If you're the successor trustee of a simple, probate-avoidance trust, you'll probably be ready to close the trust within a few months after assuming your duties as trustee. Once you've distributed the trust assets to the people named in the trust document to inherit them, it's time for the trust to end.
The termination of a simple living trust is pretty anticlimactic—there are no official documents to sign or file. (After all, the point of a probate-avoidance trust is to keep matters out of court.) When all the expenses have been paid and the trust property has been distributed to beneficiaries, the trust simply ceases to exist.
As trustee, your guide is always the trust document (sometimes called the trust instrument). It sets out your marching orders, and you're legally bound to follow it. Only if you have a question that isn't addressed by the trust document do you need to turn to state law.
When it comes to a simple probate-avoidance living trust, your responsibility is usually pretty clear: gather trust property, and then quickly distribute it to the beneficiaries named in the trust document. You shouldn't have any long-term duties. (This is in contrast to other kinds of trusts, such as those set up to manage property for a child or young adult, or for someone with special needs; those trusts can last for many years.)
If that's what your trust document directs you to do, then when you have gathered the trust property, determined its value, and formally transferred everything to the new owners, you're ready to close the trust.
If the trust earned more than $600 in income, you must file a final tax return for it. (Though it's called the "final" return, it may be the first one as well, if the trust has been open less than a year.) You can file the return before you close the trust; if it earns a little more income after that (but less than $600), you won't need to file another return.
It's an excellent idea to tie up all the loose ends by sending a final accounting and letter to the trust beneficiaries. The trust, or state law, may require an accounting; even if it's not required, it's a good idea to tell beneficiaries how the trust ends.
Unless you think that beneficiaries want extremely detailed accounts, or the trust contains very complicated assets, the accounting doesn't have to be fancy. All you need is a clear statement of what the trust took in (if anything) and how you spent or distributed trust assets. The accounting would include:
Your letter can briefly go over the same ground—that is, you can explain that you've paid all the expenses and taxes and distributed all the property, and that as a result, the trust no longer exists.