Elk Grove, CA asked in Estate Planning for California

Q: Could irrevocable trust from California by dissolved or amended in this example?

Trust A is generation skipping. Trust B is divided amongst children. Standard HEMS. Otherwise beneficiaries cannot take out money, only what trust generates. Each settlor is deceased, one very recently and he hadn’t been of sound mind for years. Trust was made when tax exempt rate was $600,000. Estate does not come close to modern exemption threshold.

Can irrevocable trust be dissolved or amended if all beneficiaries agree to this citing that the original intent of establishing this kind of trust is now moot as it was to avoid estate tax when the tax exemption was set much lower?

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2 Lawyer Answers

Jeffrey Louis Gaffney

Answered
  • Estate Planning Lawyer
  • Carlsbad, CA
  • Licensed in California

A: Yes, the trust can be dissolved under those conditions.

California Probate Code section 15403 gives permission to do so upon petition to the court (you can't just do it on your own).

You will have to show that all the beneficiaries consent and that the trust is no longer needed to carry out its material purpose (here, estate tax avoidance).

Genene N. Dunn

PREMIUM
Answered
  • Estate Planning Lawyer
  • Tustin, CA
  • Licensed in California

A: Yes, a trust can be set aside if you can show the court that all beneficiaries agree or that circumstances have changed according to Probate Code Section 15409. The courts are getting tons of these petitions now with the higher exemption and older trusts that planned for a low exemption amount. It does have to be accomplished by a court petition.

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