If you own a home, business or other assets, California law generally allows you to keep them in a trust. A trust may allow you to protect items from being seized by creditors or in a divorce. In many cases, you can dissolve a trust assuming that you follow the proper protocols to do so.
How to dissolve a revocable trust
Dissolving a revocable trust is relatively easy if you have named yourself as the trustee. In such a scenario, you simply transfer ownership of trust assets back to yourself or to another person or entity. It may also be necessary to sign a document affirming that the trust is no longer in existence. If someone else serves as the trustee, you may need that person to take these steps on your behalf.
How to dissolve an irrevocable trust
Dissolving an irrevocable trust tends to be more difficult because you’ll typically need the permission of all beneficiaries to do so. Even if you do have everyone’s permission, there is no guarantee that state law allows you to take such a step. In the event that such a document is nullified, it’s a good idea to take steps to clarify what should happen to your estate after you pass. Doing so may minimize the risk of probate litigation taking place in the event that you choose not to create a new trust.
It is in your best interest to make changes to a trust as quickly as possible regardless of how the document is structured. This may help to ensure that these changes will be recognized in the event that they are challenged in court.