Q: Can a "discretionary" testamentary trust provision in a will be voided via motion to the court?
This case is an Administration with the Will Annexed where the will was created BEFORE the Deceased spent 4 years in a Conservatorship that cost her most of her estate assets via nursing home costs, hospitalization and conservator fees. Now the "discretionary trust" (where the chosen trustee has already opted out at the beginning) only covers a townhouse and about $50,000, hardly justifying the creation and maintenance of a trust for 10 years. Can the judge somehow decide that the best interests of the beneficiaries are now served without the trust due to the huge change in circumstances since the will was created over a decade ago?
A:
The basic answer is yes, a court can alter a trust arrangement and even terminate a trust where there is a change in circumstances. These proceedings must take place in the Circuit Court or in a Probate Court having "equity jurisdiction." There are several sections in the Alabama Uniform Trust Code that may apply, including the following:
Section 19-3B-414
Modification or termination of uneconomic trust.
(a) After notice to the qualified beneficiaries, the trustee of a trust consisting of trust property having a total value less than $50,000 may terminate the trust if the trustee concludes that the value of the trust property is insufficient to justify the cost of administration.
(b) The court may modify or terminate a trust or remove the trustee and appoint a different trustee if it determines that the value of the trust property is insufficient to justify the cost of administration.
(c) Upon termination of a trust under this section, the trustee shall distribute the trust property in a manner consistent with the purposes of the trust.
(d) This section does not apply to an easement for conservation or preservation.
(Act 2006-216, p. 314, §1.)
In order to terminate or amend the trust you will need the help of an attorney, as a petition would need to be filed in the appropriate court. Good luck!
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