Many trusts created here in California and elsewhere provide for the distribution of any remaining assets when the trust terminates. If you do not receive your share until that time, you are called a “remainderman” or remainder beneficiary.
More than likely, the trust delineates how the trustee should divide those assets among the remainder beneficiaries, but in some cases, it isn’t as simple as writing a check. Some of the assets may require extra steps in order to distribute since they are not liquid assets. The trustee does not have to sell them in order to provide you with your equitable share, but he or she does need to make sure that you receive the share outlined for you in the trust.
Types of assets you may receive
During the life of the trust, some beneficiaries receive the income derived from its assets. This often means that the trustee is managing certain assets that now must be divided among the remainder beneficiaries, such as the following:
- Real estate: The trustee will need to execute a new deed transferring the property from the trust to you and any others who may be entitled to a share of it.
- Mortgages or promissory notes: If the trust loaned money to anyone, the designated lender, which was the trust, will require changing to reflect the remainder beneficiary or beneficiaries as the new lender.
- Privately held stocks and bonds: The trustee will need to contact the company to have the appropriate transfer documents drafted for execution.
- Publicly held stocks and bonds: The trustee must return stock certificates or bonds to the issuing company to make the transfer of the stock or bonds to the remainderman. The trustee should notify the broker of the transfer as well.
- Royalty interests: The trustee will transfer any natural resource or intellectual property interests owned by the trust to the remainder beneficiaries.
- Partnership interests: The trustee will need to notify the partnership of the transfer of ownership interest.
Making these transfers happen may turn out to be the easy part of this process. The challenge comes with valuing each of the assets remaining in the trust, especially if there is more than one remainder beneficiary. The trustee should not simply guess how much an asset is worth unless the trustee and all of the remainder beneficiaries agree to do so and everyone agrees with the proposed value.
When the trustee fails to properly value and divide the assets, you may not end up with the equitable share of the assets intended for you. Of course, unless specifically stated in the trust, the law does not require that you receive an equal share, only an equitable one. However, if you believe the trustee failed in this duty, it may be worthwhile to get a second opinion from someone with experience in this area to determine whether litigation is necessary in order to rectify the problem.