So a trustee has been trusted with a certain amount of funds to look after the return of all the debts and litigations that might be levied on a property after the death of the owner. A diligent, responsible trustee makes sure that all the tax returns are paid, appropriate properties sold and the debts of the demised individual have been repaid. Even then it might transpire that a trustee holding the funds of an individual is faced with sudden litigations by unsatisfied creditors or beneficiaries. What does a trustee do in such a situation? How long can a trustee be allowed to hold funds until all possible legal charges have been satisfactorily looked into?
Accepted that there is always a possibility that any additional problem can come up after the completion of all claims being addressed to, but such claims have to be addressed by the trustee which will require a certain amount of time and capital from the trustee’s side which might not be available to a trustee. In such a situation know how long can a trustee hold funds to refute any claims?
How does it work?
In such a situation the State Law allows a trustee to recover funds from any beneficiary even after distribution of such funds in order to pay attorneys, accountants and tax officials in order to overlook the funds of the owner. There are two ways of going about such a scenario. First, a trustee is allowed to hold a certain amount of funds in order to look over the complete transference of property and any litigation charges levied over settlement agreement. Second, if it happens that the fund allotted to a trustee does not ensure the payment of fees of attorneys and lawyers then the trustee is allowed to ask for the return of alotted fund from beneficiaries in order to pay attorneys’ fees. Such a situation can be highly problematic and can take years to resolve such a dispute.
Thus most trustee’s are allowed to hold on to a reasonable amount of funds in order to stave off potential liability and consequent attorney fees. What is the reasonable amount depends on the state of affairs and the size of possible attorney fees? In most likely circumstances it is few ten thousands of dollars if it is a small trust or few hundreds of thousands of dollars when large estates are put on trustee’s responsibility.