As I mentioned yesterday, even though revocable living trusts have been used in estate planning for many years now, they are often misunderstood (see Revocable Living Trusts - What They Are, and Aren't). One common misconception that I run into again and again has to do with what happens to a revocable living trust after the trustmaker (= the person who created and funded the trust) dies. Many people believe that after their loved one who has a fully funded revocable living trust dies, they won't have to do anything except collect their inheritance check. But really now, common sense should intervene - do they really think that the trust will literally grow arms and legs and run around cleaning up their deceased loved one's final affairs?
The reality is that even though probate of a fully funded revocable living trust will not be required, the successor trustee of the trust will still have quite a few responsibilities and duties to fulfill before the beneficiaries of the trust can finally be paid. This will include paying the trustmaker's final bills, paying the ongoing expenses of maintaining the trustmaker's property, filing the trustmaker's final income tax return and paying any taxes that may be due, filing a trust income tax return and paying any taxes that may be due - well, you get the picture. But fortunately the successor trustee will be able to do all of these things without having to worry about a probate judge looking over their shoulder. This will, in turn, make the trust settlement process more streamlined and faster than probate.