What Happens to a Revocable Living Trust After the Person Who Created It Dies in Virginia?
Many people in Virginia use revocable living trusts to manage their property while they are alive and distribute it after their death. The major benefit of revocable living trusts is that they allow property in the trust to pass to beneficiaries without probate.
However, what happens to the trust after the creator’s death? In this article, we’ll answer that question.
The trust generally becomes irrevocable
During the creator’s lifetime, a revocable living trust is usually amendable or revocable. In most cases, the individual setting up the trust, referred to as the grantor or settlor, maintains control over the trust during their lifetime.
After the grantor’s death, the trust automatically becomes irrevocable. Once the trust becomes irrevocable, the instructions set out in the trust determine what happens to the trust’s assets. This means the successor trustee cannot rewrite the instructions, regardless of how the situation may have changed.
The role of the successor trustee in such an instance is fiduciary in nature.
The successor trustee takes control
Most people who set up revocable trusts act as trustees during their lifetime. The trust agreement should specify who will be the successor trustee after the grantor dies.
Some of the successor trustee’s responsibilities include identifying and safeguarding the trust property, valuation, recordkeeping, taxation, payment of expenses, communication with the beneficiaries, and, finally, distribution of property.
Fiduciary duty arises when trustees owe a duty to the beneficiaries to act diligently and in accordance with the trust terms, rather than for their own personal gain.
Debts, expenses, and taxes need to be addressed
A successor trustee should not commence the distribution process right away upon the death of the grantor. This is because there might be various fees, taxes, administrative fees, or other liabilities that require attention before anything else can be done.
Depending on the situation, the trustee may need to work closely with the executor or administrator of the deceased’s estate. An individual can have a combination of probate and non-probate estates, meaning that administering a trust does not necessarily preclude any estate issues.
Making distributions from a trust too early can cause problems when additional funds are needed to pay valid obligations.
Assets are distributed according to the trust
Once the trustee completes the required administrative work, they can distribute the property in accordance with the trust deed.
Sometimes, trusts require outright distributions. This means the trust requires the trustee to distribute the remaining property equally among the grantor’s children, for example. Some trusts also continue for many years after the grantor dies. The property may stay in the trust for minor children, disabled beneficiaries, and other people whom the grantor wanted to protect from any financial harm.
The trustee is supposed to act accordingly, even if it goes against the beneficiaries’ wishes.
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