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Question:

I am co-trustee of my parents’ trusts. All the funds have been at the same bank from the time they created the trusts in 2011, with the same accounting firm doing the appropriate annual filings. We are now (after my mother’s passing) at the point of making a partial distribution of assets (waiting for the final distribution until all taxes and other expenses have been paid). In order to do that the lawyer has asked for a “Release and Waiver” document to be signed by all beneficiaries. Five of the six beneficiaries have signed. The sixth had questions that we have answered, but he still has not submitted the form. Can we distribute to the five others prior to receiving the final release?

Response:

Yes, you can make the distributions to the five who are complying. There’s no reason they should have to wait on the recalcitrant beneficiary. At some point, you will need to distribute to the sixth beneficiary as well even though they have not signed the release. While it’s customary for trustees to request a release and for beneficiaries to provide it, the beneficiaries have a right to their distributions whether or not they sign a release and waiver. They just don’t have a right to a partial distribution while you’re resolving everything involved with your parents’ trusts and estates.

Once you are ready to make a complete distribution, you still might want to hold back some of the last beneficiary’s share in reserve until the statute of limitations on any challenge to your acts as trustee has expired. Any continuing legal and accounting fees as a result of this delay should be paid from this particular beneficiary’s share.

However, I would not want to second guess your attorney’s advice since they are more knowledgeable about your state’s laws and practices and about the particular facts of your case.

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