probate

Trust Modification, Interpretation, Reformation & Termination

Trust beneficiaries often have the following questions regarding irrevocable trusts:

  • Can the terms of the Trust be changed?

  • Can the Trust be terminated (and income/principal be distributed prior to the time specified in the Trust)?

  • Can the Trustee alter the Trust’s administration?

The answer to all these questions is . . . possibly “Yes”.

An irrevocable trust can be modified, reformed, or terminated:

1. If the trustee and all “qualified beneficiaries” agree with the proposed modification, they can enter into a written agreement and no court order is required. Fla. Stat. §736.0412.

Judicial modification of an irrevocable trust can occur if:

(a) “The purposes of the trust have been fulfilled or have become illegal, impossible, wasteful, or impractical to fulfill, because (i) circumstances not anticipated by the settlor, compliance with the terms of the trust would defeat or substantially impair the accomplishment of a material purpose of the trust; (ii) because of circumstances not anticipated by the settlor, compliance with the terms of the trust would defeat or substantially impair the accomplishment of a material purpose of the trust; or (iii) a material purpose of the trust no longer exists. Fla. Stat. §736.04113(1).

  1. (b) If compliance with the terms of a trust is not in the best interests of the beneficiaries. Fla. Stat. §736.04115(1).
  2. Judicial termination can occur if:

(a) If the trust assets have become so small that it is not economical to administer. The trustee is authorized to terminate a trust under $50,000 in value according to Fla. Stat. § 736.0414(1).

(b) The value of the trust property is insufficient to justify the cost of administration. Fla. Stat. § 736.0414(2).

Daniel A. Seigel has extensive experience obtaining the non-judicial and judicial modification (and in some cases termination) of irrevocable trusts.

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