When should a beneficiary expect distribution from trust accounts? It can be difficult without considerable expertise. The process can be complicated, and knowing what to anticipate can help to relieve the stress and emotions associated with it. Here is what you need to know about how long it takes to distribute assets and why you need to work with an experienced CPA:
What is a Trust Distribution?
A trust distribution refers to the payment or distribution of trust assets by a trustee to beneficiaries. Trustees must administer trusts following the trust instrument.
Distribution adheres to asset distributions detailed in the trust document and requires carefully reviewing the trust instrument or document to ensure they follow all necessary directives.
Related Article: What is the Difference Between a Trustee and Executor?
Average Time for Trust Distribution
When it comes to distributing assets from trust accounts, timeliness matters. Generally, a trustee must distribute assets within a ‘reasonable’ time.
However, what is ‘reasonable’ can be confusing. Typically, it takes twelve to eighteen months after trust administration commences to fully distribute assets. In most cases, it can take over a year if there are significant or large assets to sell.
This estimate accounts for settling things like tax and debtor liabilities. In more extreme cases, it can take up to two years. Still, before the final distribution, a trustee can make a preliminary or partial distribution to beneficiaries.
For example, if the estate has $1,000,000 and will require less than $250,000 to administer it, the trustee is able to distribute $750,000 to beneficiaries and keep $250,000 in reserve just in case.
Related Article: California Trust Accounting: What Documents are Needed?
What Must Happen Before Trust Distribution
Before beneficiaries can receive assets, a trustee must distribute assets from trust accounts using a transparent administration process.
Ultimately, the amount and type of assets determines how long distribution takes. A trustee must also pay outstanding bills, taxes, and other liabilities before distributing assets. If the estate is very large, the trustee may have to wait for the IRS to review their estate tax return and send a closing letter. Visit the IRS website for the most accurate number.
While these things can take time, trustees are legally obligated to provide reasonable updates on the status of distribution to beneficiaries. Moreover, a trustee must:
- File the will with the Clerk of Court
- Notify creditors
- Sell personal assets like stocks, bonds, and real estate
- Obtain the death certificate
- Contact social security if necessary
- Gather and take an inventory of trust assets
- File taxes for the trust
- Review trust investments
- Establish a record-keeping system
- Identify and locate all beneficiaries and heirs
- Pay all administration expenses
This doesn’t include other paperwork involved. The length of the process hinges on the complexity of the trust. Given the complexity of this process, working with a premier CPA is imperative.
Get Help With Trust Account Distribution in California Today
If you are currently awaiting asset distribution from a trust account, working with an expert CPA is critical. Understanding your rights as a beneficiary and how to navigate this process is daunting to undertake alone and only compounds your stress.
Fortunately, with Marcia Campbell CPA, you receive unequaled financial consulting services that facilitate every financial aspect of this complex process and enable you to know what to anticipate every step of the way. Contact us with any questions.