Modification and Termination of Trusts Flashcards
Are trusts generally revocable or irrevocable?
Trusts are irrevocable unless the terms of a trust expressly provide that the settlor may revoke or amend.
The Uniform Trust Code (UTC) reverses this presumption, stating that trusts are fully revocable or amendable unless otherwise specified.
Under the UTC, how are trusts treated regarding revocation?
Trusts are fully revocable or amendable unless the terms of the trust expressly provide to the contrary.
What is required for a settlor to terminate an irrevocable trust?
The consent of all beneficiaries who must be living at the time.
How can a revocable inter vivos trust be revoked if no method is specified in the trust instrument?
By:
* Executing a later will or codicil that expressly refers to the trust
* Any other method manifesting clear and convincing evidence of the settlor’s intent.
Can testamentary trusts be revoked as freely as the will itself?
Yes, testamentary trusts may be revoked by the settlor/testator as freely as the will itself while the settlor/testator holds capacity.
What happens to a trust if a sole trustee becomes the only beneficiary?
The trust ceases to exist and the trustee becomes the owner of the trust assets.
What are the conditions under which a trust is terminated by operation of law?
A trust is terminated by operation of law when:
* The trust res has been consumed, destroyed, or lost
* The trust’s purposes have been fully accomplished
* Accomplishment of the material purposes of the trust has become illegal, impossible, or impractical.
What might be a court’s ruling in the hypothetical case of Timmy Testator’s trust after Debra’s accident?
The court may terminate the trust interest at least for Debra, as her future prospects have been terminated.
In the hypothetical involving Harry, what happens after his death regarding the trust?
The trust remains valid and will not fail for want of a trustee; the court will appoint one unless the trust says otherwise.
What does the administrative deviance doctrine allow a court to do?
Allow deviance from administrative provisions as necessary to accomplish the settlor’s purposes, without changing beneficial interests.
What is the Clafflin Doctrine?
After the settlor’s death, the trust cannot be terminated before the time specified by the settlor, even if all beneficiaries agree, if the material purpose of the trust has not yet been accomplished.
What can a court determine regarding a trust after the settlor’s death?
A court may terminate the trust if it determines that there is no material purpose left and all trust beneficiaries have been identified and consented.
What are examples of material purposes of a trust?
- Staggered distribution of the trust property
- Discretionary trusts
- Spendthrift clauses.
What happens when a trust was to be in operation for a specified number of years or until a prescribed event occurs?
The trust ordinarily terminates in accordance with the instrument’s terms.
