Ending a Trust or Estate Administration? Understand the Key Similarities and Differences Between the Two.

After the work of administering a trust or estate is complete, the final step is to close it. While there are many similarities between closing an estate and terminating a trust, there are also some differences. The trustees and personal representatives should be aware of these similarities and differences in order to ensure that the estate is closed and the trust is terminated in the proper manner.

How the Process Is Similar

When it comes to terminating a trust or closing an estate, the general concept is the same. The trustee or personal representative must account for the assets, distribute to the beneficiaries, and wind up the affairs. Following are four ways in which the processes are similar:

  1. For both the termination of a trust and the closing of an estate, the trustee or personal representative must prepare a final accounting of the assets.
  2. All or most of the assets of the trust or estate must be distributed.
  3. All tax returns owed by the trust or estate must have been filed and taxes paid.
  4. Beneficiaries must be notified of the trust termination or estate closing.

How the Process Is Different

Since a trust administration is a different process than a probate administration, however, there are also some differences when it comes to completing the administration. Following are four of these key differences:

  1. Closing an estate requires approval from the Superior Court in Orange County or other court that has jurisdiction over the proceedings. A trust, however, can generally be closed without court involvement.
  2. A final account for the estate must typically be filed with the court, unless the beneficiaries waive the requirement. The final account for the trust, however, does not need to be filed with the court.
  3. Typically, the personal representative must file a petition for final distribution before distributing the assets of the estate. A trustee, however, can distribute the remaining assets of the trust without first seeking court approval.
  4. To close an estate, a hearing must be held to give interested persons an opportunity to contest the closing of the estate or some other issue with the estate administration. Terminating a trust does not require such a hearing.

Whether you are terminating a trust, closing an estate, or both, we are here to help. We can walk you through each step of the process to ensure that it is carried out properly. View our client testimonials page today to learn how we have helped countless others with the implementation of their loved one’s estate plan.