Trusts are a great way to manage property if you don't think you'll be able to manage it yourself in the future. Nevertheless, trusts themselves come to an end, sooner or later. The whole point of financial planning is to create a certain amount of predictability and security. By informing yourself about the termination of trusts you can avoid unintended outcomes.
Trust Establishment and Terminology Basics
There are some basic terms that are used when discussing trusts. Remember, a trust is a special type of property arrangement in which the original owner of the property, called the "grantor," places some property in trust, designates someone to take care of it, called the "trustee," for the benefit of another person, who is called a "beneficiary." The rules for how the property must be used, and how to take care of it, are spelled out in a written document, called the "trust instrument."
Ways a Trust Can End
The first and easiest way a trust can end is that the trust property is exhausted. If the trust property was cash or stocks, this can happen when all of the money, plus interest, gets paid to beneficiary. If the property was some other asset, like a house, then the trust may end when the house is destroyed or the trust itself comes to an end.
Indeed, trusts can and do end when the grantor specifies an end date or condition, and that condition is met. For example, the grantor can say that a child gets the benefit of cash in a trust until the child turns 18, or, alternatively, until the child graduates from college.
What Happens after a Trust Ends
Assuming there is still property in the trust, the trustee will work with the beneficiary to distribute the remaining property. Some grantors (wisely) include instructions in the trust instrument that say how the assets should be distributed. When there are no instructions, the trustee and the beneficiaries must decide a fair way of splitting up the assets.
While lawyers are not strictly necessary for this process, it might be useful to consult with an estate planning attorney if you have any questions about your rights with respect to the end of a trust. In situations where the potential beneficiaries are at odds with one another a lawyer's assistance can be even more important, since conflicts increase the possibility that litigation will be necessary to resolve the dispute.
For more detailed information, read FindLaw's articles on the types of trusts available.
Get a Free Initial Legal Assessment
There are a myriad of different ways that finances can be managed and directed. An experienced professional can take all of your concerns into consideration when devising a trust or other financial instrument and can point out issues you might miss, such as the trust's tax consequences or your ability to later modify the terms. Contact a local attorney for a free initial legal assessment to discuss your estate planning needs and learn how they can help tailor a solution for your individual situation.