Part II: Modification and Termination of Trusts

Question 1

What is the general rule for revocability of a trust?

Answer 1

Generally, settlor can revoke whenever unless trust expressly restricts that ability like an irrevocable trust.

Question 2

Can you revoke an irrevocable trust?

Answer 2

with written consent of all living persons with vested or contingent remainders.

Question 3

If a beneficiary wants to modify or terminate, what three things must occur?

Answer 3

1. all beneficiaries must agree
2. all Bs are legally competent and changes won’t interfere with a material ?
3. settlor’s intent is not frustrated
   - settlor consents or modification would not interfere with a material purpose.

Question 4

What things are usually considered a material purpose?

Answer 4

1. support of beneficiary
2. spendthrift provision
3. payment at certain ages
4. payment at certain dates
5. discretionary trust

Question 5

A trust may be terminated by an operation of law where

Answer 5

1. property exhausted

2. merger

Question 6

A trust may be terminated or modified by the court if

Answer 6

1. trust purposes accomplished
2. purposes of trust have become illegal
3. purpose of trust have become impossible

Question 7

Upon termination of the trust, what are the duties of the trustee?

Answer 7

1. continue to exercise powers for a reasonable period of time necessary to wind up the affairs of the trust.
2. distribute to remaindermen