Having trouble understanding how a trust works after death? Help is available.
Whether you are a trust beneficiary or successor trustee, understanding how a trust functions after the grantor’s death is essential. Beneficiaries need this knowledge to protect their rights and hold the trustee accountable, while trustees require it to fulfill their duties and manage the trust effectively.
While trusts and estates may appear similar — and people often confuse them — their inner workings are quite different.
A trust is a fiduciary arrangement in which the trustee holds title to trust assets on behalf of the beneficiaries until they can eventually be distributed to them in accordance with the terms of the trust. A successor trustee isn’t authorized to take over management of the trust until the grantor either becomes incapacitated or dies.
Both beneficiaries and trustees can benefit from having an experienced probate attorney by their side during trust administration. For beneficiaries, an attorney can help safeguard their inheritance and take legal action if it’s at risk. For trustees, an attorney can help ensure they fulfill their duties properly and protect them from potential liability.
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Most Common Types of Trusts and How They’re Handled After Death
While there are many types of trusts — from marital trusts to special needs trusts — most fall under one of two broad categories: revocable living trusts or irrevocable trusts. The sections below explain how each type of trust works after death.
How Does a Revocable Living Trust Work After Death?
A revocable living trust — one that the grantor can modify or revoke during their lifetime while they remain mentally competent — typically becomes irrevocable once the grantor becomes incapacitated or dies. At that point, the successor trustee is legally obligated to carry out the trust’s terms exactly as written.
Revocable living trusts are popular estate planning tools because of the flexibility they offer. For example, a person who’s single with no children but anticipates building a family in the future may create a revocable living trust to serve as their primary estate planning document so they have the option to alter their trust as necessary, or revoke the trust altogether, if their circumstances change.
Unlike irrevocable trusts, revocable trusts don’t typically come with many tax savings or protect assets from the reach of creditors.
How Does an Irrevocable Trust Work After Death?
An irrevocable trust — one that typically cannot be modified or revoked by the grantor once created — remains irrevocable after the grantor’s death. Once a grantor signs an irrevocable trust, the successor trustee must abide by the terms that appeared in the document when it was executed (with limited exceptions).
Because grantors of irrevocable trusts cede control of trust assets upon signing the trust, irrevocable trusts are considered separate tax entities. In other words, the assets held by an irrevocable trust are not considered a part of the grantor’s taxable estate.
Irrevocable trusts often result in tax savings for the grantor. Creditors also could struggle to access the assets in an irrevocable trust, since these assets are not owned by the grantor.
Does a Trust Go Through Probate?
For many, the most appealing feature of trusts is their ability to completely avoid probate — the court-supervised process all estates must pass through, whether or not a will exists. That said, trusts are not always immune from court intervention. If a dispute arises regarding the trust’s validity or administration, litigation could still occur.
Avoiding probate offers significant advantages, including reduced administration costs, speedier distributions to beneficiaries and greater privacy. These benefits may leave more of the trust’s value intact for beneficiaries.
How Do Distributions of Trust Assets to Beneficiaries After Death Work?
Trust assets can generally begin to be distributed once the trust’s debts, taxes and expenses have been paid. In some cases, preliminary distributions may begin even earlier — provided the trust holds sufficient funds to cover potential liabilities. This differs from probate estates, which generally require full resolution of debts and court approval before any distributions can be made.
Trust distributions must follow the instructions outlined in the trust document. For instance, if the trust states that distributions are to occur one year after the grantor’s death, the trustee is legally bound to follow that timeline.
Trusts offer flexibility, allowing grantors to set their own distribution schedule, which may include lump-sum payments, staggered payments over time or even discretionary distributions based on the trustee’s judgment. In contrast, estate distributions usually happen as a lump sum at the end of probate, once all the estate’s financial obligations have been satisfied.
Who Controls a Trust After Death?
After the grantor’s death, control of the trust transfers to the successor trustee named in the trust document. If the designated trustee is unwilling or unable to serve, the document may identify an alternate trustee. If no alternate is named, a court will likely need to appoint someone, often giving consideration to the beneficiaries’ preferences.
