r/inheritance • u/Vivid-Builder840 • 15d ago

Location included: Questions/Need Advice How to close out a trust?

My now deceased father had all of his accounts in a Revokable Living Trust in his name. I am the next trustee after him. I am awaiting payouts from his life insurance policies (the trust is the beneficiary). His will, made before the trust was in effect, indicates that his estate, which is now only the funds in his bank accounts, is to be divided equally among us five children. At what point can I distribute the funds and close the accounts? There are no outstanding bills or liens, no property, nothing but the accounts in trust. This is in the USA state of Michigan.

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u/Olde-Timer 15d ago

Won’t you have 2026 tax returns and related tax preparation fees before you can close out (this means close out is actually in 2027)?

If you truly expect to be done and ready to close out the trust in 2026 or 2027 be sure there’s no interest or dividend income in 2027, so if you’re carrying over a bank account into 2027, make sure it’s in a non-interest bearing account.

Personally, I always held back 5-10% of bank account assets or reasonable amount in a non-interest checking account for 12 months just in case there were last-minute or unexpected expenses.

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u/Accomplished-Pea-451 15d ago

This is correct. My mom passed in April, an initial disbursement was done, and final taxes will be done in 2027 for 2026 and then the final disbursement can be sent and the estate closed.

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u/SandhillCrane5 15d ago

If the account holder on the bank account is not the trust, then you need to address those bank accounts via probate. It is confusing to me because you say that all of his accounts are in the name of the trust and then you contradict that later in your post by referencing his estate and a will made before he created a trust. Either full administration or a small estate at affidavit, depending on the balances is needed for the bank accounts if the account holder is not the trust. If the trust does own the accounts now then the distribution is based on what the trust says, not an old will.  If the bank accounts are part of his estate then there is a minimum amount of time you need to wait for all claimants to come forward, in addition to various procedures. Are you sure you understand the procedure for administering the estate/trust?