Modification & Termination of Trusts

Question 1

A trust will terminate automatically upon the…

Answer 1

expiration of the term specified in the instrument or when all of the purposes of the trust have been accomplished (or become void).

Question 2

A settlor can revoke or amend a trust unless…

Answer 2

the trust terms expressly state that it is irrevocable and cannot be amended.

Question 3

Beneficiaries may terminate or modify a trust through either with…

Answer 3

1. The consent of the settlor and all beneficiaries, even if it would conflict with a material trust purpose; or
2. The consent of only all beneficiaries, but only if no material purpose of the trust would be frustrated.

Question 4

A court may modify or terminate a trust if:

Answer 4

1. unanticipated circumstances threaten the purpose of the trust; or
2. continuation of the trust on its existing terms is impracticable or wasteful.

Question 5

If modification or termination is not available solely because not all of the beneficiaries consent, a court may modify or terminate the trust if:

Answer 5

1. the trust could have been modified if all beneficiaries had consented; and
2. the interests of any nonconsenting beneficiaries will be adequately protected.

Question 6

A trustee can terminate a trust if the property is…

Answer 6

less than $100,000 and the amount is insufficient to justify the cost of administration.

Question 7

Absent contrary terms in the trust, the trustee may combine several trusts or divide one into several provided doing so…

Answer 7

would not frustrate any purpose of the trusts or impair the rights of any beneficiary.