All trusts eventually come to an end. Generally, once the property or assets in the trust are exhausted, it will end. However, it can also end if the property was destroyed or if the grantor specified an end date or certain conditions under which the trust would end. Instead of terminating your trust altogether, you can also modify it.
Here are some of the circumstances in which a trust can be terminated:
- You were not of sound mind when you created it
- The basis of the trust was illegal
- There is a dispute between the beneficiaries
- You created it under distress, fraud, or by mistake
- Your trustee is in violation of his or her duties
Who Can Terminate a Trust?
The settlor of the trust is usually the only individual who can terminate a trust. That said, there are some circumstances in which other parties might be able to terminate.
Here are some of the other individuals who can potentially terminate a trust:
- Those who might be negatively impacted by the trust
- Beneficiaries who are disputing the trust
A trust can also be terminated if it involves illegal conduct or if it cannot operate properly as a trust due to its small size. Additionally, beneficiaries can only terminate a trust if they are all in agreement. Unless specified in the trust, trustees are never allowed to terminate a trust.
Revocable and Irrevocable Trusts
If a trust is revocable, it can be canceled at any time. However, if the trust is irrevocable, its terms usually cannot be modified or terminated. Of course, there are some exceptions to every rule. It might be possible to terminate or modify an irrevocable trust if the settlor and all involved beneficiaries consent to it. When a trust is terminated, all of its assets are extinguished.
Common disputes involving revocable trusts include:
- The trust’s validity and ability to meet state requirements
- The timing of its revocation
- Conflicts regarding the trust property
Discuss Your Trust with an Estate Planning Attorney Today!
The process of terminating a trust can be complicated, especially if not everyone is in agreement regarding its termination. It is crucial to hire an experienced estate planning attorney to guide you through it and avoid making any costly errors. At Drexler Law, our team has the knowledge, insight, and skill to help you achieve your goals. If you need to terminate or modify your trust, you can rely on us to smoothly navigate every step. We can also assist you with a number of other estate planning tools, including wills, medical directives, and powers of attorney.
Do not hesitate to obtain the legal help you need today. Call our law office at (719) 259-0050 to schedule a consultation with one of our knowledgeable estate planning attorneys.