Once a loved one passes away, his or her assets that are placed in a trust must be distributed according to the trust’s terms. Trust beneficiaries often become impatient waiting for distribution and become angry with the trustee.
Many people ask why distribution can be delayed for long and whether beneficiaries should be worried. There are many answers to those questions. Because these are questions that I am so frequently asked, I have written the following blog post to provide an overview.
As an estate planning professional I have helped countless people create trusts to make sure that their assets pass according to their wishes, to avoid probate, and to gain strategic tax advantages. With the help of an experienced estate planning attorney, you can create an trust that achieves your goals through a highly personalized trust creation process. If you have questions about incentive trusts or any other area of estate planning, call experienced Bay Area attorney Linda J. MacKay today at (408) 379-9600.
Legitimate Reasons that the Trustee Needs Time to Distribute Assets
There is an incorrect belief that a deceased person’s assets can just be divided after his or her death and distributed according to his or her trust. That is not an accurate picture of how the asset distribution process works, as it ignores the complexities of tax and estate law. First, the executor or trustee must make sure all taxes are paid for the year or years any distribution will be made. Second, the trustee must make sure that any distribution is made per the trust’s terms. Specifically, there may be terms in place that delay distribution, such as waiting for a beneficiary to attain a college degree, get married, or get sober. These terms could significantly delay distribution but should not be a secret to any beneficiary. Any beneficiary to the trust should be able to have the probate court perform an accounting to make sure that trust funds are being used legitimately and that distribution is occurring according to the trust’s terms. Under normal circumstances, it may take a trustee up to a year to distribute trust assets to beneficiaries.
Illegitimate Reasons that the Trustee Needs Time to Distribute Assets
In my experience, trustee malfeasance occurs when of one of the following illegal activities is present. The most common is that the trustee uses trust assets for his or her benefit. In this situation, distributing assets will tip off trust beneficiaries to his or her siphoning off funds. As a result, the trustee drags his or her feet and comes up with excuses regarding why the assets cannot be distributed. If this is occurring, you need the help of an experienced estate planning attorney and the probate court immediately.
A second illegitimate reason for delaying distribution occurs when a trustee incurs large legal bills because of the trustee’s actions. While not as morally reprehensible as stealing, this amounts to the same thing—the trustee is wasting trust assets on his or her negligent acts.
Often trustees who do not follow the trust’s terms. They do not invest trust funds properly or fail to diversify the trust portfolio under the trust’s terms. Again, these trustees are violating the incredible faith put in them by the deceased and are often wasting assets needlessly. If you sense that this sort of conduct is occurring, you need to attain the help of an experienced estate planning professional immediately.
If You Need Estate Planning Help, Call Linda J. MacKay Today
If you have questions about trusts or the role of a trustee, call an experienced estate planning attorney. As discussed above, there are both legitimate and illegitimate reasons that a trustee may be taking so long to distribute assets to beneficiaries. Attorney MacKay has the experience to help you through this challenge and to guide you through the estate planning process.
Contact the Law Offices of Linda J. MacKay today at (408) 379-9600. The Law Offices of Linda J. MacKay is ready to assist you with your estate planning questions.