Trust Modification and Termination

Question 1

In what ways can a trust be terminated?

Answer 1

1. Expiration
2. Material purpose satisfied
3. Settlor’s power

Question 2

When can a trustee block premature termination?

Answer 2

If the trust is still serving some material purpose - needs to be discretionary or support trusts

Question 3

When can a trust be modified if the settlor is still alive?

Answer 3

1. Unilaterally if expressly provided in the trust document

2. If not reserved, then if (a) all beneficiaries consent and (b) doesn’t interfere with primary purpose

Question 4

When can a trust be modified if the settlor is dead?

Answer 4

1. All beneficiaries agree if consistent with primary purpose
2. Unforeseen event frustrated purpose

Question 5

When can a trustee be removed?

Answer 5

When trustee (1) breach fiduciary duty OR (2) grossly mismanaged property

Question 6

When can a beneficiary terminate a trust?

Answer 6

1. Trust purpose has been accomplished

2. Settlor has no remaining interest AND all beneficiaries consent