What Happens to a Revocable Trust When the Trustee Dies?

By Beverly Bird

The laws surrounding revocable living trusts are made somewhat confusing by overlapping terminology. The names grantor, trustmaker, trustor, settler and trustee all refer to the same person, the creator of the trust. This is because, unlike with an irrevocable trust, he maintains control of the assets he places into it. He can sell them, add others, or remove them for his personal use. As manager of the trust, he is the trustee, at least until his death.

Role of the Successor Trustee

Although the creator of a trust is its trustee while he’s alive, someone must step in to manage the trust for him when he dies. This is his “successor trustee." When you create a revocable trust, you can name two or more individuals as successor co-trustees so the management of your trust depends on their agreement when you die. You can also name a descending order of individual successor trustees, so if one doesn’t want the job or is unable to perform, the next one can step in. Whoever you name, and however you name them, one or more will step into your role as trustee or manager of your trust when you die.

Change of Beneficiary

When you create a revocable trust, and while you are alive, you are its “initial beneficiary” as well as its trustee; you own the assets. When you die, this creates a change of beneficiary or beneficiaries. The person or persons you named in your trust documents to inherit from you become the new beneficiaries upon your death. They now own the assets you placed in your trust, according to the terms you decided when you made it.

Protect your loved ones. Start My Estate Plan

Distribution of Assets

The assets in your trust pass to your beneficiaries much in the same way they would have if you had left a will instead. Your successor trustee acts as the executor of your will would. The only real difference is that the assets you placed in the trust do not have to go through probate. Your successor trustee will disburse your assets and pay your taxes, debts and the costs of the trust’s operation from the assets you placed into it. He will make your bequests and close out the trust. If you want any assets to remain in trust, such as if one or more of your beneficiaries are minors and you don’t want them to receive their money until they come of age, your successor trustee can create new trusts for them from your original one.

Death of the Successor Trustee

If you name only one successor trustee and that person predeceases you, or if he dies himself before closing your trust, it’s possible your trust could be left with no one to steer it. States have their own individual laws to address this situation when it occurs. Generally, your heirs would have to petition the court to have a successor trustee appointed. Your beneficiaries may have the right to suggest their own choice, or one of them can apply for the job himself.

Protect your loved ones. Start My Estate Plan
Responsibilities of a Successor Trustee Upon the Trustees' Deaths


Related articles

Oklahoma State Trust Laws After the Death of a Trustee

A living trust can spare your family from the trials and tribulations of probate court. In Oklahoma, a trust grantor may set up a trust and then name a trustee to handle the assets. The trustee makes distributions to beneficiaries, according to the terms set down by the grantor. If a trustee dies or becomes incapacitated, then the trust -- as well as Oklahoma law -- decides what happens next.

Can an Executor of an Estate Distribute Gifts From a Trust?

An executor is to a trustee what a cat is to a dog -- they’re both animals but different species. Executors and trustees are both fiduciaries, but they’re different kinds of fiduciaries. One works under the direction of the court to settle your probate estate while the other deals with assets you’ve placed in trust. Your executor cannot distribute gifts from your trust unless you named her as both the trustee of your trust and your estate’s administrator.

Power of Attorney Vs. Trustee

The advantages of giving someone a power of attorney over your financial affairs are similar to those gained by naming a trustee to manage assets you’ve placed in a trust — until you die. Both options allow someone else to act in your place if you become incapacitated and can’t take care of your affairs yourself.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help. Wills & Trusts

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 ...

How to Set Up a Trust for Minor Children

Setting up a trust is largely a matter of making long-term decisions. When you’re establishing one for children, the ...

Difference Between Heir & Legatee

You may hear the terms "heir" and "legatee" used interchangeably, but the words have two different legal meanings. An ...

What Is a Reversible Living Trust?

In order to shelter assets from the probate courts and taxation, many people choose to create a trust. In a trust, a ...

Browse by category
Ready to Begin? GET STARTED