Fiduciaries must exercise care when distributing property from estates and trusts, as they can be held personally liable for incorrect distributions.
Timing and type of income is a key consideration in making distributions. As best practice, distributions should not be made until all creditor claims, debts, and tax effects of the distributions are determined. Several statutes can have a considerable impact on the order and amounts of distributions. Fiduciaries should be aware of the effect of:
Distributions can be made at any time after the time for presenting claims against the estate has expired. UCA § 75-3-1001. Where a distribution of property to the beneficiaries is desirable prior to settlement of all debts, fiduciaries should exercise care and withholding sufficient assets so that they do not exhaust the estate's property and render it insolvent.
When making a distribution, it is always best practice for a fiduciary to request a receipt and release from the beneficiary.
When making distributions before final settlement of the estate, exercise care in calculating hold-backs.
Sometimes a beneficiary's share needs to be offset because they received a prior advancement.