Before we get into the specific topic of living trust termination, we should explain some things about living trusts in general. The first thing that you should know is that a living trust is a versatile legal document that can be effective for people who are in many different situations. You do not have to be very wealthy to realize the benefits.
A living trust is a revocable trust, so you would have the power of revocation if you establish this type of trust. If you ever choose to do so, you can dissolve the trust entirely and take back direct personal possession of the property that you conveyed into it.
You can also act as the trustee while you are living, so you would handle the business of the trust, and you can act as the initial beneficiary as well. In the trust declaration, you name a successor trustee to administer the trust after you are gone, and you name successor beneficiaries.
In this declaration, you could instruct the trustee with regard to the exact nature of the distributions to the beneficiaries. For example, you may not want to allow for lump sum inheritances. If you feel this way, you could instruct the trustee to distribute a certain amount each month over an extended period of time.
Another major benefit that you would gain if you utilize a living trust as your vehicle of asset transfer is the avoidance of probate. A will would be admitted to probate, and the heirs to the estate would not receive their inheritances during the process. Even if the situation is relatively straightforward, the process will take about a year in most areas.
Now that you understand some of the reasons why you may want to consider the creation of a living trust, we can look at the matter of termination. As we have stated previously, a living trust is revocable, so you can revoke the trust at any time and it would no longer exist.
Since you would be using the trust as an estate planning device, it is unlikely that you would ever want to dissolve the trust. If the trust is intact at the time of your passing, exactly when it will terminate will depend upon the circumstances. For example, if you instruct the trustee to liquidate the property and distribute all of it as soon as possible, the trust would terminate when all the assets were distributed to the beneficiaries.
If you were to allow for ongoing distributions over an extended period of time, the trust would terminate whenever the assets were exhausted.
To Schedule a Free Consultation
If you are interested in the possibility of working with our firm after learning these facts, please select our “Workshops” tab to RSVP for a free estate planning workshop. At that workshop you will be offered a free one-hour consultation with an attorney: www.collinslawgroup.com/seminars/
- How to Leave Assets for Your Minor Children in Your Estate Plan - July 21, 2021
- Can a Beneficiary Sell His/Her Interest in a Trust? - July 19, 2021
- 5 Things to Consider When Creating Your Estate Plan - July 16, 2021