But when the trustee of a revocable trust dies, it is up to his successor to resolve the affairs of his loved one and close the trust. The successor trustee follows what the trust establishes for all assets, property and family heirlooms, as well as any special instructions. When the grantor, who is also the trustee, dies, the successor trustee named in the Statement of Trust assumes the position of trustee. The new trustee is responsible for distributing the ownership of the trust to the beneficiaries named in the trust document.
The successor trustee is in charge of liquidating a trust, which usually means terminating it. Once the trust dies, the successor trustee takes over, examines all the assets of the trust, and begins to distribute them according to the trust. If Form 706, United States Wealth Tax Return (and Transfer by Generation Skip) is required, the assets held in the revocable trust must be aggregated and reported on Schedule G, Transfers During the Life of the Decedent, rather than listed separately (e. However, for income tax purposes, the trust will now be considered an independent taxpayer and will be required to obtain a TIN, even in cases where the trust has obtained a separate TIN during the life of the grantor (Regs.
Be careful when it comes to revocable trust seminars and sales speeches that say “everyone needs a revocable trust. Once you have met with a trust attorney, the next step in liquidating a trust is to establish date of death values for all of the decedent's assets. In many cases, the reasons for using a revocable trust are non-fiscal and include avoiding probate, planning for asset protection, and managing potential issues related to grantor privacy and disability. You'll need to file a trust income tax return, so keep a careful record of the value and disposition of each asset owned by the trust.
In addition to reading and summarizing the information of the revocable living trust, review the decedent's financial documents and make a list of what the decedent owned and owed, how each asset is titled (on behalf of the trust, in the individual name of the trust, as common tenants, or in joint names with another person) and, for assets and debts that have a statement of account, the value of the asset or debt as it appears on the statement of account and the date of the statement of account. A revocable trust will remain a trust of the grantor unless or until the grantor relinquishes the power to revoke, initiates appropriate amendments to the trust during its lifetime, declines the trust to a non-grantor trust, or dies. As stated above, you generally need to transfer your assets to the revocable living trust during your lifetime to ensure that they avoid probate (Wisconsin is unique in that it does have a procedure for married couples to transfer assets to a trust after the death of one or both spouses). In addition to locating the original revocable living trust agreement and any amendments to the trust, you will need to locate the decedent's original transfer will.
A copy of the grantor's death certificate (both grantors, if the trust property was originally co-owned) and a copy of the trust document are usually needed. Once you have located all of the decedent's important documents, read the revocable living trust to determine its specific provisions. The election, which is irrevocable, is made by filing Form 8855, Choice to Treat a Qualified Revocable Trust as Part of an Estate, no later than the prescribed time to file the return for the first tax year of the estate, including extensions, or, where there is no estate estate, the due date of QRT income tax return, including extensions. Basically, the process of transferring trust ownership to beneficiaries is the reverse of transferring it to the trust in the first place.
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