When the Grantor Dies
The trust typically terminates when the grantor dies, and its assets are then distributed to whomever the grantor has designated. In nearly all cases this would be the grantor's child or children, but a single grantor may have his or her trust go to anyone, including organizations. Since the trust's founder is usually the trustee when the trust is created, upon his or her death a new trustee must be named. This new trustee will be responsible for operating the trust and, more importantly, carrying out the distribution of its assets.
The New Trustee
Upon the death of the original trustee, a new trustee who is named in the trust agreement takes over administration of the trust.

This person is designated the "successor trustee," and all assets will have to be transferred and placed in this person's name. Upon the death of Ann B. Smith, her child or other designated person who becomes the trustee must register all the trust's assets in his or her name as successor trustee. An advantage of a living trust is that none of the assets in the trust are subject to probate.
Federal Tax Considerations
The assets in the trust are subject to United States estate or "death" taxes when the single grantor dies. All of the grantor's assets, both those within and those outside of the trust, are subject to this tax since the grantor had the ability to modify the trust in any way, including revoking it. No taxes are due if the fair market value of the assets, minus any liabilities, is under the Federal Estate Tax Exemption at the time of death. If the assets exceed that amount, the amount over the exemption amount will be taxed at 46-55%.
It is up to the successor trustee to determine if any taxes are due and, if so, to file a tax return. The successor trustee has nine months from the date of the grantor's death to file the return and to pay any estate taxes that are due, but a six month extension may be obtained.
Asset Distribution
The trust agreement will indicate how its assets will be distributed when the trust terminates, and the successor trustee has the responsibility of carrying out those instructions and distributing the assets to those directed to receive them. The people or organizations designated in the trust agreement to receive any of the trust's assets need to have those assets registered in their name by the successor trustee. Following that, the beneficiary then owns the proceeds.