Modification and Termination of Express Trust

Question 1

Judicial Modification

Answer 1

The court may direct or permit a trustee to modify the terms of the trust if it is established by clear and convincing evidence that owing to circumstances not KNOWN or ANTICIPATED by the settlor, compliance with the trust terms would DEFEAT or substantially IMPAIR the accomplishment of the trust’s purposes.

Question 2

Judicial Termination

Answer 2

A court may terminate a trust upon finding that:

a) Costs of administration are defeating the trust purposes;
b) The trust purposes have been fulfilled or become illegal or impossible to fulfill, OR
c) Due to unanticipated circumstances continuation would defeat or substantially impair the trust purpose.

Question 3

Judicial Division or Consolidation

Answer 3

Upon a showing of good cause and notice to all the beneficiaries, a court may direct the division or consolidation of two or more trusts (whether or not created by same settlor) if the division or consolidation:

1. Is not contrary to the Settlor’s intent;
2. WILL FACILITATE TRUST MANAGEMENT; or
3. Is in the Beneficiary’s best interest

Question 4

Modification of Trusts (Express Trusts)

Answer 4

Rule: A trust is irrevocable unless:

1. Settlor expressly retains the right to revoke/amend
2. Judicial Modification
3. Judicial Termination
4. Judicial Division or Consolidation