Revocable trusts are a commonly used estate planning tool. The trust will be created by someone known as a “grantor.” This is the person who places assets into the trust and is the beneficiary of the trust. When the grantor dies, the trust does not automatically go away. There are steps that need to be followed in order to close the trust after the grantor dies. Until all of the closing steps have been completed, the trust still operates. 

The most important thing to know about what happens after the grantor’s death is that the trust does not have to go through the probate process.  After death, the assets of the revocable trust are distributed in line with the grantor’s directions. After the debts and obligations of the estate are settled, the assets are distributed to the beneficiaries. However, in order to do this, the following steps must be taken.  A Denver estate planning attorney can help you execute these steps.

Family Notice

The obligations that attach to a trust are assumed by the successor trustee after the grantor’s death. This trustee has to deal with the beneficiaries and has certain obligation to them to uphold. Each beneficiary has a financial interest in the disposition of the trust and will need to act to protect this interest during the closing of the trust. 

The successor trustee has an obligation to give notice to the beneficiaries that they are in control of the trust.  This is done by sending a letter to each beneficiary. There may be legal requirements for what information must be contained in the letter. An attorney can help figure out what must be in the letter because the notice may be invalid if the law is not followed, which can slow down the process of closing the trust.  How soon the notice must be sent will also vary depending on state law. If there are no requirements for what must be in the notice, use your judgment about what you need to tell the beneficiaries in order to allow them to exercise their legal rights. Trustees only need to send one notice to the beneficiaries.

Notifying the Creditors

When the estate is settled and the trust is closed, it is the last opportunity that creditors have to be paid back the debts that they are owed by the deceased.  Death does not make the deceased obligations disappear and creditors can and will be paid back from the estate. Accordingly, they should also be notified that the trust has become irrevocable and that the trustee is now responsible for the trust and intends to close it. They will need the notice in order to look after the legal and financial interests and take the action necessary to protect themselves. 

Whether notice to creditors is required is also a matter of state law.  Many states will require the trustee to publish notice of death in a newspaper or some other publication. Some states do not require notice to creditors in the event of the death of the grantor. However, creditors have the right to contest the distribution of the estate if they are not paid back and if they challenge this, it will slow the process. Creditors generally have a limited period of time to file claims against the estate. However, if the creditors do have notice, in most states it will give them a shorter period in which to file a claim than they would otherwise have.

Settling and Negotiating Debts

The deceased may have owed money. As mentioned above, the creditors are able to access the trust’s assets for repayment. It is important to know that not all debts must be paid. Some debts do go away when the grantor dies. For example, student loan debts do not survive the death of the grantor. Other loans, such as credit card debt do continue to exist. 

The debts must be paid before the trust property is distributed to the beneficiaries. If not, both the trustee and the beneficiaries may be sued by the creditor for repayment of the debt. The trustee can either use liquid assets of the trust such as bank accounts to pay the debt or sell assets to raise funds. The beneficiaries may receive money or property usually only after all of the creditors have been paid. Another of these obligations and debts is income taxes, which must be paid out of the deceased’s assets. Some states have laws that require that estate taxes be paid before the beneficiaries can receive assets. The trustee must be careful about distributing assets before debts have been settled in order to avoid becoming personally liable.


The first things that must be done before distributing the assets is valuing them in order to know how to do the distribution. After the bills, expenses and creditors have been paid, the pool of assets with be known. Then, the trustee must follow the directions of the grantor in either selling or deciding what to do with the assets. After all property that must be sold is sold, there will be the group of assets that needs to be distributed. To the extent that the assets are liquid, checks will be issued to the beneficiaries. If the property is not sold, then it will be retitled to reflect the new ownership by the beneficiaries. Note that the trustee may be liable for any future expenses if new expenses arise after the assets of the trust are distributed so this final step may take some time. 

An estate planning attorney can advise on any issues relating to either establishing or settling a trust. There are a multitude of issues that can arise in planning these trusts, and decisions made at this stage can affect what happens after the grantor passes away. Thus, it is essential to make sensible choices now to ensure that settling and distributing the trust goes as smoothly as possible and your family can better adjust after the loss of a loved one.

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