Law Offices of Roshni T. Desai
Long-term Planning For Orange County

How is a trust terminated?

You may already know a lot about trusts. Perhaps you have a trust, or you are wondering if anything could ever happen to it. For the most part, your trust is safe if done correctly. So what events can terminate a trust? 

Basics of a trust

A trust allows you to preserve property for loved ones down the road. Putting some or all of your property in a trust can protect those assets from going through the probate process after you die. You designate a trustee who oversees the distribution of property to your beneficiaries.

Trusts are either revocable or irrevocable. Irrevocable trusts can be modified, but not revoked, unless there are a court order and beneficiary consent.

When is a trust terminated?

Trusts have lifespans. Most trusts naturally come to an end. This usually happens after the trustee distributes all the property to the beneficiaries. There's nothing left of value. Once all your conditions are met, the trust is essentially terminated.

For example, you create a trust. In that trust, you specify that you want your assets to support your child through college. Your wish is granted once he/she graduates. Therefore, the trust ends.

In another situation, a trust might be terminated because the property, such as a house or car, was destroyed in a fire or accident. There are other reasons for termination, which include:

  • The trust was illegal
  • The trustee violated his/her duties
  • Disputes between beneficiaries

In some cases, a trust might not have a set end date or instructions. Therefore, the trustee and beneficiaries will need to agree to split up the assets fairly. Once the property in the trust is exhausted, it will end.

To avoid these dilemmas, it's important to create a trust that follows California laws, regulations and guidelines. In doing so, it creates a smooth process for you and your loved ones.

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