(Formerly Standard 30)
PGTS Standard
37. Assets of matured trusts and estates are distributed and the trusts/estates are terminated within a reasonable period of time. [PGTS]
Defining Reasonable Time
In describing legal processes, it is wise to not define things with too much detail. For example, the amount of time needed to process a matured estate is one of those instances. The definition of the term “reasonable time” will vary by the type of documents, the complexity of the estate, and the laws of your state. It may also depend on the resources available to your organization to process a matured estate. The determination of what is “reasonable time” is defined by USLEGAL.COM “Reasonable time refers to the amount of time that is fairly required to do whatever is required to be done, conveniently under the permitted circumstances.”
As a Seventh-day Adventist Christian organization, we must focus our attention on building Christ-like loving relationships, rather than legal processes when interacting with families who have just lost a loved one. When a person dies, there is usually nothing in a legal sense that is urgent and cannot wait for a few weeks until after the memorial service. The best reply when a grieving family member asks you what they need to do the day after their loved one has passed away is, “there is nothing urgent; take care of family.” As Christians we want to create legendary service rather than ghost stories of abuse.
Last Will and Testament
Probate is a necessity for all wills; however many states allow for an expedited process if the value of the estate is below a certain threshold for that state. Most personal representatives will start the probate anywhere from two months to a year from the date of death. It is important to begin the probate process as soon as possible to start the clock for the required time in which creditors may file claims against the estate. No distributions may be made until this prescribed time by state law is completed.
When probate is opened, the definition of “reasonable time” will be determined by the assets that are part of the estate. Some estates that are composed primarily of cash may be completed in a few months. Others with a more a complicated asset mix may take years. If there is a court challenge to the will, the reasonable time will be significantly extended, to say nothing of the additional costs to defend the will.
Trusts
When serving as a trustee, one of the first things you will want to do is send a certified mail notice to each stakeholder that will start the clock running on the ability to mount a challenge to the trust. Trusts that are composed of liquid assets may do a partial distribution as soon as all the trust expenses are paid. If there is a challenge to the trust, or if you are aware of a possible challenge, it is best to delay the distribution of assets to beneficiaries until the time period to challenge runs out, or the challenge is resolved. Those with more complicated assets, such as real estate or business partnerships, will take longer. As noted last month, all trusts must have a voted termination by the governing committees once all assets are distributed.
Charitable Gift Annuities
Once proof of death is received, the distribution should be made within a month.
Charitable Remainder Trusts
The assets held within the CRT will determine how long it will take to liquidate, distribute, and terminate the trust. Typically, once the CRT is funded, and payments are being made, the assets are fairly liquid and can be sold relatively quickly. In these situations, a final distribution is usually made within a month.