Modification and Termination of Trusts

Question 1

Modification by Settlor

Answer 1

Settlor may modify the trust if the settlor EXPRESSLY RESERVES the power to MODIFY or REVOKE

Power to revoke includes power to modify. Greater includes the lesser.

NOTE: minority rule is that settlor always has power to revoke, unless if the trust is made irrevocable

Question 2

Modification by Court

Answer 2

Court may modify charitable trusts under cy pres power

Court can also modify private express trusts under Doctrine of Changed Circumstances

Question 3

Doctrine of Changed Circumstances

Answer 3

When a court exercises this power, court changes the administrative or management provisions of the trust

Requires: (1) unforeseen circumstances on the part of hte settlor, and (2) necessity (deviation needed to preserve the trust)

Question 4

Terminating Irrevocable Trusts

Answer 4

(1) settlor and all beneficiaries agree to terminate (includes guardian ad litems representing unborn and unascertained beneficiaries);
(2) all the beneficiaries agree to terminate and all the material purposes have been accomplished; or
(3) By operation of law (passive trusts and Statute of uses)

Question 5

Statute of Uses

Answer 5

When a private express trust has corpus, but is passive (no active duties and just holding title)

Under Statute of Uses, beneficiaries get legal title and trust terminates

NOTE: not all J* use statute of uses