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This article discusses “How to Settle a Trust After the Trustmaker Dies,” including:

  • Where is the residence of the Successor Trustee?
  • Trustees with Several Successors
  • The Successor Trustee Isn't Interested in the Job
  • What Is the Number of Beneficiaries?
  • What if There's a Trust Contest?
  • When the Estate of the Trustmaker is Taxable
  • Are Trust Assets Complicated?
  • Settling Up a Trust

A revocable living trust is a legal entity that holds a trustmaker's property and avoids the need for probate when the trustmaker—also known as the grantor—dies. Since a deceased person cannot own land, probate is required to transfer properties from the decedent's possession to the names of living beneficiaries after his or her death.  

The revocable living trust, on the other hand, owns the grantor's properties and does not die. Without engaging the probate court, those properties may be passed to beneficiaries, effectively settling the trust. When the grantor dies or becomes incapacitated, a "successor trustee" is appointed in the trust documents to handle this process, stepping in and handling the revocable trust.  

Irrevocable trusts can continue to operate after the trustmaker passes away, while most revocable trusts divide their assets and close their doors. If real estate or other properties must be sold, this could take up to 18 months, but it could take much longer. The length of time it takes to settle a revocable living trust is determined by a variety of factors.  

This article discusses “How to Settle a Trust After the Trustmaker Dies,” including:

  • Where is the residence of the Successor Trustee?
  • Trustees with Several Successors
  • The Successor Trustee Isn't Interested in the Job
  • What Is the Number of Beneficiaries?
  • What if There's a Trust Contest?
  • When the Estate of the Trustmaker is Taxable
  • Are Trust Assets Complicated?
  • Settling Up a Trust

Where is the residence of the Successor Trustee?  

With modern technology, the location of the successor trustee in relation to the living trust shouldn't be a big deal, but it can be, particularly when an attorney is assisting with the trust settlement and the attorney is local.  

Successor trustees who live close to their lawyers can drop by their office at any time with questions. When the successor trustee lives out of town or in another state, quick meetings like this are impossible. The nearest the successor trustee is to the attorney and the trust's operations base, the faster tasks can be completed.  

Trustees with Several Successors  

Some grantors appoint two or three co-trustees in the event that they die or become incapacitated. This will inevitably cause complications and delays, particularly if the trust's formation documents stipulate that all trustees must agree before any action can be taken.  

Trustees may discuss, negotiate, or squabble for days or even weeks. This is particularly true when the grantor appoints two or more adult children as successor trustees.  

The Successor Trustee Isn't Interested in the Job  

Grantors should always consult with their prospective successor trustees to ensure that they are able to take on the role, but this does not always happen. And if it does, it won't stop anyone from agreeing in Year 1 while the trust documents are being drawn up, just to change their mind 25 years later.  

Successor trustees may sign letters of renunciation at any time before or after taking over, if they find the job is too much for them. Now that they're 65 and retired, responsibilities and time demands that didn't bother them as much when they were 40 may seem more stressful.  

Although some trusts appoint successors to their successors, the process of transferring authority can take some time. If no other replacement trustees are named and the first resigns, a beneficiary can be chosen, but this may lead to controversy and the need for court intervention. When there is a dispute or a court case, time starts to slow down.  

What Is the Number of Beneficiaries?  

When there are many beneficiaries, trust administration takes longer. The distance between them and the counsel, successor trustee, or both is also important. This is actually a function of the time it takes for each of them to submit and receive documents.  

How Frequently Do Beneficiaries Agree?  

It's highly doubtful that two beneficiaries, let alone three, four, or more, would agree on everything. Some might even employ their own lawyers to oversee the trust administration, and these attorneys are notorious for nitpicking any step taken by the successor trustee.  

To summarize, the more beneficiaries disagree, the longer it will take to settle the trust.  

What if There's a Trust Contest?

A trust contest is a civil action taken after the trustmaker dies to invalidate the terms of a revocable living trust. One or more of the following four claims are used in trust contests:  

  1. The trust agreement was not signed in accordance with legal requirements.  
  1. The trust agreement was obtained by deception.  
  1. Duress and undue influence were used to obtain the trust agreement.  
  1. The trustmaker lacked mental ability and therefore was unable to enter into the trust agreement.  

When a trust contest is involved, settling the trust can take a long time because any or all of these factors must be proven.  

When the Estate of the Trustmaker is Taxable  

A taxable estate would almost certainly take longer to settle than one that is not. Unless the successor trustee receives a closing letter from the state Department of Revenue and/or the IRS, the trust cannot be terminated and final distributions made.  

In practice, only properties worth more than $11.58 million are subject to the federal estate tax as of 2020, although some states have much lower estate tax rates. After filing an estate tax return with the state or the IRS, the waiting period for these documents generally range from six to eight months.  

Are Trust Assets Complicated?

When the trust consists of a house and a bank account, dealing with trust assets can be reasonably easy. When a family company is involved, trust administration can become difficult and time-consuming.  

Significant and rare assets may need to be appraised, which may cause delays.  

Settling Up a Trust  

If everybody gets along, the trust properties aren't difficult and don't need to be sold, and the trustmaker's estate isn't taxable, settling a very easy trust can only take a month or two. Otherwise, the process of settling a trust may take a number of years.

Request a consultation with an Illinois Attorney. Call our office at (630) 324-6666 or schedule a consultation with one of our experienced lawyers today. You can also fill out our confidential contact form and we will get back to you shortly.

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