​​Hi, I’m Eric Ridley, an estate planning lawyer based in California. Today, I want to discuss a question many of my clients ask: “What happens to my trust when I die?” Let’s break this down in a simple, straightforward way.

The Role of Your Trustee After Your Passing

First things first: your trustee. This is the person you’ve chosen to manage your trust. After your passing, their job kicks into high gear. They’ll handle distributing your assets according to the trust’s instructions. It’s crucial to pick someone who’s responsible and whom you trust deeply. Let’s delve into the role of a trustee and what their responsibilities entail after your passing:

1. Identifying and Gathering Assets: One of the first tasks for the trustee is to locate and gather all the assets in the trust. This could include bank accounts, real estate, stocks, and personal property. They need to secure and manage these assets. This might involve things like changing the locks on a property or updating account information.
2. Paying Debts and Taxes: The trustee must settle any outstanding debts and taxes your estate owes. They will need to review your financial obligations and ensure they are paid. This step is crucial as it legally clears the way for assets to be distributed to beneficiaries. If this isn’t done correctly, there could be legal complications later.
3. Distributing Assets to Beneficiaries: So, what happens to your stuff? Your trustee will distribute your assets to your beneficiaries – the people you’ve chosen to receive your things. This could include money, property, or family heirlooms. It’s essential to be clear in your trust about who gets what.
4. Communication with Beneficiaries: The trustee should maintain open communication with your beneficiaries. They must keep them informed about the process and any decisions made regarding the trust. Transparency is critical to avoiding misunderstandings or disputes.
5. Legal and Fiduciary Responsibilities: Trustees have a legal and fiduciary responsibility to act in the best interests of the beneficiaries. This means they must be honest, fair, and impartial in trust management. They must avoid conflicts of interest and cannot use the trust’s assets for personal benefit.
6. Keeping Records and Reporting: The trustee must keep detailed records of all transactions related to the trust. This includes expenses, distributions, and investment decisions. They may also need to prepare and provide financial reports to beneficiaries or the court if necessary.
7. Possible Ongoing Management: The trustee’s role can be long-term in some trusts, especially those set up for minors or specific purposes. They might manage the trust assets for years, making distributions per the trust’s stipulations.

When Does the Trust End?

Most trusts are designed to distribute all assets and then wrap up. But some trusts, like those set up for children or grandchildren, might continue for years. The timing depends on how you’ve set things up.

Your Unique Situation Matters

Every trust is as unique as the person who creates it. That’s why tailoring your trust to your needs and wishes is essential. This ensures your legacy is handled just the way you want. Let’s explore in detail why and how your unique situation matters in shaping your trust.

1. Personal Goals and Objectives: Everyone has different goals for their estate. Some might want to support a child’s education, others aim to preserve wealth across generations, and some focus on charitable giving.  A trust should reflect these personal goals, with specific clauses and structures aligning with your objectives.
2. Family Dynamics:  Family structures and dynamics can significantly influence how a trust should be structured. This includes considering the needs of spouses, children, and other relatives.
3. Financial Complexity: Individuals may have a variety of assets, including real estate, businesses, investments, and personal items, each requiring different management and distribution strategies. The nature of your assets also impacts tax implications. 
4. Legal Considerations: Trust laws vary by state, and your trust must comply with the state’s laws where it’s established. A well-designed trust should also consider potential legal changes and include provisions for flexibility.
5. Long-Term Vision: Your trust should align with your long-term vision, including how you foresee your assets being used years later. Given that circumstances can change, trusts should be designed with a degree of flexibility to adapt to life changes such as marriage, divorce, birth of children, or death in the family.
6. Special Provisions: Some individuals may have specific wishes, like setting up a scholarship, supporting a charitable cause, or preserving a family home, which requires special provisions in the trust. Consider including conditions for distributions, like reaching a certain age, achieving educational milestones, or other specific criteria.

Let’s Talk About Your Trust

Interested in setting up a trust or just want more info? I’m here to help in plain English, with no legal jargon. Your first chat with me is on the house. Just give me a call at (805) 307-7668 or contact me online for a free initial strategy session. Let’s make sure your trust does exactly what you want it to do when you’re no longer here.