Can a trust be dissolved by the trustee

Dissolving a Trust and Trustee Powers

There are two primary types of Trust:

• Revocable Trust: The grantor, who usually serves as trustee, can add to the Trust and take it at will. The grantor also can dissolve the Trust completely. These trusts are useful for avoiding probate following the death of the grantor.
• Irrevocable Trust: Once the grantor establishes an irrevocable trust, they cannot change the trust instrument. The grantor surrenders their property to the Trust. The Trust can only be changed by court order in case of a contest. Irrevocable trusts provide asset protection. They can also help the beneficiaries avoid estate taxes.

Dissolve a trust

Dissolving an early trust requires unanimous agreement from all beneficiaries. Trusts are usually managed without court involvement, yet in certain situations seeking court approval is necessary in order to meet legal standards and protect all interests involved.

Dissolving A Trust: Tax Implications

Taxes are paid annually during the trust instrument’s lifetime whenever the Trust earns $600 or more. When the time comes for the final administration and distribution, the taxes should be paid to date. The trustee pays any taxes still due during the final process. By the time the trustee is dissolving, Trust tax implications are at a minimum.

How to dissolve a trust

Dissolving a trust requires legal proceedings or unanimous agreement among beneficiaries. One party must petition the court, outlining reasons for terminating it, which may prompt a judge to dissolve it. Or alternatively, all beneficiaries may come together and effectively dissolve the trust themselves.

How To Dissolve A Trust After Death

Following the death of the grantor, the trustee takes several trust administration steps. The trustee vows to follow the Trust closely. The trustee cannot gain personal profits from any of the administrative actions. The trust administration steps include:

1. The trustee signs the affidavit of acceptance of the appointment of trust form.
2. The trustee notifies the beneficiaries that they will be inheriting. This written notification marks the beginning of a 120-day window for filing contest petitions with the courts. The trustee gives each beneficiary a copy of the final Trust, including all amendments.
3. The trustee sets up a trust account for all monies, including those from existing grantor bank accounts. At this time, the trustee also files for a tax number specific to the Trust.
4. The trustee inventories all assets of the Trust. This step includes consulting experts on valuation, legal counsel for guidance, and realtors to sell any real property.
5. The trustee liquidates assets. The trustee is mindful of the beneficiaries and strives to obtain fair proceeds.
6. The trustee identifies all creditors and pays off all debts.
7. The trustee presents an accounting report to the courts. The trustee shares this report with the beneficiaries.
8. The trustee distributes funds to the beneficiaries.
9. The trustee closes out the Trust.

Can A Successor Trustee Revoke a Revocable Trust?

The short answer is no. The grantor is the only one who can revoke a revocable trust. A revocable trust is similar to how the grantor manages their bank account before drafting the trust instrument. The grantor may act as a trustee while still alive, but any revocation of Trust should come from their role as the grantor. A grantor can amend or revoke a revocable trust at their discretion. The grantor should always call their trust lawyer before amending a Trust to complete all required paperwork legally.

Potential Legal Challenges To Revocation Of Trust

Revocation of Trust, especially when the grantor is elderly, can raise warning flags to family members. Suppose the changes to the Trust are excessive, such as disinheriting part of the family, closing down the Trust, or paying a substantial amount of money to an outsider. In that case, those of legal standing are within their right to contest the revocation petition. Contesting the revocation is also appropriate if the trustee appears to be in breach of duty.

Contestable charges include:

• Undue influence on the grantor.
• The grantor lacks mental competency when they make the changes.
• Incomplete documentation if signatures are missing.
• Misappropriation of funds by the trustee.
• Self-dealing by the trustee.
• Dereliction of fiduciary duty by the trustee

When Does An Irrevocable Trust End?

An irrevocable trust ends once the trustee fulfills their fiduciary duty to the Trust. A trustee ends an irrevocable trust once they complete all trust administration steps. Trustees make sure that they pay all creditors and distribute the rest of the funds to the beneficiaries. When the trustee has paid all the assets, the Trust ends.

Seeking Legal Counsel

You should seek advice from a trust attorney at every step of the trust process. The grantor needs legal guidance when initially creating the Trust. The trustee should have a trust lawyer to guide them through how to dissolve a trust after the grantor’s death. Your trust lawyer can help to identify any dissolving trust tax implications. A trust lawyer can help you understand can a trustee revoke a revocable trust. A trust attorney will help the trustee as an intermediary of the courts to clarify when an irrevocable trust ends. Call one of our experienced trust attorneys today for further information on trust administration.

Successor Trustee Roles And Responsibilities

The successor trustee takes control of your Trust beginning at your time of death. The first thing you will need to do is file the appointment of successor trustee form and the acceptance of successor trustee form. Since the Trust is revocable, the successor trustee is empowered with making changes and investment decisions without court oversight. The successor trustee is responsible for safeguarding and administering the Trust to benefit the beneficiaries exclusively. You need to follow the terms of the Trust strictly. Your first step as the successor trustee is to establish yourself as the legal trustee and open a trust bank account. You will need to file a statutory notice of trustee change to obtain a federal taxpayer ID number. Once you have that, the following documentation will allow you to have the assets of the Trust retitled:

• A statutory notice of change of trustee
• Certified copy of the death certificate
• Taxpayer ID number
• Affidavit of appointment of a successor trustee
• Certificate of Trust

Review Trust

Carefully review the Trust. If these terms are not clear, your trust lawyer will help you petition the court for instructions. While you will most likely be advised to use your discretion, you need to be careful. Keeping to the Trust’s terms might not please all beneficiaries, but you still should administer the Trust to the grantors’ wishes. This review is an excellent time to look for any improprieties that might serve to invalidate the Trust. Your trust lawyer can be a great asset during this stage.

Notifications To Inheritors

Within 60 days of the grantor’s death, you need to mail notifications to all beneficiaries and heirs they are due to inherit. This mail should include:

• A copy of the Trust
• Your appointment of successor trustee California
• Certified copy of the death certificate
• Your complete contact information