If you’re the successor trustee of a revocable living trust and the grantor has died, your job is to take control of the trust assets, notify everyone entitled to notice, pay the grantor’s debts and taxes, and then distribute what’s left to the beneficiaries named in the document. That is what to do with a living trust after death, in the broadest terms. The sequence matters, the tax steps matter most, and the whole process usually runs twelve months or longer. Skipping ahead, especially to distributions, is how trustees end up personally on the hook.
Find the Trust Document and Order Death Certificates
Start by locating the original signed trust. It names you, defines your powers, lists the beneficiaries, and sets the conditions on every distribution. Read the whole thing before you touch an asset. A clause you miss on the first pass, such as a requirement to hold a minor’s share in a continuing subtrust, becomes a serious problem if you’ve already written checks.
At the same time, order certified copies of the death certificate from the county vital records office where the grantor died. Every bank, brokerage, title company, and insurance carrier will want its own original. A dozen is a reasonable starting number. Running short just means repeated trips.
Notify Beneficiaries and Heirs
Most states require the successor trustee to send written notice to all trust beneficiaries and to the grantor’s legal heirs within 60 days of accepting the role or learning of the death, whichever is later. The exact contents vary, but the notice typically includes the grantor’s name, the date the trust was created, your name and contact information as trustee, where the trust will be administered, and the beneficiary’s right to request a copy of the trust document.
That notice also starts a contest clock. In many states, beneficiaries have roughly 120 days from receiving it to challenge the trust’s validity. If you never send proper notice, that window can stay open indefinitely, which is the last thing you want hanging over the administration. Document the date and method of every notice you send.
Get an EIN for the Trust
While the grantor was alive, the revocable trust used the grantor’s Social Security number. The moment the grantor dies, the trust becomes irrevocable and a separate tax entity, and it needs its own Employer Identification Number. Apply using IRS Form SS-4, which you can file online at no charge.1Internal Revenue Service. Information for Executors You’ll need the EIN before you can open a trust bank account, file the trust’s tax return, or transfer any financial assets into trust-titled accounts. Do this early. Every institution will ask for it alongside the death certificate.
Inventory and Appraise the Assets
Identify every asset the trust holds and take control of it: account statements, deeds, vehicle titles, insurance policies, business interests, and tangible personal property like jewelry or art. For real estate, you may need to record an affidavit of death of trustee in the county where the property sits, which puts your authority on public record so you can later sign deeds.
Build a written inventory and assign each asset a fair market value as of the date of death. For real estate, closely held businesses, and valuable collectibles, hire a professional appraiser. Those date-of-death values do two jobs. They determine whether the estate owes federal estate tax, and they set the new cost basis the beneficiaries inherit.
That second job is the stepped-up basis, and it’s a quiet windfall most families don’t understand. Under federal law, assets a person owned at death take a new cost basis equal to fair market value on the date of death, and assets in a revocable living trust qualify because they’re included in the grantor’s gross estate.2Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent If a beneficiary later sells an appreciated asset, their taxable gain is measured from that stepped-up number, not from what the grantor originally paid. The appraisal you commission now directly sets that number. Low or careless valuations cost beneficiaries real money later.
Pay Debts, Expenses, and Creditor Claims First
Nothing goes to beneficiaries until the grantor’s debts and the costs of administering the trust are paid. That typically covers final medical bills, funeral costs, credit card balances, mortgage payments, utilities on trust-owned real estate, and professional fees for attorneys, accountants, and appraisers.
Many states let the trustee publish a notice to creditors, which sets a deadline (usually three to six months) by which anyone the grantor owed money has to file a claim. Claims that arrive late can generally be rejected. The waiting period is worth it because it gives you a clean cutoff.
If the trust can’t pay everyone in full, state law sets a priority order. Secured debts, administrative expenses, funeral costs, taxes, and final medical bills generally come ahead of unsecured debts like credit cards. A trustee who pays a lower-priority creditor while a higher-priority one goes unpaid can be personally liable for the shortfall. When the math is tight, get a lawyer’s read before writing checks.
File the Tax Returns
Trust administration can involve up to three separate returns, and missing any of them creates problems that land on you.
The Grantor’s Final Form 1040
Someone has to file the grantor’s final individual income tax return covering January 1 through the date of death. It’s prepared the same way as any 1040, reporting the income earned and claiming eligible deductions and credits.3Internal Revenue Service. File the Final Income Tax Returns of a Deceased Person A surviving spouse can file jointly for that year.
