Modification and Termination of Trusts

Question 1

Four ways to modify / terminate trusts

Answer 1

(1) by settlor
(2) by merger
(3) by operation of law
(4) by beneficiaries after settlor’s death (Clafflin doctrine)

Question 2

Settlor termination under common law

Answer 2

Common law presumes trusts are irrevocable unless the trust expressly provides that the settlor may revoke or amend

Question 3

Settlor termination under Uniform Trust Code

Answer 3

Presumes trusts are fully revocable or amendable unless the terms of the trust expressly provide to the contrary

Question 4

Settlor requirement to terminate trust

Answer 4

Settlor may terminate an irrevocable trust only with consent of all the beneficiaries who must be living at the time

Question 5

Trust termination by merger

Answer 5

The trust ends if the sole trustee becomes the sole beneficiary

Question 6

Trust termination by operation of law

Answer 6

A trust is terminated by operation of law where:

(a) the trust fund has been consumed,
destroyed, or lost;
(b) the trust’s purposes have been fully accomplished; or
(c) accomplishment of the material purposes of the trust have become illegal, impossible, or impractical

Question 7

Clafflin doctrine

Answer 7

After settlor’s death, the trust cannot be terminated before the time specified by settlor, even if all of the beneficiaries agree, if the material purpose of the trust has not yet been accomplished