Although a Last Will and Testament is typically the cornerstone of a comprehensive estate plan, most plans also include a variety of additional tools and documents such as a trust agreement. If your estate plan includes a trust agreement, or you are considering the addition of a trust agreement, it only makes sense to understand how a trust operates and other important aspects of trust agreements. For example, when does a trust end or terminate? Before you create a trust you certainly need to know how to terminate the trust should you wish to do so.
Trusts are broadly divided into two categories – revocable and irrevocable. If you create a revocable trust you retain the ability to modify, change, and even revoke or terminate the trust at any time and for any reason after the trust is established. On the other hand, if you create an irrevocable trust you give up the ability to modify, change, or revoke the trust once the trust becomes effective. Therefore, if your trust is a revocable trust you can terminate the trust any time you wish to do so; however, if the trust is an irrevocable trust it can only end, or terminate, through another means.
Some of the additional ways in which a trust may terminate or end include:
Through the trust terms. As the maker of the trust you can include a specific end date for the trust or a set of conditions that will cause the trust to terminate.
Depletion of trust assets. If the value of the trust assets drops below a specific value a court may order the termination of the trust and distribution of the remaining assets to the beneficiaries.
Trust purpose found to be illegal or unconscionable.
Trust found to be invalid.
Death of the Trustee if no replacement Trustee was named.
Agreement of beneficiaries. If all beneficiaries agree a court may terminate an irrevocable trust if it does not violate the trust purpose.
Trust purpose is fulfilled.
If you have additional questions or concerns about creating, modifying, or terminating a trust agreement or about your Illinois estate plan in general, contact the experienced Illinois estate planning attorneys at Nash, Nash, Bean & Ford, LLP by calling 309-944-2188 to schedule your appointment today.
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