We often talk about how trusts can be a great way to protect your interests, assets or heirs now and in the future, but do trusts do their job for eternity? The most common answer is no, trusts usually come to an end at some point. Most trusts aren’t actually designed to last forever, and even long-term trusts usually evolve or are ingested by new legal vehicles or arrangements throughout the years. Here’s a look at some ways and reason a trust ends.
Trusts are designed to hold property. In most cases, once the property the trust was designed to hold is gone, the trust is also gone. For example, if you create a trust to hold cash for a minor child, the money is likely to run out eventually. Perhaps you left $100,000 to cover educational expenses; once that money and any interest or wealth growth from that money is gone, the trust ceases to exist.
You might put real property, such as a house, in a trust. If the house is lost to a natural disaster, the trust might end. Whether or not insurance funds related to the house are funneled into the trust and cause the trust to continue depends on how the trust was set up.
Some trusts have hard endings, which means that they were created to end at a specific time. You can create a trust that will end after a certain amount of time or upon a certain event occurring. For example, people commonly create trusts for their minor children that end when the children reach a certain age. You might create a trust to support a business that ends when the business reaches a certain milestone or age too.
Trusts can be complex, but they aren’t forever. The goal is to create a trust that lasts long enough to do its job. Working with an experienced estate planning professional can help you structure your trust to meet your needs.
The Law Offices of Yacoba Ann Feldman is an experienced San Fernando Valley Estate Planning and Administration Attorney. If you need a compassionate and effective attorney, contact our firm for a consultation.
