A trust can remain open for up to 21 years after the death of anyone living at the time the trust was created, but most trusts end when the trustee dies and the assets are distributed immediately. The trustee is responsible for distributing the assets within a reasonable period of time. However, there are many factors that can influence how long it will take. Typically, the total distribution of a revocable active trust is approximately 12 to 18 months.
The deadline can be even shorter, 4 to 5 months, if the distribution is simple. Revocable trusts can be easily changed or modified, but they offer the least amount of asset protection. They take effect during their lifetime, once they are created and funded. But as soon as you die, they automatically become irrevocable, at which point they cannot be changed.
A revocable trust will generally remain open 12 to 18 months after the death of the trustee (the creator of the trust). Once all of the estate's debts and taxes have been settled, the remaining value will be distributed to the beneficiaries. In addition, the trustee must organize the preparation and filing of trust income tax returns to properly declare income earned after the trustee's death and before all of the trust's assets are distributed among the beneficiaries. But what is reasonable? In our experience, many trustees don't understand that trust distributions must be made on time.
If a trustee misappropriates the funds of a Trust by failing to distribute assets properly or by distributing them to the wrong people, it is possible to take legal action. That way, the trustee can be sure that he is managing the distributions in accordance with the wishes of the creator of the trust. Trusts are generally held unless written legal or enforcement requirements have been violated. If you know the lawyer who originally drafted the trust, or if you know where the decedent's estate planning documents are located, you may be able to review the actual trust to see if it is listed as a beneficiary.
The trustee can also refrain from distributing assets until the beneficiary is of legal age or if the document describes staggered distributions. We have seen cases where a trustee has waited five to ten years to make the distribution of a trust, and there is no reason for that kind of delay. In reality, irrevocable trusts don't have a deadline to remain open or will remain open after you die, as they aim to use them for long-term planning and asset management. Under the California Probate Code, the trustee has a trustee duty to manage assets and manage the distribution to beneficiaries and heirs in accordance with the terms described in the trust document.
Consider using a mediator as an intermediary to try to limit the time it takes to conclude a trust contest. However, in trusts where there are no lawsuits or estate taxes, the distribution must take place within a reasonable time. A person interested in the outcome of the court's decision must initiate a trust contest. Trusts can be a solid solution for anyone who wants to protect their wealth while protecting their legacy and loved ones.
So, what can cause delays in the distribution of trust assets, making the deadline even longer than 18 months? Taxes to be paid and debts owed can cause delays...