The Final Distribution Process
A trust does not last forever. When a termination event occurs, the trustee has a duty to wrap things up. This means giving trust property to the beneficiaries who are entitled to it, within a fair time.
On the occurrence of an event terminating or partially terminating a trust, the trustee, within a reasonable time, shall distribute the trust property to the persons entitled to it subject to the right of the trustee to retain a reasonable reserve for the payment of debts, expenses and taxes.
A.R.S. § 14-10817(B)The trustee can hold back a fair reserve to cover debts, expenses, and taxes before making final distributions. This prevents the trustee from having to chase beneficiaries for money later.
Proposals, Objections, and Trustee Release
Before distributing, a trustee may send beneficiaries a formal proposal. It outlines who gets what.
If a beneficiary does not object within thirty days, that silence counts as acceptance. However, the proposal must have included clear notice of the right to object and the deadline.
On termination or partial termination of a trust, the trustee may send to the beneficiaries a proposal for distribution. The right of any beneficiary to object to the proposed distribution terminates if the beneficiary does not notify the trustee of an objection within thirty days after the proposal was sent.
A.R.S. § 14-10817(A)The statute also covers what happens when a beneficiary releases the trustee from liability. That release is not valid if it came from improper conduct by the trustee.
It is also invalid if the beneficiary did not know their rights or the key facts about a breach. This protects beneficiaries from being pressured into waiving claims.