Can You Dissolve a Trust?
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At Phelps LaClair, we are estate planners with more than 40 years of experience in creating exceptional estate plans. We have served thousands of satisfied clients in the Phoenix Valley to enable them to protect their assets and successfully pass on their wealth when they die. While we focus on designing revocable trusts, we also need to dissolve a trust from time to time.
Why dissolve a trust?
Life brings many unexpected changes. Divorce is one of the most common reasons to dissolve a trust. The need to change a trustee or beneficiary is another reason. Sometimes job changes, investment failures, business decisions, or different life goals may necessitate reworking a trust to such an extent that it is better to dissolve the trust and create a new one. Here is how that works.
All of the assets and property included in a trust must have their title of ownership transferred out of the trust. Typically, these are are transferred to the original grantor of the trust. Make a list of all titled property and financial accounts included in the trust. These items must be re-titled and filed with the appropriate agencies. For instance, if your house is held by the trust, you must prepare a new deed transferring the house from the trust to you. This deed then must be filed with the county. The same holds true for other listed property, as well as for bank and retirement accounts: ownership must be transferred out of the trust. Be sure to keep records and copies of every transfer in a personal file.
Create a dissolution document
A legal document must then be created stating the trust grantor’s wish to dissolve the trust. The document states that the grantor desires to revoke all terms and conditions of the trust and completely dissolve it. This document is signed by the grantor(s) in the presence of a notary public, who will witness and notarize the signature(s). If the original trust was registered with a court, the dissolution document should also be registered there. Copies of the document should be delivered to all persons who had an interest in the trust: beneficiaries, trustees, financial institutions, and anyone else affected by the trust. The original document should be kept by the trust creator.
When you need to dissolve a trust, you can rely on Phelps LaClair to oversee the process with you. As a second generation estate planning firm, we understand the complexities and details involved. We can streamline the process of dissolving an out-of-date trust, and we can design a new plan to fit your current situation. Call us today to set up an appointment for a consultation.