Terminating the Trust

• Author: Margaret A. Munro, Kathryn A. Murphy
• Profession: Has more than 30 years' experience in trusts, estates, family tax, and small businesses/Attorney with more than 20 years' experience administering estates and trusts and preparing estate and gift tax returns
• Pages: 235-244

CHAPTER 15 Terminating the Trust 235

Chapter15

Terminating the Trust

All good things must come to an end, and that includes trusts. A day will

come when you’ve fullled all the terms of the trust and the need for it just

goes away. This may happen when the income beneciary dies or reaches

a certain age, or when all the principal has been spent. Whatever the reason, when

the time comes for you to terminate the trust, you don’t just get to wash your

hands and say, “I’m done.” Although the end scenario isn’t dicult, you do need

to follow a few rules and perform a few rituals before you can walk away from

your duties as trustee.

In this chapter, we tell you what needs doing and when you need to do it. We

explain how to make those nal distributions, prepare that last tax return, set

aside something for those contingent expenses that always seem to crop up, and

nally wrap a nice bow around the whole package with your nal account, which

should show zero balances in both income and principal on the last day.

Distributing All Assets According

to the Trust Instrument

No matter what event triggers the termination of a trust, you need to nd new

homes for the remaining assets before you can wrap up its aairs. Of course, none

of this division is left to your discretion; the trust instrument has the disposition

IN THIS CHAPTER

»

Making nal income and principal

distributions

»

Planning for, and preparing, the nal

tax return

»

Gazing into your crystal ball for

future expenses

»

Wrapping up the nal account