Disbursement of Family Assets Through a Trust

As living trusts become more popular as an estate planning tool, people are learning how to disburse family assets through a trust. Most people are familiar with how a decedent’s property is disbursed through the probate process. When a loved one dies, his or her will is filed with the probate court and validated.

The executor or personal representative has the responsibility of administering the estate and distributing the assets in accordance with the terms of the will. If the decedent did not have a will at the time of his or her death, the court will appoint an executor or personal representative to administer the estate and distribute assets in accordance with the intestate laws of your state.

Disbursing the assets of a living trust after the grantor’s death is similar to administering a probate estate except you do not have a court overseeing your actions.

Distributing Family Assets From a Living Trust

If you are serving as the trustee for your living trust, you may wonder who will distribute the family assets after your death. In order to ensure that the living trust is properly administered upon your death, you always name a successor trustee in your living trust. The successor trustee is responsible for taking control of the living trust and managing it in accordance with the terms of the trust.

The successor trustee does not need to be appointed nor does the successor trustee require court authorization to take control of the living trust. The successor trustee simply steps into your shoes and begins to act on behalf of the trust.

As successor trustee, you must review the trust documents to determine how the grantor wanted to distribute the family assets upon his or her death. In some cases, you may be required to have some assets appraised and valued before they can be divided and disbursed to the beneficiaries of the trust. For example, if the living trust directs that one-half of the assets are to be distributed to his spouse with the remaining one-half being divided between his children, the only way to distribute the correct percentage of assets is to determine the exact value of the assets in the trust.

In some cases, the grantor may have left directions related to each asset naming a specific beneficiary for that asset. Determining the value of the assets may not be required in this case.

Meeting With the Beneficiaries

As the trustee, you should schedule a meeting with all of the beneficiaries to discuss the disbursement of family assets from the living trust. Provide each beneficiary with a copy of the living trust and copies of any appraisals performed that establish the value of the assets held by the living trust. By providing copies of these documents to the beneficiaries, you are avoiding potential arguments regarding the terms of the living trust and the value of the assets being distributed.

You may also want to provide the beneficiaries with a written summary explaining how you will finalize the living trust and disburse the family assets from the trust. Prepare a proposed distribution of assets and ask each beneficiary to sign the proposal signifying their agreement to the proposed distribution of the family assets from the living trust.

In order to transfer title of the assets from the living trust to the proper beneficiary, you will likely need to provide a copy of the death certificate and a copy of the trust agreement to the financial institution holding the asset or the agency responsible for transferring title before you can transfer title of the asset from trust’s name to the beneficiary’s name. In the case of real estate, consult a real estate attorney to prepare a deed conveying title of real property from the living trust to the beneficiary. The type of deed required to transfer real property from the living trust to another party can vary from state to state. For the transfer to be valid, the deed must be drafted, executed, and filed in accordance with state property laws.

For personal property and other family assets included in the living trust, distribute those assets directly to the correct beneficiary. While you are not required to submit reports of the distribution to the court, as you do when administering a probate estate, it is wise to have each beneficiary sign a receipt and acknowledgement for each family asset disbursed to that beneficiary. This protects you as the successor trustee should any questions arise after the trust has been fully disbursed.

Do I Need an Attorney to Disburse Family Assets Through a Trust?

No, you do not need an attorney to act on behalf of the living trust to disburse the family assets. The living trust gives you the authority you need to make the distributions to the beneficiaries. However, if you are uncomfortable or unsure, you can retain the services of an estate attorney to assist you with the distribution of family assets through the trust.