Article On The Threat Of Small Trust Termination Statutes

Alyssa A. DiRusso (Professor, Cumberland School of Law) recently published an article entitled, Euthanizing small charities: the threat of small trust termination statutes, 45 Cumb. L. Rev. 473-485 (2014-2015). Provided below is an excerpt from the article:

Perpetual charitable trusts are increasingly a luxury available only to the most affluent class. In a growing number of American states, generous people of moderate means can no longer create a charitable trust with the assurance that it will outlast them. Whereas donors of all wealth backgrounds may design their charitable trusts to be perpetual, modest trusts are at growing risk of involuntary termination.

With the widespread adoption of the Uniform Trust Code, many American states are enacting statutes that grant a trustee full discretion to terminate a trust on the sole ground that it has too little money to justify administrative expenses. Section 414(a) of the Uniform Trust Code states: “After notice to the qualified beneficiaries, the trustee of a trust consisting of trust property having a total value less than [$ 50,000] may terminate the trust if the trustee concludes that the value of the trust property is insufficient to justify the cost of administration.” The Uniform Trust Code also permits a court to terminate a trust, or modify its terms or trustee, if the court reaches the same conclusion on the relationship between trust value and administrative costs.