The Trust’s Form 1041
After the grantor’s death, any income the trust earns (interest, dividends, rent, capital gains) is reported on Form 1041, using the trust’s EIN. The return is required if the trust generates $600 or more in gross annual income.4Internal Revenue Service. File an Estate Tax Income Tax Return Income distributed to beneficiaries during the year passes through to their personal returns. Income retained inside the trust is taxed at trust rates, which hit the top bracket far faster than individual rates.
Form 706 and the Estate Tax
For decedents dying in 2026, the federal estate tax exemption is $15 million per individual, or $30 million for a married couple. That figure was set by the One Big Beautiful Bill Act, which made the higher exemption permanent and indexed it for inflation going forward. If the gross estate (including trust assets, life insurance proceeds, retirement accounts, and prior taxable gifts) exceeds that threshold, you must file Form 706 within nine months of the date of death.5Internal Revenue Service. Instructions for Form 706 A six-month extension is available by filing Form 4768.
Even if the estate is well under the threshold, a married grantor’s estate may still want to file Form 706 for a different reason: portability.
Don’t Skip the Portability Election
When a married person dies without using their full exemption, the surviving spouse can inherit the unused portion (the deceased spousal unused exclusion, or DSUE). To claim it, the trustee or executor files a complete Form 706. The filing itself is the election; there’s no separate form.5Internal Revenue Service. Instructions for Form 706
The standard deadline is nine months after death, plus the six-month extension. Miss that, and if the estate wasn’t otherwise required to file, a simplified late election is available under Revenue Procedure 2022-32, which allows filing Form 706 solely for portability up to the fifth anniversary of the death.6Internal Revenue Service. Revenue Procedure 2022-32 Miss both and relief becomes much harder. For a married grantor with significant assets, failing to make the portability election is one of the costliest mistakes a trustee can make, even when the first spouse’s estate owes nothing.
Distribute the Assets
Once debts are paid and tax obligations are settled, you distribute what’s left according to the trust document. Some distributions are simple: a dollar amount to a named person, a specific item to a specific heir. Others require more work: dividing a portfolio equally among several siblings, or funding a continuing subtrust for a minor who doesn’t receive their full share until a stated age.
Follow the terms exactly. If the document says a beneficiary receives their share at 30, you cannot accelerate it, no matter how reasonable the request. Real estate transfers require a new deed naming the beneficiary, recorded with the county. Investment accounts get re-titled. Personal property is delivered.
Get a signed receipt from each beneficiary for what they received. Better still, get a signed release confirming the beneficiary acknowledges their full share and releases you from further claims. That paperwork is your best protection against a beneficiary who later says they were shortchanged.
Protect Yourself from Personal Liability
Being a trustee is a fiduciary role, which means the law holds you to a high standard of care, loyalty, and impartiality. Breaching those duties can leave you personally responsible for the resulting losses.
The sharpest edge is taxes. Federal law lets the IRS pursue anyone holding a decedent’s assets for unpaid estate taxes, and that includes you. Distribute to beneficiaries before the estate’s tax obligations are resolved and you can be personally liable for the bill, even if you acted in good faith. The government’s claim takes priority over the beneficiaries’ claims.
You can request a formal discharge from personal liability by applying to the IRS under 26 U.S.C. § 2204. Once the IRS determines the tax owed and you pay it, the agency issues a discharge that prevents it from coming back for additional amounts later.7Office of the Law Revision Counsel. 26 USC 2204 – Discharge of Fiduciary From Personal Liability For any estate within range of the filing threshold, the wait is worth it.
Beyond taxes, trustees can be held liable for mismanaging investments, failing to diversify, self-dealing, or distributing in ways that don’t match the trust document. Courts can order repayment out of pocket and forfeit any compensation you earned. When the trust is large, complicated, or has family tension around it, hiring a trust administration attorney isn’t really optional.
Final Accounting and Closing the Trust
After everything is distributed and every obligation is met, prepare a final accounting showing all income received, all expenses and debts paid, all distributions made, and the resulting zero balance. Send it to every beneficiary. Once they approve it, have each one sign a written release. If a beneficiary refuses to sign, you can petition the local court to approve the accounting, which provides similar protection.
If the estate filed Form 706, request an estate tax closing letter from the IRS through Pay.gov. The current fee is $56, and processing takes several weeks after the IRS accepts the return as filed.8Internal Revenue Service. Frequently Asked Questions on the Estate Tax Closing Letter Some title companies and financial institutions want to see the closing letter before completing transfers, so order it as soon as the return is accepted.
With the accounting approved, releases signed, and tax matters closed, the trust has no assets and no obligations left. Your duties end and the trust ceases to exist. Keep the trust document, the final accounting, all tax returns, beneficiary receipts, and releases for at least seven years. If a dispute surfaces later, those records are your defense.