When the Surviving Spouse Dies
When the surviving spouse dies, the trust normally terminates and its assets are distributed to their children or other named beneficiaries designated by the couple. A new trustee must take over and operate the trust if the surviving spouse had been the sole trustee. This new trustee is responsible for carrying out the distribution of the trust's assets and the winding up of the trust's business affairs.

The New Trustee
Since the trust now has a successor trustee who has been named in the trust agreement, all assets held by the trust need to be transferred and placed in this person's name. For example, with the death of Ann B. Smith, the trust names their daughter, Barbara M. Smith, as the successor trustee. She needs to register all the assets in her name as successor trustee, but neither Trust A nor Trust B is subject to probate.
The assets in Trust B, which were subject to estate tax when the first spouse died, are exempt from estate tax, but those in Trust A are now taxable. The fair market value of the assets in Trust A and any assets held outside of the trust are determined as of the date of the surviving spouse's death, and if the total exceeds the maximum exemption, they will be subject to the federal estate tax. The maximum exemption is determined by the year of death.
Within nine months of the survivor's death, the successor trustee must determine and file an estate tax return and pay any amounts owed.
Trust Asset Distribution
The trust will designate who receives the assets in Trust B, and the successor trustee will carry out the distribution. If the couple's three children are designated by the trust to receive the assets, the successor trustee must re-register those assets in their names and deliver them to them.

The disposition of the assets in revocable Trust A will be made according to the terms of Trust A. Unless the surviving spouse has specified who receives Trust A's assets, they will follow the distribution of the assets in Trust B, which in this example is the couple's three children.