Trust Assets Distribution
The primary responsibility of a successor trustee is distributing the assets of the original trust to the corresponding beneficiaries. Before assets are dispersed, there are a few steps that must be followed.
First, within 60 days of the date of death (or within 60 days of the second spouse’s death if the trust is in relation to a couple), all beneficiaries of the trust and heirs at law must be contacted in writing. This notification is specifically worded and, if any of the trust beneficiaries request it, a copy of the trust as well as all of its amendments are required to be be given to them. Any person who receives this notice has 120 days to challenge the original trust.
The original trust assets can be sold. Or, if all of the parties agree, the assets may be evenly split among them. For example, a beneficiary may want the property while another may request an equally valued mutual fund. If, however, an understanding cannot be reached among all parties, the assets of the trust will be equally divided, with each beneficiary receiving their equal share of each separate asset from the trust.
A precise list of all the trust assets must be produced once an agreement has been reached by all beneficiaries with regard to the division of trust assets. After this list has been agreed to and signed by all parties, the assets must be re-registered in the names of the beneficiaries who will receive them. Additionally, each financial institution that holds title to these assets have to be notified of the re-registration. For real estate, a new deed must be created for each parcel of property.
Additionally, an annual accounting of the trust must be filed with all of the beneficiaries, as well as upon a change of trustee or thetermination of a trust. This accounting must show which assets were held in the trust at the date of death, as well as the value of the assets on the date of death and their current market values.
There are some trusts that stipulate that the trustee may not distribute the assets for a set number of years. In cases such as this, the successor trustee will be responsible for investing the trust assets and making distributions to beneficiaries in the future. In any case, a successor trustee has a fiduciary responsibility to manage the trust solely for the benefit of the trust beneficiaries. This means the originators of the trust, if alive but incapacitated, and for the designated beneficiaries upon the trust originators’ deaths.
It is best to consult with an estate planning attorney during this process. The information you receive can help that you are following the process in the proper manner. With the multitude of steps involved that relate to asset distribution, it is a good idea to work with someone who knows the process.