Trusts are a common, yet diverse, estate planning tool. There are trusts for different purposes, with different terms and provisions. Some trusts, called testamentary trusts, are created by the settlor’s Will after his or her death. But many trusts are established during the lifetime of the settlor. When you consider establishing a trust, it’s important to know what happens to a trust after the death of the settlor. Florida Law According to the Florida Trust Code, a trust may be modified or terminated when the trust expires or is revoked or is properly distributed pursuant to the terms of the trust. Fundamentals and a Few Specifics. Trusts are legal relationships that involve the following parties: A settlor or grantor who establishes and funds the trust; The trustee, who manages the trust; and Beneficiaries who receive disbursements from the trust. The trust is established and governed by the trust instrument, the document that contains the terms and provisions of the trust. The trust instrument is prepared by the settlor according to his or her wishes as long as they comply with laws regarding trusts. Trusts may be terminated after the death of the settlor, with the proceeds distributed to the beneficiaries. The proceeds may also be used to fund a new trust. A trust can be revocable during the settlor’s lifetime, then become irrevocable upon the death of the settlor. Irrevocable trusts created after January 1, 2001 may be terminated, in certain cases, after the settlor’s death. However, termination may require the unanimous agreement of the trustee and all qualified beneficiaries. Pet trusts must terminate upon the death of the last pet named in the trust. Trustee’s Responsibilities Upon Death of the Settlor Sometimes the settlor also acts as the trustee, but the trust instrument should have named a successor trustee. Upon the death of the settlor, the successor trustee may take some or all of the following actions: Coordinate with the personal representative of the estate and the estate’s attorney; Collect on any policies or financial accounts that named the trust as beneficiary; Find, maintain, invest, and protect the trust assets; Begin obtaining appraisals and valuation of trust assets; Identify creditors and pay off valid claims against the trust; Calculate and pay any taxes that are due; Pay administration expenses for the trust; Keep beneficiaries informed; and Terminate the trust if necessary. The trustee is expected to act on behalf of the beneficiaries of the trust in all things. Trusts Can Be Complicated. We can help.
