What Happens to a Living Trust When Your Spouse Dies

A joint revocable living trust doesn't end when one spouse dies — it changes. The assets still avoid probate, but there's real administration work, and depending on how your trust was drafted, it may split into two separate trusts with different rules. Here's what you need to know and what you need to do.

The short answer

When your spouse dies, your joint revocable living trust becomes at least partially irrevocable. You likely continue as sole trustee and remain the beneficiary of your own share — but the deceased spouse's share of trust assets needs to be accounted for, and depending on your trust language, you may need to fund a separate trust, apply for a new tax ID, and file a separate tax return.

The trust still avoids probate. That's the whole point of it. But "avoiding probate" does not mean "nothing needs to be done."

Which type of trust do you have?

The answer to "what happens now" depends almost entirely on how the trust was drafted.

Simple survivor's trust (single-pot)

Everything stays together under your control. After your spouse dies, you continue as sole trustee, remain the beneficiary of the entire trust, and can amend it as you see fit. This is the simpler and increasingly common structure for couples whose combined estates are well under the federal estate tax exemption.

A/B trust (credit shelter or bypass trust)

At the first spouse's death, the trust divides into two:

• A Trust (Survivor's Trust): your share. Remains revocable. You control it, can amend it, and can change the beneficiaries.
• B Trust (Bypass Trust / Credit Shelter Trust / Family Trust): the deceased spouse's share. Becomes irrevocable. You typically have the right to receive income from it and sometimes limited principal access, but you cannot change the beneficiaries.

A/B trusts were widely drafted in the 1990s and 2000s to use both spouses' estate tax exemptions before federal portability existed. With the 2026 federal estate tax exemption at $15,000,000 per person (permanent under OBBBA),¹ most couples no longer need a B Trust for federal estate tax purposes — but many older trusts still trigger the split automatically, and some states with lower estate tax exemptions (Massachusetts, Oregon, Washington) still make the structure relevant.

What to do: simple survivor's trust

If your trust doesn't split at the first death, the administration is relatively straightforward:

1. Order certified death certificates. You'll need at least six copies. Financial institutions require original certified copies — photocopies are not accepted.
2. Review trustee succession. Confirm you are named as the sole successor trustee or that you automatically continue. If your spouse was the sole trustee (a drafting mistake), you may need a court order — another reason to read the document now.
3. Notify financial institutions. Contact each bank, brokerage, or custodian holding trust accounts. Provide the death certificate and a Certificate of Trust (a shortened summary of the trust your estate attorney can prepare). They'll retitle the accounts to you as sole trustee.
4. No new EIN needed. A revocable living trust uses the grantor's Social Security number. After one spouse dies, the surviving spouse's SSN continues to cover the trust for tax purposes.²
5. File your spouse's final return. The year of death allows a joint MFJ return — use it. It's your last chance at the wider joint-filer tax brackets for Roth conversions and capital gains harvesting (see The Widow's Tax Penalty and Roth Conversion Strategy for Widows).
6. Update the trust within 12 months. Your trust still names your spouse as co-trustee, contingent beneficiary, and successor trustee. Those provisions are now obsolete. Have your estate attorney update it.

What to do: A/B trust administration

If your trust divides at the first death, additional steps apply — and some have deadlines.

Step 1: Determine how much goes into the B Trust

The B Trust is typically funded with an amount up to the deceased spouse's applicable estate tax exemption — up to $15,000,000 in 2026. The exact amount depends on your trust language. Many older trusts say "the maximum amount that can pass free of estate tax," which now could mean the entire estate for most couples. If that's the case, your estate attorney should review whether funding the full B Trust actually makes sense, or whether a disclaimer approach would be simpler.

Step 2: Get an EIN for the B Trust

The B Trust is now a separate irrevocable trust entity. It must have its own Employer Identification Number (EIN), obtained from the IRS via Form SS-4 (available at IRS.gov — you can apply online and receive an EIN immediately).² You'll use this EIN to:

• Open a separate bank and brokerage account for B Trust assets
• File Form 1041 (trust income tax return) each year for income retained in the B Trust

Step 3: Retitle assets into the B Trust

Assets allocated to the B Trust must be transferred under its name and EIN. Your broker can do this — it's a title change, not a sale, and doesn't trigger capital gains. Proper retitling is essential; assets that stay in the surviving spouse's name are not legally in the B Trust.

