Termination and Modification of Trusts Flashcards Preview

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Flashcards in Termination and Modification of Trusts Deck (11):
1

Which parties can modify the trust?

1. by settlor
2. by beneficiaries
3. by court

2

Modification by settlor

implied from the power to revoke

3

Modification by beneficiaries

unanimous consent
AND
does not frustrate any material trust purpose

4

Modification by court

(1) Cy pres doctrine for charitable trusts

(2) Changed circumstances:
- unknown and unanticipated changed circumstances;
AND
- continuing under existing terms would impair trusts' purposes

5

Termination of Revocable Trusts

If trust is silent, cts are split on whether revocable by settlor or not

Maj. view = presumed irrevocable, unless
(1) settlor reserved right to revoke; AND
(2)complies w/ provisions in trust agreement

Min. view: presumed revocable unless trust expressly states irrevocable

6

Termination of Irrevocable Trusts

3 ways in which even an expressly irrevocable trust can be terminated early:

(1) unanimous election by settlor and all beneficiaries
(2) the Clarflin doctrine: all beneficiaries agree; and no further material trust purpose
(3) merger

(?) operation of law = passive trusts and the statute of uses

7

Changed circumstances for modification by court

at the request of a trustee/beneficiary, a ct may modify a trust due to changed circumstances unknown to and unanticipated by the settlor and continuation under existing terms would impair the initial purposes of the trust

(1) unknown and unanticipated changed circumstances;
AND
(2) continuing under existing terms would impair trusts' purposes (i.e. deviation required to save trust)

8

The Clarflin doctrine
(for the termination of irrevocable trusts)

permits termination of irrevocable trust can be terminated early if

(1) all beneficiaries agree; and
(2) no further material trust purpose

9

Termination of spendthrift trust?

No, even if all parties agree

10

Merger (for termination of irrevocable trusts)

if the sole trustee becomes the sole beneficiary, the trust interests "merge," and the trust terminates

11

Judicial power to terminate

ct has power to terminate a trust early if the trust's purpose has become

• impossible
• illegal
• completed