Article on Terminating or Modifying Irrevocable Trusts

Bradley E.S. Fogel recently published an article entitled, Terminating or Modifying Irrevocable Trusts by Consent of the Beneficiaries – A Proposal to Respect the Primacy of the Settlor’s Intent, Real Property, Trust and Estate Law Journal, Winter (2016). Provided below is his synopsis of the article:

          In most states, an otherwise irrevocable trust may be terminated or modified by all of the beneficiaries as long as the trust does not have an unfulfilled material purpose. With few exceptions, however, a settlor of a trust is allowed to put whatever conditions she likes on her largesse. The beneficiaries might dislike the trust terms or wish they were different, but they are merely looking a gift horse in the mouth. After all, it was the settlor’s choice to make the gift in the first place. The wants of the beneficiaries are only relevant to the extent that the settlor decided to make them relevant. Thus, trust termination by consent of the beneficiaries is inapposite in American trust law.

            Trust modification or termination by consent of the beneficiaries should be abandoned in favor of the doctrine of equitable deviation. Equitable deviation allows trust modification (or even termination) based on circumstances not anticipated by the settlor. Such changes are made to better effect the settlor’s intent. Equitable deviation respects the primacy of the settlor’s intent and recognizes that, due to unanticipated circumstances, trust modification or termination may improve the trust’s efficacy in effecting that intent.