Modification & Termination

Question 1

What is the most common way for a trust to end?

Answer 1

Expressly (e.g. beneficiary reaches certain age or upon death).

Question 2

Can a settlor revoke a trust?

Answer 2

Yes, unless it’s an irrevocable trust.

Question 3

Can a settlor revoke an irrevocable trust?

Answer 3

Some states allow this if:

• Settlor has WRITTEN CONSENT
• From all Beneficiaries with vested or contingent interests

Question 4

When can Beneficiaries make changes to the trust?

Answer 4

When all agree

Question 5

If the beneficiaries of a trust wish to alter it, they must…?

Answer 5

• Not frustrate the settlor’s intent

- Be Competent

Question 6

A beneficiary cannot frustrate the settlor’s intent when it comes to changing the trust. To ensure this, the beneficiary should…?

Answer 6

Obtain settlor’s consent to modify

OR

The modification should not interfere with the material purpose of the trust.

Question 7

What is the name of the rule which requires the beneficiary not to interfere with the material purpose of the trust when making modifications?

Answer 7

The Claflin Rule.

Question 8

When will be law operate to terminate a trust?

Answer 8

All the trust property is exhausted

Merger of equitable and legal title.

Question 9

When might a court terminate a trust or waive any part of it?

Answer 9

• Trust accomplishes its purpose
• Purpose becomes illegal
• Purpose becomes impossible

Question 10

If the trust terminates, will the trustees powers immediately fall away?

Answer 10

No, the trustee needs their powers for a reasonable period of time to be able to wind up the trust and diatribe remaining property to the beneficiaries.