Ready to distribute financial account assets in mother's trust - Do I need a lawyer?

[ThankYou]

Jurisdiction

New York

My mother passed away recently. All of her financial assets were titled in the name of her living trust when she passed.

There are financial accounts at several financial institutions that hold stocks, bonds and cash equivalents. This would not be a final distribution as there is also some real estate in the trust and I will retain enough cash in the trust to cover expenses until the trust estate can be closed. So it is a partial distribution of her trust estate. More to come at some future date.

No estate tax, either federal or state, is due. I am the sole current trustee.

I am ready to make this distribution of the financial accounts to the beneficiaries in the percentages specified in the trust document and want to do so as soon as possible.

I am a financial expert so I do not need assistance with the financial aspects of the distribution.

Is there any reason why I need a lawyer for this and if so specifically what service do I need from them?

 

[flyingron]

You would need to read and understand the trust document to distribute trust assets. If you can't do that, a lawyer is obligatory.

 

[ThankYou]

You would need to read and understand the trust document to distribute trust assets. If you can't do that, a lawyer is obligatory.

Thank you but I have read the trust document many times, had lawyers read it and provide specific services related to it in the past and I believe I understand it very clearly. I have been familiar with the document for many years and had a lawyer do some work related to it about a year or so ago.

So I don't think I would need a lawyer for that purpose.

 

[army judge]

Is there any reason why I need a lawyer for this and if so specifically what service do I need from them?

How Long Does a Trustee Have to Distribute Assets – What Can Beneficiaries Do

After the death of the trustee, beneficiaries typically like to know how long does a trustee have to distribute assets. Distribution of trust funds after death is an important issue for the beneficiaries and the trustee. Trust funds that were properly transferred to a revocable living trust or irrevocable living trust are not subject to probate and get distributed after death in accordance with the terms of the trust.

What Beneficiaries Should Know About How Long Does a Trustee Have to Distribute Assets
After the death of the person who made the trust, the trustee follows instructions set forth in the trust which tells the trustee how to manage, handle and distribute the trust assets to the beneficiaries. The trust may or may not say how long doe s trustee have to distribute assets. The trustee may have to make an accounting of the decedent's assets before he distributes assets. If there are any assets that are discovered that have not been transferred to the trust, the trustee must advise the executor or personal representative of the estate to initiate a probate proceeding to transfer assets that are not included in the trust.

Frequently, a spouse may be the trustee and also the executor of an estate. Assets that the trustees may have to distribute may include:

Real property
Cash
Stocks, bonds and investment accounts
Jewelry and collectibles
Automobiles and other items of value
The trust assets are passed to the heirs of the decedent in accordance with the terms and conditions of the trust and not the decedent's will. On the other hand, any assets that are not properly passed to the trust and that are held in the sole name of the decedent will be subject to probate.

With a living revocable trust, the trust owns the assets, but the donor can revoke or change the trust and has control over managing and spending the assets during the donor's lifetime. With an irrevocable trust, the trust owns the assets and the donor cannot use the assets for the donor's benefit or transfer assets from the trust to the donor's personal accounts. The type of trust and the language of the trust may indicate how long does a trustee have to distribute assets.

What a Trustee Should Do After the Death of a Person Who Established the Trust
Being appointed trustee means that you have to take on a substantial fiduciary duty. This includes distributing assets, but also includes acting responsible in other respects. Failure to act responsibly and in accordance with the law could mean that you could be individually liable for mistakes you made. Before distribution of trust funds upon the death of the person who made the trust, you should consult with an estate attorney. You can schedule a consultation with Albert Goodwin at 212-233-133.

One of the first things you should do after death of the person who made the trust is to find the trust paperwork, if you haven't gotten it already. Once you have this, you will have an idea of who the beneficiary or beneficiaries are and which property is going to be included in the trust. It is essential to find these things out as soon as you can, as the beneficiaries would like to know how long does a trustee have to distribute assets.

Once you have the trust document, you should notify all the beneficiaries of the trust (unless the trust states otherwise). After death of the person who made the trust, if the trust allows, you should always keep in contact with the beneficiaries and give them periodic updates as to what is happening with the trust, along with giving accountings from time to time.

Once you have notified the beneficiaries, you will want to get a tax ID number and a death certificate. These things, along with the trust instrument are necessary to do various steps later.

Once you have gathered up the paperwork necessary to do your duty as trustee, you will want to gather up trust property and figure out what the value was as it was on the day the grantor died. For accounts that contain liquid assets, such as bank accounts, you may want to join all the accounts into one for simplicity's sake. If personal property and real property is going to be used to fund the trust, you will want to secure all of that property and make sure that it is safe from harm or theft. Remember that you have a duty to pay all bills related to trust property and to insure property such as jewelry, cars or houses so that the trust doesn't lose their value for some reason.

After all the trust assets are gathered up it is the duty of the trustee to distribute those assets and funds after death fairly according to the trust document's terms. This could mean that the trustee has to liquidate some assets. The trustee would also be responsible for investing those assets in a cautious and diverse manner so that the trust maintains its value.

