Modification and Termination of a Trust

Question 1

Settlors Power to Revoke or Amend

Answer 1

• Express Revocation by writing or physical act = event + intent
• Automatic termination = expires by own terms, no purpose left, or purpose has become unlawful

Question 2

Majority Rule: Amendments and Revocation

Answer 2

Trust is presumed to be revocable and amendable unless writing to the contrary

If settlor has power to revoke, they have more to modify or amend

Question 3

Beneficiaries Power to Terminate Irrevocable Trust

Answer 3

• Consent of all beneficiaries if court conlcudes that continuance is not necessary to acheive any material purpose of the trust
• Consent of all beneficiaries AND settlor event if inconsistent with material purpose

Question 4

Unfulfilled Material Purpose

Answer 4

• Both income and principle beneficiaries remain
• ALL beneficiaries (present and future) must agree for premature termination

Question 5

Trustee Power to Terminate

Answer 5

• Generally, no power to terminate, unless expressly allowed in trust

Question 6

Removal of a Trustee

Answer 6

Court can remove if
* Purpose would be frustrated if Trustee continued; or
* Trustee violated a duty

Question 7

Court Power to Terminate

Answer 7

May modify admisitrative or dispositive terms if:
* Unanticipated circumstances
* Modification or termination would further purpose of the trust
* Inability to administer the trust effectively

Question 8

Modification if Settlor is alive

Answer 8

• Can modify unilaterally, unless irrevocable
• If irrevocable, settlor can still terminate if all beneficiaries consent

Question 9

Modification if Settlor Dead

Answer 9

Either
* All beneficiaries agrees to modification consistent with material purpose; or
* Unforeseen event has frustrated purpose of trust (no benefirciary consent