Step 4: Plan for annual B Trust tax filings

The B Trust files Form 1041 each year for income it retains. If you are the income beneficiary and the income is distributed to you, it's deductible by the trust and taxable on your personal return. Income retained inside the trust faces highly compressed brackets: in 2026, trusts reach the 37% federal tax bracket at just $16,000 of retained income,³ versus $626,350+ for an individual single filer. Distributing income to yourself rather than retaining it in the trust typically results in lower overall tax — but talk to a CPA about your specific situation.

Step 5: Consider the portability election

Even if your trust doesn't require a B Trust funding, you should consider electing portability — formally preserving your deceased spouse's unused federal estate tax exemption (called the DSUE: Deceased Spouse's Unused Exclusion). Without portability, you lose the deceased spouse's exemption permanently.

Portability requires filing Form 706 (Federal Estate Tax Return):⁴

• Standard deadline: 9 months from date of death (15 months with a 6-month automatic extension)
• Extended relief: Under Rev. Proc. 2022-32, if the estate was not otherwise required to file an estate tax return (estate value below the $15M exemption), the executor can elect portability up to 5 years after the date of death using a simplified filing procedure.⁵ Write "FILED PURSUANT TO REV. PROC. 2022-32" at the top of the Form 706.

With a $15,000,000 individual exemption, a portability election effectively gives you a combined $30,000,000 shield against federal estate tax. Whether that's meaningful for your estate depends on the numbers — but for a widow in her 60s with a $3–5M estate that may grow significantly, locking in the DSUE now is cheap insurance. Ask your estate attorney.

Administration checklist

What's NOT in the trust — and why that matters

IRAs, 401(k)s, 403(b)s, and other retirement accounts are almost never held inside a living trust (and generally shouldn't be — naming a trust as IRA beneficiary creates significant inherited-IRA complications). These assets pass by beneficiary designation, not through the trust, and have their own rules entirely.

Similarly, life insurance payable to a named beneficiary, accounts with POD (payable-on-death) designations, and JTWROS brokerage accounts all pass outside the trust automatically. The trust governs what it owns; it doesn't govern everything.

See: Inherited IRA Rules for Surviving Spouses, What Happens to a 401(k) When Your Spouse Dies, and What to Do With Life Insurance Proceeds.

Trust assets do get step-up in basis

Assets held in a revocable living trust are included in the gross estate, which means they receive a step-up in cost basis to fair market value at the date of death — just like assets held outright.⁶ The community property vs. common law state rules apply the same way inside a trust as outside one.

B Trust assets also received a step-up at the first spouse's death (since they were in the gross estate at that point). When B Trust assets eventually distribute to heirs at the second death, there may be another step-up at that time.

For detail on how to document the step-up and use the joint-year window, see Step-Up in Basis After Your Spouse Dies.

Updating your trust for the road ahead

Your trust was written for a married couple. It names your spouse as co-trustee, contingent beneficiary, and backup trustee in multiple places. Those provisions are now obsolete and must be updated. Within 12 months of your spouse's death, work with your estate attorney to:

• Name new successor trustees. Adult children, a trusted sibling, a professional trustee, or a corporate trust company. Without this, your trust could be administered by no one if you become incapacitated.
• Revise beneficiary designations in the trust. Who inherits the trust assets after you? If the answer was "to my spouse, then to our children," the first layer is now moot.
• Update your pour-over will. This document sends any assets not already in the trust into it at your death — it still names your spouse as the primary beneficiary.
• Update healthcare directive and powers of attorney. These almost certainly named your spouse as your primary agent.
• Review distribution provisions. Trust provisions for grandchildren's education, age-based distributions, and special-needs planning may need revisiting in light of the new family structure.

Common mistakes

• Assuming the trust runs itself. Trusts avoid probate; they don't eliminate administration. Every financial institution needs to be notified. Assets need to be retitled. Tax IDs may need to change.
• Not funding the B Trust. If the trust has A/B language and you don't fund the B Trust, you may have defeated the estate plan entirely — and potentially created estate tax exposure at the second death that the trust was designed to prevent.
• Using the wrong tax ID for the B Trust. The B Trust is irrevocable and must have its own EIN. Reporting its income under your SSN is a tax error.
• Missing the portability window. The Rev. Proc. 2022-32 five-year window is generous, but it doesn't last forever. For most widows (estate under $15M), you have five years to elect portability — but act within the first year while the paperwork is fresh and the estate attorney is already engaged.
• Not updating your trust. A trust that still names a deceased spouse as beneficiary, co-trustee, and successor trustee is a document that needs to be fixed. Don't leave it for your children to untangle.
• Assuming the trust covers IRAs. Retirement accounts governed by beneficiary designations are outside the trust unless you specifically named the trust as beneficiary — which is usually not advisable. Confirm this is set up correctly.

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