Modification Flashcards
Is a trust revocable?
Majority rule: A trust is presumed revocable by default. The settlor may revoke or amend the trust unless the terms of the trust expressly provide that the trust is irrevocable.
Note: the majority rule used to be that a trust was presumed irrevocable.
Testamentary Trust
A trust that is created by a valid will.
Elements: the essential elements must be ascertained from (1) the terms of a will (2) an existing writing incorporated by reference (3) the exercise of a power of appointment created in the will.
Is a testamentary trust revocable?
It is revocable during testator’s lifetime but becomes irrevocable when testator dies.
Pourover Will
A will that gives a gift to a trust.
A pour-over will is valid if:
The trust is identified in the testator’s will and the terms are incorporated in a writing execute before or concurrently with the execution of the will.
There are facts of independent significance
The trust was valid and in existence before the will was executed or at the time it was executed.
How does a trust terminate?
A trust terminates automatically if its stated term expires or its purpose is accomplished.
How can beneficiaries modify or terminate a trust?
Bs may compel modification or termination of a trust if all beneficiaries consent + modification or termination will not frustrate the material trust purpose;
If any B does not consent – court may still modify part of the trust as long as the interests of the non-consenting Bs are not substantially impaired.
A trustee generally many not unilaterally terminate w/o consent of all beneficiaries. (trustee may terminate if he happens to be the only B or trust provisions allow it)
Can a settlor modify or terminate trust?
Yes - if he is alive he can modify / terminate the trust during his lifetime; this right is presumed under the majority rule.
May be modified / terminated by consent of settlor and beneficiaries (even when inconsistent w/ trust purpose)
Changed circumstances
Court may modify / terminate by petition by trustee or beneficiary if continuation of trust would defeat the purpose of the trust or if modification will further the purposes of the trust.
Claflin doctrine
Trust cannot be modified / terminated even if all beneficiaries agree, if doing so would be contrary to the material purpose of the settlor.
Material purpose = spendthrift, support and discretionary trusts.
What happens if the original charitable purpose of charitable trust is frustrated? (Cy Pres doctrine)
A charitable trust may fail if a particular charitable purpose becomes unlawful, impracticable, or impossible to achieve.
If the original charitable purpose is frustrated or can no longer be pursued, trustee and court can modify the trust to “one as near as possible” to the “settlors original purpose.”
Only applicable if the settlor had general charitable intent, not a specific charitable intent (eg named charity)
Court may admit extrensic evidence to ascertain settlor’s intent.
Trust instrument may prohibit cy pres (by indicating that trust should revert to settlor or estate).
Charitable trust?
It is created for the relief of poverty or the promotion of education, health, religion, scientific, literary, benevolent, governmental purposes.
