In California, does the executor. of a living trust have to wait to disperse funds until the last tax form has been filed. All assests in th...

Question

In California, does the executor. of a living trust have to wait to disperse funds until the last tax form has been filed. All assests in the estate have been placed in a trust banking account. Some monies have been dispersed to the beneficiaries. the estate accountant is saying I need to keep all funds until she files the final tax in 2016.

Answer

If everything is done except 2015 tax returns, there should be no reason not to make distributions. You should retain an amount sufficient for accounting fees and anticipated 2015 income taxes, if any.

Answer

Ask the accountant to provide you with an explanation as to why he or she wants you to keep all funds until the taxes are completed. Ms. Cusack is correct, of course. In most cases you would retain a reserve for taxes, legal and CPA fees and unanticipated expenses. Then you pad that out by $10,000, give or take, just to be safe. Then you distribute what's left to the beneficiaries. But, there may be a reason why you should retain more than that - ask for that reason.