Fixing or killing off broken trusts

What do you do if a trust drafted 20 years ago no longer works?  A beneficiary may think her trust "doesn't work" because she isn't getting as much money as she wants from the trustee.  That trust may be working precisely the way its creator or settlor intended, even if the beneficiary is unhappy.  But what if the trust provisions impede the administration of the trust?  What if the trust will disqualify the beneficiary from receiving governmental benefits like Medicaid unless its terms are changed?

It has become increasingly apparent that there must be ways to modify or terminate irrevocable trusts in certain situations.  Court decisions and statutes provide ways to make changes to trust terms or terminate the trust if appropriate.

Fixing or Killing Off Broken Trusts is Glenn Karisch's paper on modifying and terminating trusts in Texas.  It was presented to the State Bar's Advanced Estate Planning and Probate Law Course on June 23, 2016.  It discusses judicial and nonjudicial modifications and terminations and rescission of trusts.  Some techniques are tried and true, while others (like decanting) are just beginning to be widely used.

The paper also addresses several thorny issues, including the possible duty of a trustee to seek judicial modification or termination of a trust if certain facts exist.  Finally, it offers drafting suggestions intended to avoid the need for court action to change trusts in the future.

The latest version of the paper is available here. The slides used at the June 23, 2016 presentation are available here.