Trusts are ideal for managing funds; you can essentially lock them away for months or years at a time until a predetermined date or event takes place. Eventually, a trust must come to an end.
How does a trust come to an end?
The most common way for a trust to be ended is for the beneficiary to receive all the funds or assets in the trust. If you establish an end date or condition, the benefits will be paid to the beneficiary at that point. For instance, if you designate $10,000 to your daughter only to be paid after her marriage, then when she gets married, the trust would be paid out and it would be closed.
What happens after the trust ends?
If there is still property in the trust, then the trustee, or the person in charge of the trust, will work with the beneficiary to determine how to distribute the remaining assets. As a grantor, you have the option of designating what happens to any additional items in the trust.
For example, if you place $10,000 in a trust and designate that $10,000 will be paid out to your daughter, then that will happen. However, in the meantime, interest may collect, and you may find that there will be $15,000 in the trust when she is paid the $10,000 you granted to her. You have the option of designating what happens to that money. If there are no instructions, then the trustee and beneficiary must come to a fair conclusion for how to split up those assets.
Speaking with your attorney and learning more about trust administration can help you plan your estate, so you know that your beneficiaries receive exactly what you want them to.
Source: FindLaw, “How Does a Trust End?,” accessed Aug. 10, 2016