Trust Modification and Termination Flashcards
When can a trust terminate?
(1) Purpose of the trust has become unlawful, against public policy, or impossible (though remember cy pres doctrine for charitable trusts);
(2) It expires; or
(3) The trust’s material purpose has been satisfied.
What is the Claflin Doctrine?
If the settlor is dead and the beneficiary is trying to terminate the trust prematurely, the trustee can stop them from doing that so long as the trustee is still serving a material purpose.
Trust will still typically have a material purpose if it has a spendthrift clause, limits the age until the beneficiary gets the trust, or is a support trust.
When can a settlor terminate a trust?
If the trust is revocable (remember majority/UTC presumes that the trust is revocable unless otherwise specified)
Can a settlor terminate a trust if the trust is irrevocable?
Yes, if the settlor gets the consent of the beneficiaries (do not need the trustee’s consent) and it does not interfere with the primary purpose of the trust.
If a trust is terminated by the consent of the beneficiaries, then the trustee has to distribute the property as agreed to by the beneficiaries (even if it doesn’t comport with the terms of the trust).
Does an amendment to a trust have to meet the will formalities?
No
Can a trustee terminate the trust?
No, unless the trust contains express termination provisions
When can a trustee be removed by a court?
A court can remove a trustee if the purpose of the trust would be frustrated by the trustee’s continuance in officer or if the trustee violated a duty
When can a trust be modified?
(1) The settlor modifies the trust;
(2) An unforeseen event frustrates the purpose of the trust;
(3) All beneficiaries consent to a modification BUT modification but still be consistent with the material purpose of the trust;
(4) Court can modify if court determines that the value of trust property doesn’t justify the cost of the administration.