While the successor trustee manages the trust, they do not have unlimited power. They must adhere strictly to the trust’s terms and act in the best interests of the beneficiaries. Any deviation could lead to legal consequences for a breach of fiduciary duty.
What Happens to Property in a Trust After Death?
When a trust includes real property, the trustee must either transfer the property directly to the named beneficiaries or sell it — usually on the open market — and distribute the proceeds from the sale according to the trust’s instructions.
If the trustee plans to sell trust property, California law generally requires that they send beneficiaries a Notice of Proposed Action at least 15 days in advance, giving them the opportunity to object.
Is Funding a Trust After Death Possible?
Under certain conditions, it may be possible to transfer assets into a trust after the grantor’s death — especially if there is clear evidence that the grantor intended for those assets to be part of their trust.
One common method for posthumously funding a trust is through a Heggstad petition, which asks the court to confirm that an asset, though not formally titled in the trust’s name, should be considered a trust asset. If granted, this process can avoid probate. However, if denied, a full probate proceeding may be required to determine the asset’s ownership.
To avoid this issue, grantors should aim to formally title assets like real estate in the name of the trust during their lifetime. Without that step — or a successful petition — the asset may be considered part of the probate estate instead.
What Does Closing Out a Trust After Death Entail?
A trust can only be closed once all of the following are complete:
- Debts, taxes and administration expenses have been paid
- All distributions have been made
- All disputes involving the trust have been resolved
In essence, a trust is officially closed once no assets remain and the trustee has fulfilled all their legal and fiduciary duties.
How Long Does the Average Trust Last After Death?
There’s no fixed timeline for how long a trust remains open after death, as it depends largely on the terms of the trust and the distribution schedule set by the grantor.
Legally, however, a trust must terminate no later than 90 years after its creation or 21 years after the death of the last surviving person who was named or referenced in the document and alive at the time the trust was created — whichever is later. In California, this is known as the Rule Against Perpetuities.
That said, most trusts are closed within a few months to a few years, depending on the terms of the trust, and the complexity of the assets and administration process. Long-term trusts can become costly and may require appointment of a new trustee if the original steps down, passes away or becomes incapacitated.
Is Dissolving a Trust After Death Possible?
Dissolving a trust after death is possible, but it depends on the type of trust and the trust’s terms.
Most revocable living trusts become irrevocable upon the grantor’s death. In these cases, the trust can’t be changed, but it is automatically dissolved once administration is complete and all assets have been distributed.
In some circumstances, beneficiaries may be able to dissolve or modify a trust post-death —either through unanimous consent or with court approval. This typically applies when the trust’s purpose has been fulfilled or continuing the trust has become impractical or legally unnecessary or where changed circumstances justify changes to the trust.
These situations can be complex and usually require the assistance of a qualified probate attorney.
FAQs About Trusts After Death
Still confused by what happens to a trust after the grantor dies? Check out the frequently asked questions below to gain further insight about the process of closing out a trust.
If you require personalized legal guidance, don’t hesitate to reach out to our probate firm for assistance.
Can a trust be changed after death?
Whether a trust can be changed after the grantor’s death depends on who is seeking the change. A successor trustee cannot alter the terms of the trust once the grantor has passed away, but beneficiaries may have some flexibility.
In certain cases — particularly when the trust’s purpose has been fulfilled or continuing it would be impractical — beneficiaries may be able to modify or terminate the trust with unanimous consent or court approval.
Can a trust be contested after death?
Yes, a trust can be contested after death, so long as you have standing (i.e., a financial interest in the outcome of the contest) and valid grounds for contesting the trust (e.g., suspected undue influence, fraud, forgery, lack of capacity, lack of due execution, mistake).
That said, successfully contesting a trust isn’t always easy, as you (or your attorney) will need to gather substantial evidence to back up your claim. For this reason, working with a skilled trust dispute attorney is strongly recommended if you plan to bring a trust contest.
Can creditors go after a trust after death?
