If you have discovered you are a trust beneficiary, it is normal to feel anxious to receive your distribution and exceedingly frustrated when a trustee seemingly drags their feet. In some circumstances, trustees have every right to refuse distributions. In others, trustees may refuse out of laziness or ignorance of their duties. Regardless, consulting a premier trust attorney is essential to protect and receive your inheritance. Administration can take up to 18 months without hiccups, and delays mean waiting even longer.
What if a trustee refuses to distribute assets? Here is what beneficiaries should know.
What to know if a Trustee Refuses to Distribute Assets
Can Trustees Refuse to Distribute Assets?
If you have found yourself in a situation where a trustee has refused to distribute the inheritance to beneficiaries, review the trust instrument.
The terms of the document will provide insight into the questions you are likely asking, such as what if a trustee refuses to distribute assets? Per California Probate Code §16000, trustees have a legal obligation to follow instructions dictated in the trust.
These instructions account for the entire administration process, including distributions, and trustees must distribute assets according to these directives. This document will outline when distributions should occur and what beneficiaries receive.
A trustee can refuse only if the trust gives them that authority or instructs them to do so. Some trusts even enable trustees to decide when to make distributions and how much to distribute. In such situations, a trustee can typically refuse distributions.
In other situations, trusts place restrictions on when trustees can make distributions, like after beneficiaries satisfy specific conditions or reach a certain age. When beneficiaries demand a distribution before meeting these conditions, the trustee must refuse.
Another important consideration is whether or not the trust holds sufficient assets. If a trustee has to pay administration expenses, creditors, and taxes, but there are not enough assets to pay these costs and make distributions, these obligations take precedence.
Also, administrative issues can delay distribution, like property issues. Each trust situation is different, so working with a knowledgeable trust lawyer is critical to determining what the trust document outlines and what your recourse is.
Reasons a Trustee Can Delay Distribution
Trusts can empower a trustee to delay distribution but under the law, it cannot give him/her the power to hold distributions permanently. What if a trustee refuses to distribute assets? There are three situations wherein they can delay distributions:
- The distribution is discretionary
- The trust terms outline certain conditions beneficiaries must meet before receiving their inheritance
- The trust terms dictate that the trustee should make distributions over time and not in a one-time payment
Before taking legal action, always work with an expert trust lawyer to determine if a trustee is breaching their duty by delaying distributions.
When Should Beneficiaries Contact a Trust Attorney to Sue a Trustee?
If you are embroiled in a trust dispute and trying to determine your recourse regarding what to do if a trustee refuses to distribute assets, this is a complex matter.
When the document does not grant the right of refusal or clearly outline conditions or a timeline to make distributions, beneficiaries have legal recourse. In these situations, beneficiaries often work with a trust lawyer and sue the trustee for a breach of duty.
Trustees assume this fiduciary responsibility when they accept the position and are held to a rigid legal standard. This duty is twofold:
- The duty of loyalty
- The duty of care
When a trustee fails to live up to this standard and make timely distributions, beneficiaries can sue them, petition the probate court to remove them, or request an accounting. If removed, a judge will appoint a replacement and potentially order that the trustee pay:
- Legal fees
- Court costs
- And other expenses
Contact a Trust Attorney to Get the Inheritance You Deserve
When a trustee refuses to distribute an inheritance, this can be supremely stressful and frustrating. The legal recourse is not always clear when considering what to do if a trustee refuses to distribute assets. In some situations, a trustee maintains the right to refuse distribution. In others, this refusal is a breach of duty and could signal that they are attempting to conceal misconduct, which is when an accounting is imperative. Whatever your situation, acting immediately is critical to protecting and receiving your inheritance.
At Gokal Law Group, we have unrivaled expertise in ensuring beneficiaries receive the inheritance they deserve on time. Call us at (949) 753-9100, or contact us if a trustee is dragging their feet to receive the inheritance you deserve when you need it.