modification + termination of trust

Question 1

can settlor revoke or amend a trust

Answer 1

yes unless trust expressly revokes that right

Question 2

modern rule on silent trust says

Answer 2

revocable unless otherwise states

Question 3

can irrevocable trust be revoked

Answer 3

yes with written consent of all living Bs

Question 4

how is trust terminated by Bs

Answer 4

with consent of settlor and all Bs

Question 5

how is trust terminated or modified by Bs without settlor consent

aka Claflin Rule

Answer 5

consent of all Bs and not terminated or modified on material purposes of the trust

Question 6

list (5)

provisions considered material purposes that prevent Bs from modifying or terminating

Answer 6

1. support of a B (i.e. support for edu)
2. spendthrift provision
3. payment at certain ages
4. payment at certain dates
5. discretionary trust - gives trustee discretion to pay B only as much as is needed/allocated for a certain purpose

Question 7

list (2)

how can ct modify or terminate a trust under UTC without consent of all Bs

Answer 7

1. trust could have been terminated if all Bs consented and
2. interest of a B who does not consent will be adequately protected

Question 8

list (3)

Additional ways a court can modify or terminate a trust

Answer 8

1. unanticipated circumstances threaten purpose of trust
2. continuation of trust on existing terms is impracticable or wasteful
3. value of the trust in insufficient to justify the cost of administration or to achieve the settlor’s tax objectives

Question 9

remember: need consent of all beneficiaries if trust allocates/gives to beneficiaries that are remote or contingent (aka if A has kids)

how do we get their consent?

Answer 9

1. a party appointed to represent their interests -or-
2. representation through state law

if no “consent” then trust CANNOT be mod or term!!

Question 10

how to term by operation of law

Answer 10

1. property has been exhausted or
2. legal and equitable titles have merged

Question 11

Duty of trustee upon trust termination

Answer 11

1. wind up trust business
   
   1. iow: trustee’s powers do not automatically terminate upon trust termination….they can stay on as trustee for a reasonable time to wind up any remaining affairs.
2. distribute trust property to remainder** Bs