Modification and Termination of the Trust

Question 1

Termination in general

Answer 1

Terminates automatically upon the expiration of the term specified in the instrument or when all of the purposes of the trust have been accomplished or have become unlawful, contrary to public policy, or impossible to achieve

Question 2

Termination by settlor

Answer 2

A settlor can revoke or amend a trust unless the terms expressly say it isn’t revokable.

Question 3

Termination by Beneficiaries

Answer 3

With the settlor’s consent and all beneficiaries (regardless of if termination conflicts with a material purpose of the trust)

Question 4

Claflin Rule

Answer 4

Termination w/o the settlor’s consent: only if all beneficiaries consent and termination does not conflict with material purpose of the trust

Question 5

Termination by operation of law

Answer 5

Trust will terminate if the property has been exhausted or if the legal and equitable titles have merged

Question 6

Termination by a court

Answer 6

Court may terminate or modify if: (1) the trust could have been modified if all beneficiaries had consented; and (2) the interests of any nonconsenting beneficiary will be adequately protected.

Also requires: unanticipated circumstances that threaten the purposes of the trust; continuation is impracticable or wasteful; or value of the trust is insufficient to justify the cost of administration

Question 7

Termination by trustee

Answer 7

Uneconomic trust (trust property less than $50,000)

Combination and division of trust possible absent contrary terms in the trust