Being named trustee means that a fiduciary duty is created, meaning that it is in the trustee's be interest to hire a New York City estate attorney to be sure that all the duties set forth by the trust and under New York law is met. A trustee must work on behalf of the beneficiary first, taking special care to not to engage in self-dealing or in a way that represents a conflict of interest. Your attorney is the best one to give you guidance on the proper way to handle the trust.

Please have in mind that the actions described here are general. Many things depend on what is written in the trust document itself. For specific advise on the administration of the trust where you are a trustee, do not rely on the advice in this article but be advised by a trust attorney. If you are a trustee of a trust of a recently deceased individual and you are structuring the distribution of of trust funds after death of the person who made the trust, or you are a beneficiary of a trust, and you would like to know how long does a trustee have to distribute assets, your best strategy would be to hire a New York estate attorney who is experienced in trust administration.

How Long Does a Trustee Have to Distribute Assets - What Can Beneficiaries Do
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Distribution of Trust Assets to Beneficiaries. When, How and How Much.

A beneficiary is entitled to a distribution of trust assets if the trust authorizes such distribution. Here are some examples of the different types of trust distribution arrangements for beneficiaries:

An immediate distribution upon the death of the person who made the trust
An immediate distribution upon reaching a certain age (for example, 18 or 25)
A distribution of principal
A distribution of income
A monthly distribution
A distribution at some specific point in time
Keep in mind that the possibility of distribution of trust assets to beneficiaries might not be the same in every trust – some trusts authorize distribution to beneficiaries, some do not. You would have to have an attorney read the trust document to find out for sure, presuming that the trust document is not unclear (as some are). Some beneficiaries are entitled to distribution of assets, some are entitled only to distribution of income, and some are not entitled to any distribution, possibly for a long time. Some beneficiaries are not entitled to any distribution at all, such as contingent beneficiaries.

Every month of delay of distribution of trust assets costs the beneficiary loss of use and enjoyment of their share of the trust. If the trustee is taking too long, a trust attorney can go a long way in showing them that distributing the trust to the beneficiaries should be a priority.

As we said, a distribution to beneficiaries of a trust depends on the trust language. If you don't have a copy of the trust, you can ask the trustee to provide a copy of the trust to you. If the trustee refuses, you can bring a court proceeding to compel the production of a trust.

On one hand, it is understandable that the trustee has many things they have to get to. On the other hand, a diligent beneficiary should not sit by idly for this entire temporal period, especially if he believes that a trustee is failing the nonwaivable duty to "exercise reasonable care, diligence, and prudence."[1] For example, a court may disqualify a trustee on grounds such as commingling funds, mismanagement, dishonesty, and substance abuse.[2]

New York courts and will step in if the trustee "endangers the trust" or "seriously impedes its administration."[3] If the trustee is non-responsive, a beneficiary can send a written demand to the trustee for an accounting and distribution of trust assets to beneficiaries. This request serves two purposes. First, it may be a requirement to commence any proceeding in court against the trustee.[4] And second, it gives the trustee notice that you are serious—which may give way to a faster distribution. If the trustee does not respond to this written demand, the beneficiary may then commence a motion to compel accounting with the court.[5] New York courts generally compel such an accounting if it's for good cause.

It is a fine line between giving the trustee deference and desiring to receive the inheritance promptly. When a beneficiary knows that a trustee is mishandling the trust, a court should immediately get involved. In many cases, however, a quarrel with the trustee is not in the best interests of either the beneficiary or the trust. Therefore, it is best to discuss distribution of trust assets to a beneficiary with a competent New York trust attorney.

References
[1] N.Y. Est. Powers & Trusts Law § 11-1.7(a)(1).

[2] N.Y. Surr. Ct. Proc. Act Law § 711.

[3] In re Braloff, 162 N.Y.S.2d 620, 623 (2d Dep't 1957), affirmed, 173 N.Y.S.2d 817 (1958).

[4] N.Y. Surr. Ct. Proc. Act Law § 2102(1).

[5] See id.§ 2205, 2206.


Distribution of Trust Assets to Beneficiaries. When, How and How Much.
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How Distribution of Trust Assets to Beneficiaries Works - Policygenius
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[ThankYou]

Thank you army judge, that is interesting information.

However, there is currently no issue with the timing of the distributions, and in fact, I am intentionally trying to expedite them and have both a personal and a fiduciary interest in doing so along with the other beneficiaries since I am one of them. There are also tax advantages to making the distribution as soon as possible.

There is also no question that the trust document specifies that distribution of all of the assets in the trust estate can be made upon the death of my mother. So my intent is to make them as soon as practicable.

I don't think there is anything a lawyer could tell me about the trust document that I don't already know. So I don't think I really need any more general help with that. I have had other attorneys that I discussed that with in the past.

My main interest is in finding out if there is anything in specific that I would need a lawyer for in relation to distributing these assets now.

 

[adjusterjack]

There are financial accounts at several financial institutions that hold stocks, bonds and cash equivalents.

All of those accounts are "owned" by the trust. In other words, at the top of the monthly statement they say something like "thank you family trust." And you have the authority as trustee to liquidate the assets in the accounts and distribute the funds?

