There may be nothing worse than having to fight for what is rightfully yours. As a trust beneficiary you are entitled to one thing above all else–trust distributions. Some trusts mandate distributions as “outright and free of trust” (meaning distributions now), some require assets to be held in trust until a certain age, and some hold trust assets in trust for a beneficiary’s lifetime. Yet, even with assets held in trust either for a certain age or for a lifetime, the trust still provides for distributions during that time frame. And a trustee cannot simply ignore his or her duty to distribute trust assets.
A trustee’s duty
Let’s start with “outright and free of trust” distributions. When a trust uses that term it means the trust is over as to that beneficiary. The beneficiary’s share of the trust assets must be distributed to them within a reasonable time. And while there is no bright line rule as to what is reasonable, it usually means within six to twelve months in situations where an estate tax return is not due to be filed (that means estates with total assets of less than $13.61 million). There are times when other complications could delay distribution such as a lawsuit over trust property or complicated income tax issues. But barring something major, the trust should be distributed timely.
For beneficiaries whose share remains in trust for a period of time or for their lifetime, the trust typically will still provide for distributions of income and principal to provide for the beneficiary’s costs for health, education, maintenance, and support. In other words, the trust funds are not closed off from the beneficiary entirely. They may be limited to these distribution categories, but the beneficiary should not receive nothing. In fact, it is the trustee’s duty to inquire with the beneficiary to determine what needs they have for things like health, support, and maintenance. Does the beneficiary need help with rent, do they need a car, are there medical procedures or health insurance premiums for which the trust funds can be used? All of these are simple examples of items that fall under the category of health, support, and maintenance.
Distribution best practices
Trust distributions are supposed to lean towards benefitting the trust beneficiary. The trustee should be living by the motto “when in doubt, distribute it out.” And yet, there are countless trustees who take the opposite approach. They think they are in total control of trust funds and can do whatever they like for any reason they like–or for no reason at all. These are bad trustees.
The most egregious examples are trustees who must distribute the trust funds “outright and free of trust,” but instead decide they will keep the assets in trust and “invest” them. A trustee who is under an outright trust distribution obligation does not have the power to keep the trust asset and invest them. In fact, they have no power to keep the trust assets at all. Their only duty is to pay the final expenses of the trust and then distribute the trust assets out–end of story. And outright trust is a trust that has come to the end of its useful life. The trust is over and the assets must go.
The same is true, although not to the entire trust assets, for trusts that provide for distributions under a health, education, maintenance, and support standard. The trustee should be looking for reasons to make distributions not to withhold them. The trust is in place to BENEFIT the beneficiaries not to hold money over their heads and make them beg for it.
How to take action
So, what can you do when a trustee ignores your demands for a trust distribution? You need to find a good trust attorney and take the trustee to court. As the beneficiary, you have to right to file in court and ask the judge to issue an order mandating the trust distribution. Furthermore, you could seek trustee removal, but that is a much bigger lawsuit. Or you can do both–ask for distribution and trustee removal. There are many things a trust lawyer can accomplish by filing your case in court and fighting for your rightful distribution.
Don’t have a trustee ignores beneficiary distribution
Our attorneys have taken action against hundreds of trustees for abusing their beneficiaries. We’ve also recovered more than $300 million and helped hundreds and hundreds of clients regain their dignity as a trust or will beneficiary through litigation – if you believe you’ve been the victim of inheritance abuse, tell us your story to see if your case qualifies for a free consultation. We’re here to stand, fight and win for you.
Call (877) 408-3813 or reach out online to consult a trust contest lawyer. See why we’re voted Best Lawyers.
