A trust mistake often occurs with refunds. In the post-mortem administration of property, trustees sometimes work to fast at closing out a revocable trust.
Refunds from prepaid insurance, taxes, rents, etc. are often unanticipated and slow. Prematurely distributing assets can be detrimental to the management of the trust.
For example, consider the event when a trustee mistakenly closes out a checking account. In the following month, a refund check is delivered to the mailbox. If the bank account assigned to a trust had already been closed, it will be very difficult or almost impossible to deposit a refund check without some for of probate administration. Although inadvertent, a trust make has occurred.
An additional trust mistake can occur when there are unpaid bills. Again, trustees who fall for the trap of a “just getting this over with” mentality, unpaid bills can create personal liability. In other words, when the trustee mistakenly pays out funds before all bills have been paid, specifically taxes or utility bills, the financial impact to the bigger picture can be detrimental.
Therefore, trustees must be prudent and diligent versus fast.
Estate Attorney Jasper Berg