Johns Island, SC asked in Estate Planning for South Carolina

Q: Can an irrevocable trust be abolished to make the trustee of that trust a settlor since the settlor is deceased?

Also can a lien be placed on a piece of property which is owned by an irrevocable trust?

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1 Lawyer Answer
Nina Whitehurst
Nina Whitehurst
  • Estate Planning Lawyer
  • Crossville, TN

A: A lien can be placed on a piece of property owned by an irrevocable trust IF AND ONLY IF the trustee of that trust voluntarily grants the lien (such as a mortgage) or a judgement is obtained against the trust and it is recorded in the local land records. There are a few other instances where a lien can be placed on real property involuntarily, but they are rare and usually in connection with pending litigation. Do not attempt to lien real property without the assistance of an attorney. Wrongfully clouding the title to real property can cause the lien claimant to incur substantial costs and penalties.

As for your question about abolishing an irrevocable trust, you really should discuss this with an estate planning attorney. Irrevocable trust are, by their very nature, irrevocable, so the general rule would be no, the trust cannot be abolished. But for every rule there are exceptions. An exception might be obtained by going to court and showing good cause. Or an exception might be built in to the trust itself, such as a de minimum exception that would allow the trust to be terminated if the amount held by the trust is too small to administer in a cost-effective manner. There are other exceptions.

However, regardless of what exception applies, when an irrevocable trust is terminated, if the settlor is deceased the assets would not be distributed to the trustee; they would be distributed to the trust beneficiary(ies). A trustee might also be a beneficiary, but that is not necessarily the case.

This is not a do-it-yourself project. You should consult an attorney for advice and guidance.

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