Trust beneficiaries and trustees often have the same question: How long can a trust be open after death? There are many factors that can influence the time a trust can be opened after the death of a settler. Here’s a brief overview.
Rule of Perpetuities
The Rule of Perpetuities, a common law principle, states that nothing can be eternal. A trust can be kept open for up to 21 years following the death of the last person to have it made. This rule is not very clear, and trusts don’t stay open for as long as they could under the Rule of Perpetuities.
Administration of Trusts
Revocable living trusts are the most popular type. Most trusts can be closed within six to twelve months of the death of their settler.
Notable Exceptions
A few trusts may remain open for longer than the average time, but these are rare exceptions. These are three types of trusts that can remain open long after the death of the settler:
- Special Needs Trust – A trustee will manage the Special Needs Trust for the beneficiary who is disabled, provided that the beneficiary is still alive and funds are available.
- Trust with a Spendthrift Condition – When they want to leave an inheritance to someone financially responsible, some settlers include a spendthrift provision in their trust. This type of distribution would allow the beneficiary to receive a fixed amount each year instead of one lump sum. This arrangement would allow the trust to continue to exist as long as money is available to distribute.
- Charitable Trusts – You can name yourself, or another person to receive an income stream for a specified number of years (not exceeding 20), or for the lifetime of your non-charitable beneficiaries. The remainder of the assets donated will be divided among the charities you choose.
This article was written by Alla Tenina. Alla is one of the best tax attorneys in Los Angeles California, and the founder of Tenina Law. She has experience in bankruptcies, real estate planning, and complex tax matters. Visit www.teninalaw.com for more information. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; the ABA and its members do not recommend or endorse the contents of the third-party sites.