The Procedure to Close a Revocable Trust

The Procedure to Close a Revocable Trust
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The nice thing about creating a revocable trust, as opposed to an irrevocable trust, is that you can terminate the revocable trust easily and pretty much at anytime. The first step is always to examine the trust agreement to make sure you meet any specific requirements outlined in that agreement. Each trust agreement is a little different so you need to check yours. If the trust agreement is silent as to the procedure, the procedures outlined in this article will suffice.

Draft a Notice of Termination

A trust agreement is typically not a matter of public record, which means you could just destroy the trust agreement, in addition to following the steps below. However, the better alternative is to draft a short statement that you are dissolving and terminating the trust as of the current date. You should sign the document and attach it to the trust agreement. This will help you stay organized and be able to prove what happened to the trust if a question ever arises.

Transfer Property

When you created the trust you transferred some of your property to the trustee to hold according to the terms of the trust agreement. You will now need the trustee to transfer that property back to you. In some instances, this may be as simple as transferring possession of an item of property from the trustee back to you. For real property and other property that requires a certificate of title, you will need the trustee to sign a deed conveying the property from the trustee back to you.

Notify Interested Parties

Sometimes bank accounts, life insurance policies, or other institutional accounts get transferred to a revocable trust. If your trust involves any of those types of accounts, you will need to notify the institution that you have terminated the trust. The institution will probably require proof that the trust has been terminated, which is another reason why creating the notice of trust termination document is a good idea.

Amend Your Will

A common estate planning technique is to create a will and a revocable trust that work together. It is not uncommon for a will to identify the revocable trust and to provide that, upon death, all of the deceased person's property will be transferred to the trust. If this is how your will works, or if your will references your trust in any way, you will need to amend your will to delete those references.