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If all the parties agree, you may be able to terminate an irrevocable trust.business man shaking hands in agreement image by Jorge Casais from Fotolia.com
Determine if all the parties involved can agree to terminate the irrevocable trust. Most states allow for the termination of an irrevocable trust if the grantor, trustee and beneficiaries are in agreement. Agreement may be hard to obtain if the beneficiaries stand to lose their interest in the assets contained within the trust. Even if the parties agree to terminate the trust, they will still need to petition the court. - 2
Language within the trust may allow for its termination.documents in fire - 1 image by Igors Leonovs from Fotolia.com
Read the irrevocable trust to determine if there are provisions that allow for its termination under certain circumstances. Newer irrevocable trusts are written with provisions that allow for changes or termination of the trusts. These provisions will be specific in regard to how they can be called into action. A common provision would allow for modifications to the trust in light of changes to federal law. Provisions that enable the trust to be terminated may have been written into the irrevocable trust. Using such a provision, you can petition the court to terminate the trust. - 3
A final accounting is the last thing to be done before a completed trust can be terminated.puzzle image by Tribalstar from Fotolia.com
Determine if the objectives of the irrevocable trust have been achieved. Irrevocable trusts come with their own taxpayer ID numbers. As such, the trustee is often unsure how to terminate the trust once its objectives have been achieved. Once the assets have been distributed to the beneficiaries, a final account needs to be filed with the court. Your county courthouse will be able to advise you how to file the termination of the trust once you determine that the trust objectives have been achieved. - 4
Sometimes a trust is emptied before its objectives can be completed.empty glass jar image by vadim kozlovsky from Fotolia.com
Determine if the irrevocable trust has lost some or all of its value. Sometimes a trust simply runs out of funds and is empty. For example, if a life insurance policy names a trust as its beneficiary but the insured fails to make payments, causing the policy to lapse, then the trust becomes empty and, therefore, subject to termination. Again, a petition will have to be made with the court. - 5
Sometimes the trust's assets have lost their value, making the trust unsustainable.loss image by Warren Millar from Fotolia.com
Determine if the trust is still viable and beneficial. Sometimes a trust ceases to be beneficial, or cannot fulfill the purposes for which it was created. An example would be a trust for which the maintenance, such as rental property which must comply with stringent new tenancy laws, is too costly or arduous. Such trusts can be terminated by the court even if the beneficiaries do not consent. - 6
You don't have to live with a trust that contains an error.Correcting A Mistake image by Amanda White from Fotolia.com
Determine if the trust contains a drafting mistake. Most states allow for any contract to be revoked if it does not fulfill the intention of the parties. On occasion, a trust may even name the wrong beneficiary. If the irrevocable trust contains a drafting error or false statement, then the court may agree to terminate it.
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