At Phelps LaClair, we are often asked how long it takes for a trust to be distributed. In our experience as a second generation law firm, we know that the general rule is to have the trust distributed within a reasonable time. But what does that mean? There are several factors that determine the time frame for trust distribution.
An estate plan that is well-designed, simple and straightforward, and contains mostly liquid assets in trust has the best chance of being distributed quickly. This presumes that the Successor Trustee is conscientious and acts without undue delay. The trust documents will specify how the assets are to be distributed. In many cases, the decedent has established percentages to be distributed among his beneficiaries. When all financial accounts are closed, the total value can be distributed minus any fees and costs associated with the closings. This can be accomplished within a period of a few months.
When there are physical assets, they must be appraised and valued, then distributed according to the desires of the decedent. With real estate, for instance, the trustee will need to have a deed drawn up for each piece of property. If the property has been bequeathed to an individual, the deed can be conveyed to that person. If the property is to be sold and the proceeds from the sale distributed among beneficiaries, it is the responsibility of the trustee to get the best possible price.
The same process holds true for automobiles and other machinery, furniture, antiques, art collections and so on. The costs of appraisals and sales will be deducted from the proceeds of the sale and then the proceeds can be distributed. This may take some time, but the distributions should be concluded within eighteen months or so.
Lawsuits and challenges to the estate or trust need to be resolved by the trustee before any distributions can take place. These could be challenges to amendments in the trust, or to beneficiaries such as ex-spouses included or not included in the will. This can take months in itself and will involve legal fees that will be deducted from the value of the estate.
Very large estates may necessitate an estate tax return to be filed with the IRS. Currently, the untaxable limit is set at $11.4 million per person, but that is subject to change. If an estate tax return is required, the funds may not be distributed for years.
Trust distribution can be a complicated and daunting task. Phelps LaClair has helped many of our clients navigate through the labyrinth of trust administration. We have been designing estate plans for 40 years. We know how intimidating it can be to be named the Successor Trustee of an estate. If you are in this situation and need legal help, please give us a call. Our first consultation with you is complimentary and there is no obligation. It is our pleasure to help people in the Phoenix metro area with estate planning and trust administration. With offices in Phoenix, Chandler, Mesa and Scottsdale, we are nearby when you need us.