Yes, creditors may be able to pursue trust assets after the grantor’s death — particularly if the decedent’s estate lacks sufficient assets to cover their debts, or if the trust itself owes money.
That said, creditors are generally required to seek repayment from the decedent’s probate estate before going after non-probate assets like trust assets or accounts with beneficiary designations (which typically pass directly to the named beneficiary upon death).
It’s a common misconception that trusts fully shield assets from creditors. While revocable living trusts can offer some protection, especially after they become irrevocable at death, they do not make assets completely immune to creditor claims — especially if debts are significant.
What happens to a grantor trust when the grantor dies?
When the grantor of a grantor trust dies, the trust will most likely become irrevocable. At this point, the trust must be administered according to its existing terms.
In a grantor trust, the trust creator retains ownership over trust assets for their lifetime, rather than transferring the assets into the trust’s name. As a result, the trust’s income is treated as belonging to the trust creator instead of the trust, and it must be reported on the trust creator’s personal tax return.
What happens to a family trust after death?
Because a family trust is simply a trust established to benefit family members, what happens to it after the grantor’s death depends on the type of trust it is.
A revocable family trust typically becomes irrevocable upon the grantor’s death, meaning its terms can no longer be changed or revoked.
In contrast, an irrevocable family trust is locked in from the moment it’s signed and remains unchanged through the grantor’s lifetime and after their passing.
What happens to a trust when the beneficiary dies?
If a beneficiary of a trust dies before the trust is fully administered, their share may pass to a contingent beneficiary (if one is named in the trust).
If no contingent beneficiary is named, the share may become part of the trust’s residue, which will be distributed either to residuary beneficiaries (if any are specified) or divided among the remaining beneficiaries in accordance with the trust’s terms.
What happens to a trust if the trustee dies?
If a trustee dies during the trust administration, the trust document will typically specify a successor trustee to take over. If an alternate successor is named, that person will assume the trustee’s responsibilities and continue administering the trust.
However, if no successor trustee is listed, the beneficiaries may need to petition the court to appoint one. While the final decision rests with the court, it likely will take the beneficiaries’ preferences into account — especially if they agree on a suitable candidate.
Does a will override a trust after death?
In most cases, a will does not override a trust after death. Assets that were properly transferred into a trust are typically considered separate from the decedent’s probate estate and are therefore not governed by the terms of their will.
However, if there is compelling evidence that the decedent intended a particular asset to remain part of their estate, rather than their trust, it may be possible to transfer the asset back into the estate after death. This can potentially be accomplished through a successful 850 petition or through the probate process itself.
Who is the grantor of a trust after death?
The grantor of a trust remains the same even after death — it is the individual who originally created and funded the trust. While the grantor’s role ends upon death, the term does not transfer to anyone else.
What becomes more relevant after death is who is named as the successor trustee and who the beneficiaries are under the terms of the trust.
How does a trust work with a will after death?
When someone dies with both a trust and a will, they essentially have a comprehensive estate plan. If these documents were properly drafted by a qualified estate planning attorney, they should work together seamlessly after death.
Problems typically occur only when conflicting terms exist between the trust and will, causing confusion about which assets belong to the probate estate and which are held in the trust.
Can a trust be created after death?
No, a trust cannot be created after death. A trust must be created by a living and mentally competent grantor.
How is a living trust taxed after the death of the grantor?
Generally, only the trust’s income and capital gains are subject to yearly taxation after death at the trust income tax rate while assets remain in the trust. The trust principal, however, is typically considered already taxed, so no additional taxes are imposed on those funds.
A federal estate tax may also apply but only to larger estates — which, as of 2025, are estates valued above $13.99 million per individual (or $27.98 million per married couple).
Navigating trust taxes after death can be complex and often requires the expertise of a skilled probate attorney or CPA.
Still confused about how a trust works after death?
Understanding how trusts work after death can be confusing for both beneficiaries and trustees. Complex legal and financial tasks are often involved, but with the right support, trust administration can proceed smoothly and efficiently. Contact us today to learn how we can help protect your interests.
