Do You Have to Dissolve a Trust When One of the Trustees Dies?
A living trust is a legal creation that can continue in perpetuity, regardless of whether an acting trustee dies. A trust does not necessarily have to dissolve simply because a trustee dies. Instead, the trust will continue to operate under the direction of a successor trustee.
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Trust Instructions
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Laws regulating trust agreements, outside the context of trust taxation, are not highly detailed or restrictive. Generally, a trust can operate according to the terms of the trust instructions prepared by the trust creator. Those instructions are most often embodies in a written trust agreement or trust document.
Automatic Termination
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A trust only needs to be dissolved upon the death of a trustee if the trust instructions expressly provide for the dissolution of the trust upon the death of a trustee. Absent such an express declaration in the written trust instructions, the law does not require the dissolution of a trust upon the death of a trustee.
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Successor Trustee
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Instead of dissolving upon the death of a trustee, a trust continues to function under the management control of a successor trustee. Some trust agreements designate a successor trustee to serve upon the death of the original trustee, while other trust agreements provide instructions for a procedure to appoint a successor trustee. If the trust agreement does not provide any instructions regarding a successor trustee, one of the trust beneficiaries can request a local judge to appoint a successor trustee.
Trust Operation
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A trustee serves a purely administrative function with regard to the trust relationship. Trusts can, and most often do, operate independently of any specific trustee. This means a trust can continue to operate in the same manner before and after the death of a trustee. Some paperwork will be required to transfer title to the trust property to the name of the new successor trustee, but this routine paperwork does not affect the viability of the trust.
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References
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