Modification or Termination of Trusts

Question 1

What is the general rule of termination?

Answer 1

Trust autmoatically terminates upon experation of term specified in instrument or when all purposes of trust have been accomplished, become unlawful, contrary to public policy, or impossible to achieve

Question 2

What is the general rule of revocation or amendment?

Answer 2

Settlor can do so unless trust terms expressly state it is irrevocable and cannot be amended

Question 3

May the beneficiaries terminate or modify the trust?

Answer 3

Yes if settlor and all beneficiaries agree, even if modification or termination conflicts with material trust purpose
* ONLY beneficaries need to agree to modify (i.e., ignore settlor) if no material purpose of the trust would be frustrated
* Trustee’s consent not required

Question 4

When may a court modify a trust?

Answer 4

If: (1) unanticipated circumstances threaten the purpose of the trust; or (2) continuation of the trust on its existing terms is impracticable or wasteful