If yes to all that, I don't see any need for a lawyer.

However, you might want to consider something. If the stocks and bonds are doing well, discuss with the other beneficiaries the possibility of them opening investment accounts where they can transfer their share of the stocks and bonds "in kind" from the trust's accounts. Otherwise there may be tax issues if you sell the stocks and bonds.

 

[Zigner]

My mother passed away recently. All of her financial assets were titled in the name of her living trust when she passed.

There are financial accounts at several financial institutions that hold stocks, bonds and cash equivalents. This would not be a final distribution as there is also some real estate in the trust and I will retain enough cash in the trust to cover expenses until the trust estate can be closed. So it is a partial distribution of her trust estate. More to come at some future date.

No estate tax, either federal or state, is due. I am the sole current trustee.

I am ready to make this distribution of the financial accounts to the beneficiaries in the percentages specified in the trust document and want to do so as soon as possible.

I am a financial expert so I do not need assistance with the financial aspects of the distribution.

Is there any reason why I need a lawyer for this and if so specifically what service do I need from them?

Are you asking if there is a legal requirement that would require you to utilize an attorney?

 

[ThankYou]

All of those accounts are "owned" by the trust. In other words, at the top of the monthly statement they say something like "thank you family trust." And you have the authority as trustee to liquidate the assets in the accounts and distribute the funds?

Yes to both.

If yes to all that, I don't see any need for a lawyer.

However, you might want to consider something. If the stocks and bonds are doing well, discuss with the other beneficiaries the possibility of them opening investment accounts where they can transfer their share of the stocks and bonds "in kind" from the trust's accounts. Otherwise there may be tax issues if you sell the stocks and bonds.

Thank you, that is good advice. And yes, my plan is to transfer all of the securities in-kind. The beneficiaries can then do as they please with them. At my request, the beneficiaries have already opened accounts at the respective financial institutions and supplied me with the information I need to complete the in-kind transfers.

 

[ThankYou]

Are you asking if there is a legal requirement that would require you to utilize an attorney?

No, my question is meant to find out if there is any specific legal document or process that would be in my interest to have an attorney provide before I make this distribution. There is nothing in the trust document that requires anything like that but I want to be sure that I am not missing some standard legal process that is desirable before a distribution of this kind.

 

[Tax Counsel]

However, you might want to consider something. If the stocks and bonds are doing well, discuss with the other beneficiaries the possibility of them opening investment accounts where they can transfer their share of the stocks and bonds "in kind" from the trust's accounts. Otherwise there may be tax issues if you sell the stocks and bonds.

The mother died "recently". As a result, the step up in basis in the stocks/value of the bonds would wipe out most of the tax gain if sold now. In that case, the best thing to do in most instances like this IMO would be for the trust to sell the assets and distribute the cash to the beneficiaries in the same year as the sale. That pushes most, if not all, of the tax to the beneficiaries where it will be taxed at a lower rate than the trust would pay. That should simplify the final tax returns of the trust and get the beneficiaries the most after tax distribution. Then the beneficiaries are free to choose if and how they will invest the cash they get. A tax professional familiar with taxation of trusts and estates might be useful for you if you are not well familiar with the tax treatment of trusts.

There is nothing in the trust document that requires anything like that but I want to be sure that I am not missing some standard legal process that is desirable before a distribution of this kind.

You may want to consult an attorney and a tax professional to be sure you've not overlooked some important detail. You don't necessarily need to hire them to do all the work of the distribution, but the issue spotting may save you money and grief later on. For example, as trustee I'd want a clearance letter from those tax agencies that provide them confirming the trust has apparently met all its tax obligations. That letter will help shield you from any personal liability for trust tax issues that come up later. There may be other things like that which you would want to know about to ensure the least risk of problems for you later on. Once you've spotted the issues, you may be able to handle the rest if you feel comfortable that you know what to do to handle those issues.

 

[ThankYou]

Thank you Tax Counsel, all good thoughts.

My strategy is to distribute as many of the income generating assets as possible as soon as possible for one of the reasons you mentioned, i.e. the steeper trust income tax rates. That includes distributing as many of the securities as possible as soon as possible which I plan to do in-kind. That way the beneficiaries will still get the stepped up basis and they can decide what they want to sell. And their capital gains will also be taxed at a lower rate than if sold while still in the trust. So in this particular case I don't see an advantage to liquidating the securities before the distribution.

The final tax returns will not be until TY2024 at least so won't be filed until 2025. So I will have time to think about the next part of the strategy. But step one will be to push out this large distribution to minimize taxes in TY2023.

As to consulting an attorney to get releases from the tax authorities that and other prudent matters, I plan to do so. I will even consult one with regard to this distribution. But I wanted to see what other views I could find here first.

Frankly, I already had an attorney, but he was a disaster. I was all set to make this distribution and he failed to deliver the things he promised and then ghosted me at the critical moment. So now I am seeking a new attorney and will have to start the plan all over again.

Thank you to all who commented. Appreciate your ideas.