How Living Trusts are Terminated
The biggest benefit of a living trust is that you, as the creator of the trust, maintain control over all of its assets until you pass away. But what happens after that? How is the trust finally closed?
Terminating a living trust is a rather simple process. Your chosen trustee does not have to sign any documents or file anything in court. One significant reason why you created the trust was likely to avoid dealing with probate court issues, so you do not have to worry about your trustee navigating through any complicated legal processes.
Instead, the trust is closed as soon as all of the trust’s assets are distributed. The trustee’s job is to gather all of the property included in the trust, determine its value and distribute it to beneficiaries as quickly as possible. In some cases, the trustee must file a tax return for the trust if it earned over a certain amount of money in income over the past year.
Once all assets have been distributed, the trust is closed and the trustee’s responsibilities come to an end. Although it is not mandatory, it is generally a good idea to inform all trust beneficiaries that the assets have been distributed. The trustee could write a final letter indicating that this is the case, but it’s usually not a requirement.
Speak with your trustee and go through all of his or her responsibilities so that the person you’ve selected is prepared to execute the trust. Your trustee will be pleased to know that it is a relatively easy process.
For further guidance on establishing a living trust, meet with a skilled Tampa estate planning lawyer at BaumannKangas Estate Law.