Trust termination is the complex process of transferring assets left in the trust upon a triggering event. Often times the triggering event is the death of the grantor of a revocable trust. Due to the myriad of situations that are present with trusts, the termination of a trust will be different with each situation. I have outlined a typical list of what will happen when a trust is terminated.
- Initial correspondence with trustee, letter to file will with probate court, letter requesting death certificates, letter to post office notifying them of death, letter to social security notifying them of death, and letter to beneficiary.
- Creditor correspondence and notification.
- Asset organization and inventory.
- Asset valuation.
- Real Estate Valuation and Correspondence.
- Inventory to determine new tax basis of assets.
- Trust Accounting.
- Tax Correspondence.
- Disclaimer – if beneficiary chooses to disclaim some or all of assets.
- Testamentary Trust – Documents required to fund any trusts which are to be funded from the revocable trust. Includes SS-4, Application for Employer Identification Number, Form 56, and Notice Concerning Fiduciary Relationship.
- Transfer of Assets.
Often times the benefits of estate planning are trumpeted because of the cost savings of avoiding probate. Unfortunately, the costs of terminating a trust are often ignored. Depending on the size of the estate, the costs of creating an estate plan AND terminating the trust should be weighed against the costs of probating an estate in determining how complex the estate plan should be.