An irrevocable trust cannot be revoked or amended once created. For an irrevocable trust to be effective, it must hold title on property and be backed by a notarized irrevocable trust agreement, which can be completed by a title company, trust attorney or individual. The trust agreement certifies how trust property will be distributed to beneficiaries.
An irrevocable trust holds title on property. After the individual who set up the trust, known as the trust settlor, dies or becomes incapacitated, trust property is maintained by a successor trustee. The successor trustee must distribute trust property to beneficiaries in accordance with an original trust agreement. An irrevocable trust expires after all trust property has been distributed and all accounts paid out.
Written Notice of Administration
After providing written notice of administration, a successor trustee must resolve the affairs of the trust, such as holding meetings and distributing trust property to beneficiaries. For the sake of expediency, the trustee may hire a private asset search firm to find undisclosed trust property. Because appraisals of real estate and other high value property are completed during the initial transfer process, the trustee is only responsible for finding and distributing trust property.
A successor trustee must distribute trust property while minimizing the tax obligation for all parties. There is no time limit on the length of time it takes to relinquish trust property. For example, if the most effective way to maximize a gift-tax exemption threshold is to distribute trust property incrementally over the course of several years, the trustee may do so without pressure from the court to hurry and close the trust.
Trust Settlor Instructions
In some cases, a trust settlor may convey specific distribution instruction for trust property. For example, a settlor may make financial accounts or real estate conditional upon high school graduation or a beneficiary reaching a legal age. In such cases, an original trust agreement might contain language such as, “Beneficiary A, Jane Doe, is named as the beneficiary of a Totten account — a type of trust account that is payable on death (POD). Beneficiary B, John Doe, is named as the beneficiary of an education fund of $75,000. John will receive a check for the full amount payable on death.”