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.
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.
Trusts are legal relationships that involve the following parties:
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.
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:
The trustee is expected to act on behalf of the beneficiaries of the trust in all things.
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