Closing a trust after the grantor’s death is much like probating his will. When a decedent leaves a will, he names an executor to gather his assets and disperse them to his named beneficiaries. When he leaves a trust, the person he names as successor trustee does the same thing. The major difference is that a well-planned trust does not have to pay the decedent’s debts first. They’re usually paid by his probate estate from the cash and assets he did not transfer to his trust during his lifetime.
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Identify the trust’s successor trustee. This is the person the decedent named in his trust documents to take over management after his death. If you’re the person named, you won’t need court authorization to act on behalf of the trust; the documents are enough.
Refer to the trust documents to find out how the decedent wanted his assets distributed. You might have to have some of them appraised and valued. If the decedent stated that he’s leaving half the trust assets to his spouse and 25 percent to each of his two children, you’ll have to determine how much everything is worth in order to work out that equation. The amount you’ll divide among them is what remains after paying for any necessary appraisals and valuations.
Call a meeting of the decedent’s beneficiaries. If the decedent left his estate in percentages, provide the beneficiaries with copies of any appraisals you’ve had done to establish the value of the assets. Provide them with a written, detailed summary of what you’re going to distribute to each of them to equal those percentages. In some cases, the decedent might have left specific assets to certain beneficiaries. The trust documents can corroborate these bequests. Ask the beneficiaries to sign a consent that they agree with your distribution.
Take the trust documents, as well as a copy of the death certificate, to all financial institutions holding accounts in the name of the trust that are to be transferred to the decedent’s beneficiaries. Because the trust documents name you as successor trustee, this acts as authorization for the institution to follow your directive to transfer the accounts to the named beneficiaries.
Confer with an attorney to find out what kind of deed your state accepts for transfer of any real estate the trust might contain. This is usually a trustee’s deed, but it can vary from state to state. After you know what sort of deed to prepare, you can have one drawn up for each piece of real estate to transfer title to the named beneficiary.
Distribute the last assets, such as any personal property the trust included, and close the trust. If you have to transfer title to automobiles, check with your state’s department of motor vehicles to determine the exact procedure in your jurisdiction.
Tips & Warnings
If the decedent did not leave enough assets outside his trust to cover his debts, his creditors can usually file a claim with the court to pursue the assets in the trust for payment. Speak with an attorney and the executor of the decedent's will before you distribute assets to avoid this problem.
References & Resources
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