For the beneficiary of a trust, the most pressing question is always: “When am I going to get my share?” Trustees will likely face this question several times during the course of the trust’s administration. It is important to explain that assets cannot be distributed without first taking several steps. The trustee faces potential liability if proper care is not taken.
Seven Steps for Distributing Trust Assets to Beneficiaries
When many of the tasks of administering the trust is complete, and the trust document calls for distribution of the assets, the trustee should begin the plan for distribution. The following are seven steps to take before distributing the assets:
- Review the terms of the trust to determine whether the exact manner for distribution of the trust is outlined.
- Prepare an agreement for a plan of distribution that meets the needs of the beneficiary while still minimizing taxes and expenses owed by the trust.
- Seek an agreement on the proposed plan from the beneficiaries.
- Determine whether to distribute assets by first selling them and then distributing the cash, by distributing the assets in kind, or some combination of both.
- Factor any added expenses into assets that plan to be sold. For example, the sale of a house in Anaheim may involve a realtor commission.
- Determine an appropriate reserve amount to hold back and cover expenses or contingencies, such as final tax returns or final payments to attorneys or CPA’s.
- Consider obtaining an indemnity from the beneficiaries for any unknown liabilities that might arise.
Information like this may seem small, but can go a long way towards ensuring a smooth and efficient trust administration process. If you are interested in learning more about implementing an estate plan in Anaheim, we encourage you to sign up for our free newsletter today!