What happens to a trust if all beneficiaries are deceased?

When all beneficiaries of a trust are deceased, the trust typically follows the terms outlined in the trust document regarding how the assets should be handled. Option B highlights this critical point, as it acknowledges that the trust may provide specific directions for termination or distribution of assets to the testator's heirs or contingent beneficiaries.

Trust documents often contain provisions that govern what happens in scenarios where the initially named beneficiaries are no longer living. This could include instructions for the assets to pass to heirs, alternate beneficiaries, or even stipulations about how the trust should be terminated in such circumstances. By adhering to the terms laid out in the trust, legal clarity and respect for the grantor's intentions are maintained.

The other choices do not accurately reflect the typical outcome as outlined in most trust documents. A trust does not automatically dissolve without regard to its provisions, nor does it simply remain in effect indefinitely while awaiting a court decision unless explicitly stated. Additionally, while unclaimed assets may eventually escheat to the state under certain circumstances, this is not the default action for a trust with defined terms.