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Partial Distribution

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jvwheel

Junior Member
What is the name of your state? NY

I live in Arizona but am trustee of my sisters Rev Liv Trust. My sister passed several months ago leaving personal property worth a few thousand and 2 condos worth approximately $600 thousand total. At the time of my sister's death she had only partially finished a kitchen remodel job so I had to complet that and then sell the condos while maintaining her debt. She had a pour over will but very little property outside the trust so I was able to do a small estate and avoid probate. I have been lucky with the sale of the real estate and recently closed on the properties. I immediately paid the remainder of her debt and now have about a quarter mil in the trust checking. I understand from various sources that I do not have a capital gains libility on the condos as being in the trust the enjoyed a steped up basis so I am not especially worried about a large income tax liability. The estate totaled approximately $850,000 so there also is not a estate tax liability. I want to do a partial distribution to the beneficiaries as soon as possible and think that it would be safe to distribute $200,000 of the trust leaving the remainder in reserve for professional fees and taxes. My sister designated 10 beneficiaries of her trust so it would be a tidy little Christmas gift for everyone and Christmas was my sister's favorite holiday. I was told by several persons that before I make a partial distribution that I should have each person sign some sort of release and refund letter in the event something unforeseen come up and the money should have to be returned. Another concern that I have is that with so many beneficiaries it is likely that someone or more persons may not feel like that was all they had coming. It seems people always feel the other person is so much better off than is usually the case. I have been unable to find onr of these letters in the form sites accessable on the internet. Does anyone know what content such a letter would have. Also, what are my onligations to the beneficiaries pertaining to disclosure of the trust accounting and the trust document. I am concerned about my obligation to the privacy of the other trust beneficiaries names and distribution percentages. I want to do the right thing but am afraid of disclosung too much. What am I required to disclose. May I black out parts of the trust document. Any help would be greatly appreciated.
 


Dandy Don

Senior Member
Making a partial distribution is exactly what you should NOT be doing.

Check out a book from the library or a bookstore to find out what the actual duties/responsibilities of a trustee are. You would be well advised to hire the services of a local trust attorney to guide you through the process and to make sure federal and state tax returns for the trust are prepared if required. If you screw up by doing it yourself without legal advice, you could be facing lawsuits from the beneficiaries.

DANDY DON IN OKLAHOMA ([email protected])
 

seniorjudge

Senior Member
jvwheel said:
What is the name of your state? NY

I live in Arizona but am trustee of my sisters Rev Liv Trust. My sister passed several months ago leaving personal property worth a few thousand and 2 condos worth approximately $600 thousand total. At the time of my sister's death she had only partially finished a kitchen remodel job so I had to complet that and then sell the condos while maintaining her debt. She had a pour over will but very little property outside the trust so I was able to do a small estate and avoid probate. I have been lucky with the sale of the real estate and recently closed on the properties. I immediately paid the remainder of her debt and now have about a quarter mil in the trust checking. I understand from various sources that I do not have a capital gains libility on the condos as being in the trust the enjoyed a steped up basis so I am not especially worried about a large income tax liability. The estate totaled approximately $850,000 so there also is not a estate tax liability. I want to do a partial distribution to the beneficiaries as soon as possible and think that it would be safe to distribute $200,000 of the trust leaving the remainder in reserve for professional fees and taxes. My sister designated 10 beneficiaries of her trust so it would be a tidy little Christmas gift for everyone and Christmas was my sister's favorite holiday. I was told by several persons that before I make a partial distribution that I should have each person sign some sort of release and refund letter in the event something unforeseen come up and the money should have to be returned. Another concern that I have is that with so many beneficiaries it is likely that someone or more persons may not feel like that was all they had coming. It seems people always feel the other person is so much better off than is usually the case. I have been unable to find onr of these letters in the form sites accessable on the internet. Does anyone know what content such a letter would have. Also, what are my onligations to the beneficiaries pertaining to disclosure of the trust accounting and the trust document. I am concerned about my obligation to the privacy of the other trust beneficiaries names and distribution percentages. I want to do the right thing but am afraid of disclosung too much. What am I required to disclose. May I black out parts of the trust document. Any help would be greatly appreciated.

Do you have a burning desire to go to jail?

Get a lawyer immediately and see if you can straighten this mess out.
 

jvwheel

Junior Member
Seniorjudge, Thank you for taking the time to respond but I fail to see the mess you reference. Please elaborate.

Dandy Don, I also appreciate your time but please explain why I should not make a partial distribution.
 

seniorjudge

Senior Member
jvwheel said:
Seniorjudge, Thank you for taking the time to respond but I fail to see the mess you reference. Please elaborate.

Dandy Don, I also appreciate your time but please explain why I should not make a partial distribution.
Give us an EXACT quote from the trust instrument allowing you to do all the stuff you have done so far (leaving out personal information).
 

jvwheel

Junior Member
Thank you againg for your interest. There are 19 sections to the trust, many of which appear repetitiious, but I will start with the ones that appear most relevant.

TENTH
"It is the Grantors intention to grant the Trustee the power to deal with all of the trust property freely. It is further the intention of the Grantor that the trustee not be hampered in their duties by the fear of violating any laws of the State of New York or any other state; therefore it is the Grantors declared intent that the trustee not be bound by any such laws, and that the only requirement that the Grantor puts on him is that the act in good faith in carring out the terms of this agreement. The trustees shall have all the power and protection granted to Trustees by statute at the time of execution and without application to any court, they shall have the power and responsibilities described below, to be exercised in his sole discretion"

(G) "Sell and Lease, To sell, convey, grant options to purchase, lease, transfer, exchange, or otherwise dispose of any thrusy asset on any terms deemed advisable, to execute and deliver deeds, leases, bills of sale, and other instruments of whatever character, and to take or cause to be taken all action deemed necessary or proper in connection therewith.
(M) Distribution of Cash or of in Kind, To distribute any shares in cash or in kind,or partly in cash, anf the trustee's valuations of assets upon making such distribution shall, if made in good faith, br final and binding on all beneficiaries."

There are many other paragraphs that give the trusee complete control to do as the trustee deems fit as long as the trustee pays the taxes, debt, and distributes per the grantors wishes. I have a complete and accurate accounting of every penny with all pertinent documentation.

Most of the beneficiaries are youngsters just starting their adult lives and as such can really use the funds for first homes, education, etc. I am sure that is exactly what my sister thought when making the distribution list. $20,000 is a lot of monet to someone so young and if used wisely can give them a step up. My sister's bills have been totally paid and all that is left are the taxes for 2005 both individual and trust. I filed and paid her 2004 tax return.

In any event I would reall like to know if anyone knows where on can obtain a template for a partial distribution. I knoe that is is usual for one to sign such a documemt before recieving funds. Thanks again for your response.
 

jvwheel

Junior Member
Straight Up Answer

It apppears we drifted and I never did get a straight up answer. Does anyone know of a site where one could purchase a, "A Release and Refund," form (letter) that is typically sent to beneficiaries for their signature before making a distribution. If anyone knows of a site please paste the address in a reply. Thanks!
 

Dandy Don

Senior Member
No one wants to see you shoot yourself in the foot by doing your own shoddy legal service. Why aren't you consulting with a trust attorney to make sure everything you do is legal and permissible?
 

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