Closing out a living trust is a process that trustees may consider when the trust is no longer needed, typically because the “trustor” has died and the successor trustee steps in to administer the trust (or close out the trust). Understanding how to close a living trust correctly is essential to ensure all legal and financial responsibilities are met and to avoid complications. Trust dissolution is the formal process of terminating the trust’s existence, which involves several key steps to close the trust effectively and responsibly.
Eliminating liability
Closing out a trust “the right way” should involve the successor trustee hiring an attorney, as it is in the trustees best interest for their own protection to eliminate liability associated with the trust and make sure everything is handled properly.
This includes ensuring all debts and liabilities of the trust are settled before distributing the remaining assets to the beneficiaries. The process of closing the trust involves a thorough review of the trust’s financial obligations, paying off any outstanding debts and ensuring all tax implications are addressed. By carefully managing the distribution of assets and eliminating debt, trustees can close the trust with confidence, knowing they have fulfilled their duties and minimized any potential legal challenges or financial risks.
Do you need the original Attorney?
One common question trustees face when closing a trust is whether they need to involve the original attorney who set up the trust, especially if they cannot find the original trust document. While having the original attorney could be helpful, it is not necessary.
If the original document is missing, obtaining a copy can sometimes be challenging but it’s not impossible. The successor trustee may request a copy from the trust’s custodian or, if available, from a court of law. A living trust attorney specializes in trust administration, providing guidance on how to get a copy of a trust document and will help you avoid stress and errors by assisting you through the trust management steps. Plus they can advise you about any questions unique to your situation.