that a trust outlines terms of staggered distributions, which would be preliminary distributions set to be administered over specified periods of time, there will certainly be a delay for the beneficiaries and heirs to receive their final distributions.
In some cases, a single or multiple beneficiaries may decide to sue if they believe they have grounds to challenge the trust document. This can take place if they believe the trust creator signed the document under undue influence or if they don’t trust the lawyer who assisted with creating the document.
A trust contest in California will be overseen by the probate courts. This will cause extensive delays as the distributions will be put on hold until the case is resolved.
Is a Trustee Allowed to Refrain from Distributing Assets to a Beneficiary?
The terms outlined in the trust document is what dictate the actions a trustee can and cannot take. If the trust allows a trustee to refuse to pay a beneficiary, then they are allowed to refrain from distributing assets. A trust creator may give a trustee the authority to discern when and how much to distribute.
A trustee may also refrain from distributing assets until a beneficiary comes of age or if staggered distributions are outlined in the document. Again, this must all be in line with the terms of the trust.
What to do if a Trustee Will Not Distribute the Assets
In the event that a trustee does not make distributions in line with the trust terms, a beneficiary or heir may sue them for breach of their fiduciary duty. They may also sue if the trustee has mishandled assets or failed to provide financial accounting to beneficiaries as legally required. Also, if the trustee proves to lack dependability with paying expenses and fees on time.
If you are a beneficiary seeking a lawsuit against a trustee, you may file a petition with the probate courts to have the trustee removed and have a new trustee established in their place.
Get Help with Trust Distribution
At The Legacy Lawyers, our attorneys are experienced in California trust administration cases. We can help you whether you are a beneficiary seeking assistance with getting the distribution you deserve or a trustee seeking assistance with administering a trust. Give us a call at 800-840-1998 to schedule your consultation today!