What Happens If the Grantor of a Trust Dies?

By Phil M. Fowler

What happens to a trust when the grantor, or trust creator, dies depends on the terms of the trust. Since a trust represents a fiduciary relationship regulated by state law, independent of the grantor, a trust can continue in existence long after the grantor dies. On the other hand, when a grantor creates a trust, he may include instructions for an automatic change to, or termination of, the trust when he dies.

Independent Entity

Just as a corporation or limited liability company exists independent of the individual people who create them, so too does a trust exist independent of the grantor. The grantor is the person who creates the trust by defining the trust's terms, funding it with property, appointing a trustee and designating its beneficiaries. Beyond these actions, the trust is not dependent on the grantor for continued existence. Once appointed, the trustee acts in a fiduciary capacity and administers the trust and trust property on behalf of the beneficiaries.

Grantor as Trustee

It is a common estate planning practice for a grantor to name himself as the initial trustee of the trust. If the grantor is the trustee at the time of his death, a new trustee, sometimes called a substitute trustee or successor trustee, will take over in the grantor's place. If the trust does not identify the successor trustee, any of the trust beneficiaries can petition a local state court judge to appoint a new trustee to manage the trust.

Ready to start your LLC? Start an LLC Online Now

Grantor as Beneficiary

It is common for a grantor to also be named as a beneficiary of a trust. However, the fact that a deceased grantor was also named beneficiary of a trust does not affect the existence of the trust after the grantor's death. Instead, any trust property that should have been distributed to the grantor as a beneficiary under the trust will now be transferred to the grantor's surviving heirs according to the terms of his will, if the grantor had a will, or state intestacy laws if he did not.

Trigger Mechanism

A grantor can alter the general rule that a grantor's death will not affect a trust. Grantors have authority, at the time they create a trust, to define the terms and conditions of the trust. A grantor can, among other things, make his death an automatic trigger for certain actions to occur under the trust. A grantor can include a condition that the trust terminate automatically upon his death, or that the trustee should make certain distributions of property upon his death. Any such trigger mechanisms are entirely within the grantor's discretion at the time the trust is created.

Ready to start your LLC? Start an LLC Online Now
The Difference Between a Grantor & a Beneficiary


Related articles

How to Get Rid of a Trust

Trusts can be great estate-planning tools -- at least until you want to undo one. When this occurs, you must usually deal with a lot of tedious paperwork or require special permission from the court. In some cases, you must do both. It depends on what type of trust you chose to create and the laws in your particular state. Some jurisdictions are more restrictive than others.

How to Get Notified if You're an Heir to a Trust

A trust is a legal and financial structure that holds assets, and pays beneficiaries, according to the instructions of a grantor. The grantor appoints a trustee to manage the trust. By the terms of a will, a trustee may be responsible for paying the grantor's heirs out of trust assets. A trust may also benefit a group, business or charity. State laws and guidelines determine how a trustee or grantor notifies the beneficiaries. If you believe you may be the beneficiary of a trust but have not received notice required by law, your best course may be to seek professional legal advice.

What Is the Difference Between a Trustee and a Settlor on a California Revocable Trust?

A settlor and a trustee are two distinct roles, although one person can serve in both capacities. A settlor creates the trust and can reserve important powers with respect to the trust. The trustee is obligated to manage the trust, in accordance with state law, after its creation and until the termination of the trust.

LLCs, Corporations, Patents, Attorney Help

Related articles

What Are the Duties of a Successor Trustee for Administrating a Living Trust?

A successor trustee does not have any duties until the trustee can no longer perform his duties. A trustee is a person ...

What Is a Non Testamentary Trust?

A trust is a legal document that allows a trustee to hold property for the benefit of others, known as beneficiaries. ...

The Executor & Trustee of a Will

Fiduciary powers, or powers to act on behalf of another, may be granted to both executors and trustees under a will. ...

Removing a Successor Trustee

A successor trustee is a person or entity who administers a trust after its original trustee dies or is incapacitated. ...

Browse by category
Ready to Begin? GET STARTED