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Home » Estate Planning » How Do I Terminate a Trust?

How Do I Terminate a Trust?

November 21, 2019Estate Planning

Nashua area estate planning attorney

Although a Last Will and Testament remains the most commonly used estate planning document, trust agreements are not far behind in terms of popularity. Consequently, there is a very good chance that you will find yourself involved in the administration of a trust at some point in your life. Whether you are the creator of a trust, a beneficiary, or a Trustee, there may come a time when you wish to terminate the trust. A Nashua area estate planning attorney at DeBruyckere Law Offices explains how a trust may terminate in New Hampshire.

Trust Basics

The person who creates a trust is referred to as the “Settlor”, “Trustor” or “Grantor.” The Settlor transfers property to a Trustee, appointed by the Settlor. The Trustee holds that property for the trust’s beneficiaries as well as invests trust assets and administers the trust terms according to the terms created by the Settlor. Trusts all fall into one of two categories – testamentary or living trusts. A testamentary trust is activated by a provision in the Settlor’s Will at the time of death whereas a living trust activates once all formalities of creation are in place and the trust is funded. Living trusts can be further divided into revocable and irrevocable living trusts.

Non-Judicial Trust Termination

A living trust may terminate several different ways and/or under several different scenarios. Whether or not the Settlor can terminate the trust depends on whether the trust is revocable or irrevocable. If the trust is a revocable living trust, the Settlor can terminate it any time and without needing to provide an explanation. If, however, the trust is an irrevocable living trust the Settlor cannot ever terminate the trust once it is activated.

In an irrevocable living trust, the Settlor may include a term within the trust agreement itself that provides a specific date on which the trust is to terminate. The Settlor may alternatively include a triggering event in the trust agreement that causes the trust to terminate. The marriage of the trust’s only beneficiary, completion of college by a beneficiary, or a beneficiary reaching a designated age are all examples of “triggering” events that might cause a living trust to terminate. The Settlor may also give the Trustee the discretion to terminate the trust when the trust purpose has been fulfilled or when the trust assets diminish to a point at which the trust is no longer able to fulfill the trust purpose.

New Hampshire Law

In addition, state laws often include specific statutes that address how and when a trust can be terminated. In New Hampshire, for example, the New Hampshire Trust Code Section 564-B:4-410 addressing termination of a trust in general, stating as follows:

“a trust terminates to the extent the trust is revoked or expires pursuant to its terms, no purpose of the trust remains to be achieved, or the purposes of the trust have become unlawful, contrary to public policy, or impossible to achieve.”

If the trust is an irrevocable, non-charitable, trust, Section 564-B:4-411 allows modification or termination of the trust. The trust may be:

“terminated upon consent of all of the beneficiaries if the court concludes that continuance of the trust is not necessary to achieve any material purpose of the trust. A noncharitable irrevocable trust may be modified upon consent of all of the beneficiaries if the court concludes that modification is not inconsistent with a material purpose of the trust.”

That same section allows for modification or termination of an irrevocable, non-charitable trust by a court, even if all the beneficiaries do not agree if the court is satisfied that:

  • if all of the beneficiaries had consented, the trust could have been modified or terminated under this section; and
  • the interests of a beneficiary who does not consent will be adequately protected.

Contact a Nashua Area Estate Planning Attorney

For more information, please join us for an upcoming FREE seminar. If you have additional questions about terminating a trust, contact a Nashua area estate planning attorney at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.

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Daniel DeBruyckere
Daniel DeBruyckere
Attorney Daniel A. DeBruyckere has been practicing law in New Hampshire and Massachusetts since 1998, and has helped hundreds of clients with their estate planning and elder care issues. He is very well respected in the area of estate planning, probate, trust administration, elder law issues, and business planning.
Daniel DeBruyckere
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