Distribute after the contest window has run, after the debts and taxes are handled, and only against signed receipts. In that order.
Everyone wants their money in month two. Handing it out in month two is the most common way a trustee ends up personally paying for something.
- Serve the 16061.7 notice and let the 120 days run
- Resolve creditors, final expenses, and the decedent's final tax return
- Determine each beneficiary's share under the document, in writing, with the arithmetic shown
- Provide an accounting or obtain written waivers of accounting from every beneficiary
- Distribute against a signed receipt and release, holding a reserve
- Distribute the reserve once the last open item closes
Reserves are not stinginess
Hold back enough for the final tax preparation, the last professional fees, and whatever surprise the property throws at you. Explain the reserve in writing when you distribute, with a rough timeline for releasing it. Beneficiaries accept a reserve they understand. They resent one they discover.
Partial distributions are usually the right answer
There is a workable middle between paying everyone in month two and paying nobody for two years. Distribute a defensible portion once the contest window closes and the obvious liabilities are known, hold a reserve, and finish later. It relieves the pressure without exposing you.
Dividing things that do not divide
The house is one asset and there are three children. Somebody buys out the others, or it sells and the cash divides, or they hold it together and regret it. Those are the choices. A trustee who lets the property sit for two years while siblings fail to agree is not being diplomatic, they are neglecting the asset, and the carrying costs come out of everyone's share.
Personal property is worse per dollar than anything else in the file. Set a process early, a rotating selection order or a simple bidding system, and put it in writing before anyone walks through the house.
“Nobody has ever fought me over a brokerage account. The fights are over a ring, a truck, and one specific photograph. I have stopped being surprised by this and started addressing it in the first meeting, because sentiment does not respond to spreadsheets.”
Delia Vasquez-HartA receipt confirms what the beneficiary got. A release, when supported by adequate disclosure, limits their ability to come back at you about the administration. Beneficiaries sometimes balk at signing a release, and that hesitation is information worth taking seriously before you hand over the money.
Follow the document. If it gives one child the house and splits the residue, that is what happens even when the house is worth more than everything else combined. Trustees who quietly even things out are committing a breach on behalf of fairness, and the disadvantaged beneficiary will find out.
Questions we get asked
How soon can I distribute anything?
Small, clearly safe distributions sometimes make sense early. Anything meaningful should wait for the contest window and a real handle on liabilities.
Can I distribute the house in kind instead of selling?
Yes, if the document allows it and the values work out. Get an appraisal, document how the shares were equalized, and get everyone's written agreement.
What if a beneficiary refuses to sign a release?
You can still distribute, and you can consider a formal accounting or a court petition to obtain approval of your administration instead. Do not simply withhold their share indefinitely.
Do beneficiaries pay tax on what they receive?
An inheritance itself is generally not taxable income to them, though income the trust distributes can be. That distinction confuses nearly everyone, so let your accountant explain it in writing.
Draft the distribution schedule with the arithmetic visible before you write a single check, and have someone else check the math. We review these on a flat fee if you would rather not be the only person who has looked at it.