When the purpose of a trust ceases, what happens?

• A. The trust terminates and the estate of the trustee also ceases
• B. The trust continues until heirs claim
• C. The trustee's estate continues
• D. The beneficiaries become trustees

Answer: (A)

When a trust’s purpose has been fulfilled or can no longer be carried out, the trust ends. The remaining trust property is then distributed to the beneficiaries in accordance with the terms of the trust, and the trustee’s duties cease. The trustee’s own personal estate is unaffected; the trust estate simply ceases to exist as a separate trust, having been allocated to the beneficiaries. This is why termination occurs when the purpose stops, rather than the trust continuing or the beneficiaries automatically stepping into trusteeship.