Question regarding estate distribution

[chefpss]

What is the name of your state (only U.S. law)? Estate in CA. I live in VA.
My father passed away March 1, 2010. My step mother is the trustee. I just received a letter (5/28/10) from her lawyer stating that he has advised her not to distribute the estate because they are not sure of the possibility of an estate tax law change and want to wait until December.

1) I don't trust her. Her and her lawyer are up to something.
2) Can they legally delay the distribution?
3) What can I do to force them to distribute the estate now.

 

[anteater]

Three or four months is hardly a lengthy amount of time to distribute assets, even for a trust.

...stating that he has advised her not to distribute the estate because they are not sure of the possibility of an estate tax law change and want to wait until December.

Honestly? I think that is a defensible decision. Perhaps delaying all distibutions is being overly cautious and only enough to cover any possible estate tax liability could be retained with the remainder distributed.

Blame Congress and the President for leaving the estate tax in a swamp of uncertainty. Not your stepmother and her attorney.

3) What can I do to force them to distribute the estate now.

You can retain a CA attorney to petition the court to force a distribution. Personally, I don't think that you will get anywhere.

 

[curb1]

What is the value of the estate?

If the estate was distributed incorrectly because of the uncertainties, would you be willing to give the inheritance back?

 

[chefpss]

more questions

Just so I understand the process, specifically for Calif. I have some questions.
My stepmothers (trustee) attorney stated in the first letter I have received, that "his will and living trust will probably not need to be submitted for probate".

1) To a common person I am to assume that the will and living trust one in the same.

2) Is the trustee supposed to inform the beneficiaries of the estate distribution within a specified time frame?

3) If the estate is not going to probate what is a general time frame for distribution of the estate or are there legal guidelines?

4) I was understanding that so far there is no estate tax for this year 2010, but it will start in again next year, 2011, just as it did in 2009. If this is the current law on the books, why is the attorney recommending to delay the distribution, because Congress has made up there minds yet. It sounds like they already did and just chose not to have an estate tax this year. OR is the fact that they just haven't got around to it yet.

5) Couldn't the estate make distribution with the understanding that the beneficiaries would have to pay any new estate taxes if the law changed?

 

[anteater]

1) To a common person I am to assume that the will and living trust one in the same.

No, they are two different documents. This is in simplified terms.

A living trust controls assets that are titled in the name of the trust. A trust is a private document and is administered without supervision by a court unless an interested party presents an issue to the court.

A will controls assets that are owned solely by the deceased. Generally, a will is administered through the probate process which involves submitting the will to the court and the appointment of a personal representative to administer the probate estate. The court supervises the administration.

Note that assets that are owned jointly with right of survivorship or that have named beneficiaries (such as 401k's, IRA's, pay on death accounts, etc.) are controlled by neither a living trust nor a will.

2) Is the trustee supposed to inform the beneficiaries of the estate distribution within a specified time frame?

The trustee has certain duties to keep the beneficiaries informed. For California, you can read the statutes here:

http://www.leginfo.ca.gov/cgi-bin/calawquery?codesection=prob&codebody=&hits=20

Look for Section 16000. If you are asking if there is a time limit for the trustee to make distributions, I don't believe that you will find anything in the statutes. It depends upon what the trust document says and how complex the trust is.

4) I was understanding that so far there is no estate tax for this year 2010, but it will start in again next year, 2011, just as it did in 2009. If this is the current law on the books, why is the attorney recommending to delay the distribution, because Congress has made up there minds yet. It sounds like they already did and just chose not to have an estate tax this year. OR is the fact that they just haven't got around to it yet.

Some observers believe that Congress will not get around to doing anything regarding 2010 and the law will stand as it is. Others believe that Congress may still address 2010 and make any changes retroactive to 1/1/2010. Place your chips and spin the wheel...

5) Couldn't the estate make distribution with the understanding that the beneficiaries would have to pay any new estate taxes if the law changed?

It could, but let's put it this way. If you had the responsibility to see that any estate tax liability was paid, would you go handing out assets to beneficiaries with only an "understanding" that the beneficiaries would return enough of the assets to pay the liability?

 

[TrustUser]

hi ant,

in practice, do they usually come after the trustee, assuming that there was no fraud on the trustee's part ?

since the beneficiaries have always had beneficial ownership, it would seem to me that the trustee should not take on the final responsibility, since it was never his money.

the trustee does not usually get paid a lot, so it seems to me that few people would ever take on that job, knowing they could be sued personally ?

that has always been a gray area for me ?

 

[chefpss]

Thanks for the estate advice

Thanks Anteater, Curb1 and Trustuser!

Curb1 - Answer your estate value question, I don't know the value. The trustee has not to this date (3 months after death) notified the beneficiaries of any accounting's. My best guess would be $7 mil, but stepmother retains most of assets until her death.
It sounds from my questions and your answers to just leave it alone for now. I suppose that my stepmothers attorney will advise her to release the estate distribution after the end of this year, since no one know what Congress will do with the estate tax and the estate is always ultimately responsible to paying the inheritance tax, regardless if distribution of the estate has been made or not.

 

[curb1]

You should remain proactive. The estate does not have to be released all at once. Regardless of the status of the law, timely partial distributions are common and reasonable. Keep the communication channels open.

One reason for a trust is the efficient distribution of assets. The reasoning of the attorney (that you stated) does not sound complete.

1) How many beneficiaries are involved?

2) What is the nature of the assets? Are they liquid, or tied up in real estate or other illiquid instruments?

3) Do you have a copy of the will and/or trust?

4) How were father's assets titled?