How to Dissolve My Revocable Living Trust in California

By Jennifer Williams

The settlor of a California revocable living trust may dissolve all or part of the trust at any time. A revocable living trust is an estate planning tool used to keep assets out of probate. A settlor creates the revocable living trust, transfers ownership of selected assets to it, and usually designates himself as trustee and primary beneficiary. He names alternate beneficiaries to receive assets upon his death. Until that event, he retains use and control of the assets, and retains the right to dissolve the trust at will.

The settlor of a California revocable living trust may dissolve all or part of the trust at any time. A revocable living trust is an estate planning tool used to keep assets out of probate. A settlor creates the revocable living trust, transfers ownership of selected assets to it, and usually designates himself as trustee and primary beneficiary. He names alternate beneficiaries to receive assets upon his death. Until that event, he retains use and control of the assets, and retains the right to dissolve the trust at will.

Step 1

Identify the appropriate dissolution procedure. If the document creating the trust mandates a specific dissolution procedure, it must be followed exclusively. If no procedure is specified, dissolution according to California law is appropriate if the settlor lived in California when the trust was created, the document creating the trust was signed in California, or the trust document specifies that California law applies.

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Step 2

Draft a dissolution document according to California Probate Code Section 15401 if no other dissolution procedure is specified. Identify the trust by naming the settlor or settlors and its date of creation. Declare the trust dissolved and provide the day and year of dissolution.

Step 3

Sign the document as the trust's settlor. If there is more than one settlor, all must agree and sign. Otherwise, the signing settlor only dissolves the portion of the trust he created.

Step 4

Send copies of the signed trust document to the trustee, if the settlor and trustee are different people. Send copies to all beneficiaries named in the trust and to all relevant financial institutions. For example, send copies to banks or mortgage companies holding notes on any trust property and to investment firms managing securities owned by the trust. Maintain a copy of the dissolution document for your records.

Step 5

Remove, or retire, trust assets. Transfer ownership of each trust asset from the trust back to the settlor, or settlors, by executing a new ownership document for each asset. For example, remove the trust as owner of real property by executing a new deed naming the settlor as owner.

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How to Dissolve a Trust in Court

References

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What Happens When a Trust No Longer Has Assets?

Trusts must adhere to specific requirements to be valid. All trusts, including living trusts and irrevocable trusts, must have trust assets, i.e. property, a trustee and beneficiaries. In general, when a trust runs out of assets, the purpose of the trust is considered fulfilled and the trust may be terminated. Depending on the circumstances, the trust may need to be officially dissolved by obtaining court approval.

How to Dissolve Being a Trustee

Absent a court order, a person cannot be compelled to act as a trustee. Even if a person accepts the position of trustee, unforeseen circumstances may prevent that person from carrying out the duties of trustee. Trust documents almost always address the issue of a trustee’s resignation. Absent an express resignation provision, consult with an attorney to determine your resignation rights under state law. In most cases, a written resignation letter delivered to the next trustee listed in the trust and to the person who created the trust is required.

How to Break an Irrevocable Trust

Two types of trusts are possible: a revocable trust and an irrevocable trust. Although the grantor can unilaterally revoke a revocable trust, even a revocable trust becomes irrevocable when the grantor dies. The assets of an irrevocable trust belong to the trust beneficiaries, not the grantor. Even an irrevocable trust can be revoked under certain circumstances, although it is almost impossible for a creditor of the grantor or a beneficiary to revoke it. Although the trust laws of the various states differ on the grounds and procedures for revocation, they are all based on similar principles.

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