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Too Slow: Getting the Trustee to Distribute Your Share of the Trust

Jimmy found out that his favorite aunt, Linda, made him a beneficiary of her trust prior to her passing. Jimmy waited patiently for the trustee to do what has to be done and distribute his share of the trust. Reasoning that Linda would have wanted him to do so, Jimmy decided to splurge on an expensive vacation. Yet, the trust’s trustee is not distributing Linda’s inheritance. With his credit card bills piling up, Jimmy started to reach the trustee for periodic updates. The trustee replied “hopefully soon” to the first email, but stopped responding to the subsequent ones. Is there anything that Jimmy can do to speed things up?

A situation as described above is not uncommon. The beneficiaries obviously desire to receive their share of the trust as soon as possible. But possible is not always soon.

On one hand, it is understandable that the trustee has things to do. On the other hand, a diligent beneficiary should not sit by idly for this entire temporal period, especially if he believes that an trustee is failing the nonwaivable duty to “exercise reasonable care, diligence, and prudence.”[5] For example, a court may disqualify an trustee on grounds such as commingling funds, mismanagement, dishonesty, and substance abuse.[6] Although, New York courts will generally give a long leash, and will only step in if the trustee “endanger[ed] the trust” or “seriously impede[d] its administration.”[7] If the trustee is non-responsive, however, a beneficiary should send a written demand for an accounting. This request serves two purposes. First, it may be a requirement to commence any proceeding in court against the trustee.[8] And second, it gives the trustee notice that you are serious—which may give way to a faster distribution. If the trustee does not respond to this written demand, the beneficiary may then commence a motion to compel accounting with the court.[9] Although even here, the New York courts generally compel such an accounting only for good cause.[10]

It is a fine line between giving the trustee deference and desiring to receive the inheritance promptly. When a beneficiary knows that a trustee is mishandling the trust, a court should immediately get involved. In many cases, however, a quarrel with the trustee is not in the best interests for either the beneficiary or the trust. Therefore, it is best for a beneficiary, like Jimmy, to discuss such matters with a competent New York trust attorney.

Call the Law Offices of Albert Goodwin at 718-509-9774 or (718) 509-9774 and make an appointment to discuss your rights regarding your share of the trust.

[1] N.Y. Est. Powers & Trusts Law § 11-1.5 (McKinney 2018). This excludes the statutory exclusion of up to $25,000 from the trust for a surviving spouse or children under twenty-one. Id§ 5-3.1.

[2] N.Y. Surr. Ct. Proc. Act Law § 1802 (McKinney 2018); N.Y. Est. Powers & Trusts Law § 11-1.5(c).

[3] 26 U.S.C. § 2204 (2012); N.Y. Tax Law § 972 (McKinney 2018).

[4] Frequently Asked Questions on Trust Taxes: When can I expect an Trust Tax Closing Letter?,IRS, https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-trust-taxes#1 (last updated May 11, 2018).

[5] N.Y. Est. Powers & Trusts Law § 11-1.7(a)(1).

[6] N.Y. Surr. Ct. Proc. Act Law § 711.

[7] In re Braloff, 162 N.Y.S.2d 620, 623 (2d Dep’t 1957), affirmed, 173 N.Y.S.2d 817 (1958).

[8] N.Y. Surr. Ct. Proc. Act Law § 2102(1).

[9] See id.§ 2205, 2206.

[10] See, e.g., In re Sherburne, 464 N.Y.S.2d 531, 531 (1983) (holding that in a proceeding in which it was determined that trustees did not have authority to sell decedent’s home, ordering trustees to render and file a final account was appropriate exercise of discretion).