The beneficiaries want their money. You want to be done. So you write the checks. Then the final income tax bill arrives, or a hospital bill nobody knew about, and the trust account is empty.

Now you have to ask your siblings to give money back. Some will. Some won’t. As trustee, you may be personally on the hook for the difference.

A reserve prevents this. Before any large distribution, hold back enough to cover:

• The final personal income tax return for the person who died
• The trust’s own income tax returns while it stays open
• Washington estate tax, if the estate is over the exclusion
• Final bills: medical, credit cards, utilities, the funeral if it isn’t paid
• The cost of selling and closing out property: repairs, commissions, closing costs
• Legal and accounting fees to finish the job

How much is enough depends on the estate. A small, simple trust may need a few thousand dollars. A trust holding a house and a brokerage account may need much more until the returns are filed.

Partial distributions are fine once you know what you owe. Tell the beneficiaries in writing what you are holding back and why. Most people accept a delay they understand.

The video walks the full ten steps.

General education only, not legal or tax advice. Laws change, and the right answer depends on your facts. Reading this or contacting us does not create an attorney-client relationship. Centerbridge Law Group, PLLC, 1610 Commercial Avenue, Suite 203, Anacortes, Washington 98221.