A revocable trust can be dissolved.
When it comes to trusts, there are two primary categories.
The first is an irrevocable trust.
The other is a revocable trust.
The primary differences are found their names.
The revocable trust is designed to be relatively easily changed or dissolved at anytime by the creator of the trust who is know as the Trustmaker (also Grantor, Settlor, or Trustor).
An irrevocable trust is not designed in this way.
The revocable trust, or “living trust,” is usually created and funded in order to avoid probate and pass assets efficiently to heirs.
During the lifetime of the Trustmaker, income generated is customarily distributed to the Trustmaker who is also the lifetime beneficiary.
Because the Trustmaker retains control of the trust and assets during his or her lifetime, a revocable trust does not protect assets from estate taxes beyond his or her own estate tax exemption amount (presently $11.58 million).
Instead, the assets held in a revocable trust are considered a part of the taxable estate.
Why would you want to revoke a trust?
According to a recent Investopedia article titled “How exactly does one go about revoking a revocable trust?,” there several reasons to dissolve a trust.
Often people revoke a trust because of divorce if the trust was created jointly with both spouses as Trustmakers.
In other cases, the changes a Trustmaker would like to make to the trust may be easier to accomplish by revoking one trust and creating a new one.
Another common reason is when the Trustmaker desires to make significant changes to the provisions of the trust or appoint a new trustee.
How does one dissolve a revocable trust?
First, all assets within the trust must be removed.
To do so, you will need to change deeds, titles, and other legal documents.
These should be retitled under your name instead of the trust.
Do not forget to revise any beneficiary designations identify the trust as a primary or contingent beneficiary.
After this you will need to create a legal document stating your authority to revoke the trust as well as your desire to do so.
This document is typically known as a “revocation of living trust” or a “trust revocation declaration.”
Like all estate planning, you should not attempt this alone.
Working with an experienced estate planning attorney will ensure your legal documents reflect your wishes.
Finally, this dissolution of your revocable trust must be signed, dated, witnessed, and notarized (depending on applicable state law).
If you already submitted your trust to a court, you must file this document with the same court.
If you did not, then simply attach it to your trust papers and store it securely with your last will and testament or new trust.
Reference: Investopedia (Jan. 13, 2020) “How exactly does one go about revoking a revocable trust?”