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  1. #1
    Karenad is offline Junior Member
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    Distribution of Trust Assets after Death

    What is the name of your state? CA
    My sister is Trustee of one of my father's (Settlor) trusts. My father died December 30th 2006 in California. This sister is not the executor of his will. What are the steps she must follow, based on California law, to distribute the contents of the Trust? My understanding is that Trusts are not subject to probate so she can follow the terms of the Trust and make the Distributions as described in the Trust. i.e. "At the settlor's death, the trustee shall distribute the remaining trust estate in equal shares to the settlor's then-living children;..." Am I correct in thinking that she can just go ahead and make the distributions without having to wait for a go-ahead from probate court? How does this all work? Thanks for and help on this!
  2. #2
    tranquility is offline Senior Member
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    It depends. An estate needs to be looked at in the whole and not just in parts. While trusts avoid probate, that does not mean the assets are without responsiblity to creditors and to the government for estate tax. Unless the trust was irrevocable and gifted before death (where income tax issues arise), a successor trustee would be foolish to distribute much before probate closes or they are sure there is noting hiding out there that could have claim to the assets.
  3. #3
    Karenad is offline Junior Member
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    Thanks, Tranquility.

    The trust was established years ago but was revokable. So, do we just wait until probate is completed - and how long might that take? All my father's assets other than this investment trust are contents of a separate trust, with his wife the co-trustee. Upon his death his portion of their assets (other than the investment trust) gets distributed to her trust - this trust has a value in excess of $700,000. The value of the investment trust is small enough that inheritance tax won't come into play at all.
  4. #4
    seniorjudge is offline Senior Member
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    What assets are being probated?

    What assets belong to the trust?
    There are two rules for success:

    (1) Never tell everything you know.
  5. #5
    Karenad is offline Junior Member
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    twist

    I don't know much about wills in general, but there is a will and then two trusts. The trust for which my sister is the trustee (now that my father's died) has only one investment account in it worth under $200,000 that is to be split 3 ways (3 sisters) upon my father's death.

    The other trust is held in both my father's and step-mother's names as trustees and contains virtually every other tangible and intangible asset they have, including a house, savings accounts, life insurance policies, furniture, etc. My father's portion of the trust gets distributed to his wife ("surviving spouse") upon his death, according to his will.

    A twist in the tale: The surviving spouse has two years to dispose of the house (quite valuable) after my dad's death. Then, there is supposed to be an accounting and, based on a pro-rata apportioning of who paid what (down payment, improvements, monthly payments, etc.), the value of the house will be distributed upon its sale to my step-mother and, whatever my father's pro rata portion is, to his surviving daughters. It gets really messy here. We sisters are definitely expecting to get a big goose egg on this, since my stepmother has been quite adept at manipulating funds. In any case, she's said she expects to stay in the house for the full two years...

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