This page shows a sample or template for sending a final trust distribution letter to beneficiaries of a living trust or similar type of trust. This type of trust administration letter may be used by the trustee to notify beneficiaries that all trust property or income has been distributed and the trust will be dissolved or terminated. For instructions on how to close a trust at the end of administration, see How to End a Trust.
Instructions for Final Trust Distribution Letter
Read the following instructions before drafting a Final Trust Distribution Letter to beneficiaries:1. An important consideration for trustees is limiting liability for actions taken during administration of the trust. As trustee, it may be beneficial to include a notice in a letter to the beneficiaries regarding the limited amount of time a beneficiary has to file a claim.
Consult an attorney regarding the statute of limitations under applicable state laws and whether you should include a limitation notice in the Final Trust Distribution Letter.2. Every estate planning trust is unique. Therefore, a trustee should never rely on templates or online forms to draft legal documents or correspondence with beneficiaries. If you are attempting to complete some aspects of trust administration without a professional, you should still have an attorney review the Final Trust Distribution Letter before sending. Your attorney may recommend modifications to the Trust Distribution Letter based on the provisions of the trust, tax issues or state law. If you do not have a trust attorney, go to finding an attorney.3. The Final Trust Distribution Letter should be sent via a method of delivery that complies with state law requirements for notices to beneficiaries. See right to information about trust.
Review the applicable state trust code for acceptable methods of sending notices to beneficiaries. These often include first class mail and personal delivery. Section 109 of the Uniform Trust Code discusses acceptable methods of sending notices to beneficiaries. See
Trust Law Sources. The trustee should consult an attorney for best practices on sending notices to beneficiaries in a particular state.4. Review the trust document or trust distribution agreement and make sure the Final Trust Distribution Letter complies with the same. 5. Maintain copies of all letters to beneficiaries and proof of delivery.
Documents to Include with Final Trust Distribution Letter
The laws of some states require a trustee to give beneficiaries a final trust accounting when the trust is terminated, unless the beneficiaries have waived an accounting by signing a Waiver of Accounting Form. If applicable, the trustee may need to enclose the following documents with the Final Trust Distribution Letter:1. Final Report, Final Statement or Final Trust Accounting.2. Payment of Final Distribution Amount3. Deeds, Titles, Stock Powers
or Change of Ownership DocumentsNote: The types of documents that should be enclosed with a Final Trust Distribution Letter will vary depending on the circumstances. If you are settling an estate, you may also need to send an Estate Distribution Letter form. If the trustee is not required to send a particular document to the beneficiaries based on state law or the trust agreement, the item may be omitted. However, an attorney may suggest that a trustee provide certain documents, reports or statements to beneficiaries even when they are not required, to protect the trustee against liability. See forms for trustees.
Steps to Complete Before Sending Trust Distribution Letter
Before sending a final Trust Distribution Letter to the beneficiaries and closing a trust, the following steps should typically be completed: 1. Depending on the type of trust and applicable state law, the trustee may want to send a proposal for distribution to the beneficiaries or make a written agreement with the beneficiaries regarding how trust assets will be distributed. See Section 817 of the Uniform Trust Code. For some trusts, the trustee may obtain court approval of the final distribution. The trustee should consult an attorney about whether a distribution proposal, distribution agreement or court approval is required or recommended. 2. Complete all property trust transfer deeds, change of title documents, stock transfer forms, and other documents necessary to transfer or change ownership from the trust to the beneficiaries.3. Distribute all trust income and property to the beneficiaries or any other trust or subtrust. See Schedule K-1 Trust Estate.4. Obtain signed receipts from beneficiaries to document trust distributions made to them. In addition, a trustee may want to obtain signed waivers, consents or releases to the extent permitted by state law. For an overview, review our article on Trust Beneficiary Release forms. 5. Consult a trusts and estates attorney for advice on how to administer and settle the trust according to applicable state laws. To find laws governing trusts and trustees in a particular state, go to our Trust Law page. 6. If you are unsure whether you have completed all the steps required to settle the trust, refer to our Trustee Checklist.
Final Trust Distribution Letter Form
VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
Date Full Name of Beneficiary Street Address City, State, and Zip RE: Legal Name of the TrustDear Mr., Mrs., or Ms. Last Name of Beneficiary,This is a final distribution letter for the Legal Name of the Trust, hereinafter the Trust. The purpose of this letter is to provide information regarding the settlement and dissolution of the Trust.Option 1:
Enclosed with this letter is the final distribution to you from the Trust.Option 2: Prior to the date of this letter, all required distributions have been made to you in accordance with the terms of the Trust.
Optional: The following items are also enclosed: final report, final statement or finalTrust Accounting Form if applicable.Optional: In anticipation of any final costs, professional fees, taxes, trustee compensation, expenses or debts that may be owed by the Trust, I have retained a reserve amount in the Trust to pay such Final Expenses. To the extent any funds remain in the Trust after all Final Expenses are paid, those funds shall be distributed to the beneficiaries in the same manner. In the event no amounts remain in reserve after the payment of Final Expenses, no additional distributions will be made. The Trust is being dissolved as of date, month, year. I am resigning as trustee of the Trust effective on the same date.If you have any questions, I can be reached at telephone number of Trustee or at the address shown below.Sincerely,
Full Name of Trustee or Co-Trustees Street Address of Trustee City, State, and ZipEnclosuresThis Trust Distribution Letter Form is copyrighted and owned exclusively by Pennyborn.com. This form may not be copied, reprinted, displayed, published, broadcast, excerpted, referenced, quoted, linked to or used in any way without the prior written authorization of The Pennyborn Planning Company.END OF FORMCopyright 2020 Pennyborn.com. ALL RIGHTS RESERVED.
Other Duties of Trustees
Trustees must complete all trust administration duties in accordance with applicable laws and the terms of the trust to avoid liability. For more on the duties of a trustee and steps required to fulfill your fiduciary duties, see our page for trustees.Updated March 22, 2020.
INFORMATION ON THIS SITE, INCLUDING ARTICLES, ESTATE PLANNING FORMS, AND THE ESTATE PLANNING BLOG, DOES NOT CONSTITUTE LEGAL, FINANCIAL OR TAX ADVICE. Pennyborn.com is not a law firm and is not a substitute for a lawyer. Your use of this site does not create an attorney-client relationship. Information on this site is for educational purposes only and may not be accurate, complete or up to date.
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