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By: Scott Grossman on February 21st, 2019

Dealing with a Distribution

Somewhere along the line in dealing with the trust you’re going to get a distribution.

You may get distributions from the trust in pieces or you may get everything all at once. I’m always asked by clients well when I get a receipt should I sign it. I’m going to explain this to you and you’ll understand what to do and just as importantly what not to do. If you have a trust that pays out on more than one occasion and this happens all the time we’re in a very typical situation is a house is sold, we have most of the trust made liquid, there may be some things that the trustee still needs to deal with so the trustees still gonna hold on to some significant amount of money but is in a position now to distribute some meaningful portion of the trust. Then we know there’s going to be more than one distribution during the course of the administration and that’s fine. When you get that first distribution you should expect that you’re going to receive a receipt with it. If you get a receipt that is straightforward in other words the receipt says something like I the trustee have sent you the beneficiary a check for this many dollars and in fact, you’ve received a check for that many
dollars then sign the receipt and send it back there’s really no good reason not to. As long as what is on the receipt is accurate and it’s not asking you to do anything else other than acknowledge it has been sent to you it is fine to sign the receipt.

Sometimes we deal with either trustees or trustees attorneys who try to be a bit sneaky about things.

In addition to reporting what has been sent to you, there will be additional language saying that you are either waiving liability to the trustee or somehow excusing some kind of either known or unknown behavior of the trustee. That may be a red flag, it’s a red flag if that was not discussed before know if it was if there’s an agreement that because this distribution is being made that that sort of waiver is going to be given then that’s fine the receipt can be signed but you should know about that in advance. If you do that’s okay you don’t have to worry about it if this is brand-new to you you don’t remember any discussion about it you haven’t gotten a letter or an email talking about a waiver or anything like it don’t sign the receipt. That’s going to apply in every situation whether it’s multiple distributions or simply one distribution.

Now it is important to understand that when there is simply one distribution at the end of trust administration there is a very very high likelihood that there has been a discussion about whether or not an account is going to have to be prepared by the trustee.

There is no one right way to deal with this.

There are times where trustees have been forthcoming maybe voluntarily may be because the information got dragged out of them but the effect of all this has been that you have gotten good and complete financial information about what has happened during the administration of the trust. If that’s what applies to your case then you need to ask yourself whether you really want to force the trustee to provide an account I’m referring to a formal trust account. Because doing that is going to take time, they’re going to pay their trustee money for putting that together, and oftentimes if people have gotten the answers that they want there really isn’t any good reason to simply force the trustee into a formality that winds up costing you money.

Now on the other hand you may not be satisfied with the financial information that you’ve received and that formal trust account may be necessary.

If there’s been an agreement to waive the trust account then you should expect that you’re going to be signing a waiver. I can tell you that when I am on the other side of the case when I’m representing a trustee and we are going to conclude the administration there are only two ways that I will allow my clients to finish the case at least if they’re gonna have me representing them. One way is filing a petition with the probate court to approve the account because when that order is granted because everything is what it’s supposed to be the trustee does not have to worry that sometime in the future somebody will claim that they haven’t gotten what they’re supposed to do and sue them. The other way to do it is we provide the financial information we ask people to sign waivers if everybody and I mean everybody can make the distribution and close up that way.

So now let’s talk about your situation you’re the beneficiary you’re expecting to get these funds you should expect that the trust is going to be closed in only one of those two ways.

There is not a right or a wrong answer here there are only pragmatic answers because when we’re at the end of trust administration what we are down to is a dollars and cents discussion. If you’ve received the financial information you need there’s rarely if ever a good reason to force that formal account. If you have not gotten it then certainly we want the account. This is going to be a point of discussion, either it’s something that we’ve been discussing so you already know the answer or if you feel that we haven’t had a sufficient discussion then by all means call the office set up a time for us to talk and we’ll figure out which way to do this just don’t sign something blindly.

If you are ready to start your case, then please give us a call or fill out our Get Help Now form. A comprehensive overview of California Probate is available here. Should you have additional questions about trust litigation, you will find plenty of useful information in our Learning Center.