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When and how does a trust end?

On Behalf of | Dec 16, 2020 | Estate Planning

Creating and funding a trust can be a great way to plan your estate. Depending on your needs, a trust can serve a lot of different purposes. It can regulate how your beneficiaries use their inheritance. It can protect your estate from taxation or your assets from claims by creditors after you die. A trust can preserve assets for future generations or help you give to charity in a structured way.

When you create a trust, you should also think about how it will end. You can create rules about the end of your trust at the same time that you create it.

Some trusts automatically end when they run out of assets

If the purpose of the trust is to provide funding for charity or a structured inheritance for a family member, the trust will end when the resources funding it have all been disbursed. This kind of setup can be the simplest because it requires no special planning on your part.

You can decide what to do with assets at the end of a trust

If the value of the assets funding the trust is high enough or the restrictions you place on it are careful enough that the beneficiaries will not be able to use the resources entirely before they die, you may want to consider how you might want to dispose of those leftover assets.

You could potentially earmark them for charity or have them distributed to heirs and family members in the next generation of your family. Some people also plan to have a trust terminate at a specific date or when beneficiaries meet certain conditions. Thinking about how you want a trust to end can be as important as planning for its creation.