Time frame for receiving an inheritance question

[Drake3287]

Looking for someone here who’s been a Trustee for a family trust. I’ll ask our Estate Attorney next time we talk but I’m sort of curious at how this works so I’ll run it by you guys for now.

I’m the Trustee to my parents trust with my mom having just recently passed away. I’m in the process of selling the family home for a considerable amount of money and it’ll be divided equally to our large group of siblings. The trust itself is very straight forward.

Currently we’re in contract with a buyer and hopefully we’ll close escrow at the end of the month. Once a sale is complete and money has been deposited in the Trusts bank account how long does it typically take until I can actually write the siblings a check? With this being a Trust and not just a Will, does it still require approval from the court? There are also no creditors or unpaid bills to deal with.

This will also be in California so I know laws vary by state. The reason I ask is because a couple of the siblings badly need the money and I’d like to be able to give them an idea of how long they might be waiting. Obviously this is all new to me and I’m quickly learning as I go. Thanks.

 

[RobbieB]

As soon as you get the dough you can write the checks. Court? What court? Probate not needed because of trust.

You just have to follow the trust instructions.

 

[SecondCor521]

The only limiting factor I can think of is how long the bank account places a hold on the deposit of the proceeds from the sale.

You can ask your bank in general terms, but to be safe what I would do is go through the sale process, have the money sent to the trust bank account, and then once the deposit is in progress, ask them whether those funds are available.

At most the hold on funds is probably a week or 10 days, and if you talk to your bank branch manager about it and explain the situation, they might have discretion to make funds available more quickly (3 days or even immediately). My bank manager did that for me when I deposited a large life insurance check and I wanted to move the money to Vanguard ASAP.

Once the funds are available, and assuming that you're following the trust instrument and are the trustee as you indicate, you should be able to sent the money on to your siblings. In fact, since deposits are usually only FDIC protected up to $250K, you'd probably want to do it sooner than later to guard against the remote possibility that the bank goes under while holding on to your money.

California could have some weird trust laws that I don't know about, but in general it's your trust and your family's money, so I think it would be hard for them to restrict such a normal course of business.

I guess the only other possibly weirdness is if there is any possibility in California that the buyer could come back to you after the sale somehow, but if they're a normal buyer and you go through a normal escrow process using a standard real estate contract and a real estate agent and you buy title insurance and there's nothing weird about the property (it doesn't sit on an old Superfund site or anything), then I wouldn't worry too much about that.

My condolences on your loss.

 

[swakyaby]

If there are no other assets to distribute (stocks, mutual funds, bank accounts), you will want to withhold a certain amount to pay for expenses associated with the trust, such as trust tax preparation, taxes, estate attorney. Then, after all final expenses are paid, the remaining can be distributed.

My parent’s trust was distributed to all 4 children equally last year in California. There was no court involved.

 

[gauss]

Is the trust bank account already set up and do they recognize you as the trustee?
Have you successfully drawn money out of this account yet as trustee?
This would be one of the longer steps in the process if this has not already occurred IMHO.

 

[OddGuy]

I am very sorry to hear of your loss. The loss of a parent is devastating.

Regarding the distribution of funds, my understanding is that straightforward trust distributions do not require a court. That said, this distribution does not equate to closing the estate.

My father died last September. The lion's share of his estate passed directly to my mother. Her lawyer told her, "It appears this is a cut and dried marital trust - just have your fiduciary transfer the accounts." That was effected later in the month.

She elected to disavow her inheritance of one particular account, and pass it on the children in a three way split. That account is also the account that has been earmarked for final estate costs, including taxes. As such, that account has been sitting, untouched, since September. The final tax filing has been completed, and the funds are expected to be distributable sometime after the middle of June, which will mark 9 months since death.

I hope this is helpful.

 

[snappytom]

Sorry for your loss.

The successor trustee is now the owner of the assets that are named in the trust. You can treat them as your own property while honoring any limitations or specific instructions of the trust. There is no need to involve an attorney or the courts, all transactions are private matters.

Pressed for time as I write this, I have personal experience as a successor trustee.
Ask any questions.

 

[Gill]

The reason I ask is because a couple of the siblings badly need the money and I’d like to be able to give them an idea of how long they might be waiting.

I administered trusts my entire career and I was always amazed how someone always "badly needed the money". I never asked , but couldn't help but wonder what they would have done if the decedent had not died.
Gill

 

[Drake3287]

Thanks everyone, that certainly helps. Although I realize my parents originally had everything put into a trust for the ease of it all, I just assumed our attorney needed to get approval from the court before being able to write checks. Sounds like this isn't required for a trust which makes sense.

Yes, I opened a bank account in the name of the revocable trust a few weeks ago along with the IRS EIN required. Waiting for the funds to clear the bank isn't a problem, I just didn't know if this entire process took an extended time or not.

We also have a side checking account that we opened after her death just to pay on-going bill's and the future estate tax reporting costs. I haven't even told the other siblings about the house sale yet simply because so many of these fall apart before actually going through. I just know that a couple of them are hurting financially because of medical bill issues and the ongoing corona virus work related issues.

Luckily this entire process has gone smoothly so far so I haven't needed to talk to the attorney often which of course keeps costs down at $400. an hour. When I do end up meeting with him again I'll have a handful of questions to be explained. Thanks again.

 

[justlikebike]

I am from Canada, so the rules might be different but there is something you should check out. The rules here are you cannot finalize the estate until you get approval from Revenue Canada (Our version of the IRS) that there are no outstanding debts. If you were to distribute all of the moneys and then the IRS says "No no no, the estate owes us ## dollars" you are on the hook for that money. Here it takes about a year to get that. You can distribute it in chunks though. So if you are confident there are no debts, I would distribute enough to help the inheritors. Just ensure you put enough aside that you can pay all expenses. (Last year of Taxes, any outstanding debts (visa, etc.)) It can be a surprising amount. When I did my parents estate, it wasn't completed for 2 years.

 

[swakyaby]

Our family trust took nearly 2 years to distribute. Part of the issue was that it was an A-B trust, which at the time was intended to save a lot in estate taxes, but in the end was a headache and made obsolete by the change in estate tax law in the interim.