How to dissolve an irrevocable trust

Irrevocable trusts are excellent tools for protecting assets and minimising income taxes. They don't come without a price, however. By definition, an irrevocable trust cannot be terminated unilaterally by the truster (the person who created the trust). Instead, an irrevocable trust can only be terminated with consent of the trustee and all of the beneficiaries, or by court order.

Contact the trustee and ask whether there are any special requirements in the trust document for how to dissolve the trust. If there are special requirements, you will need to follow those in addition to the steps outlined in this article.

Ask the trustee for consent to terminate the trust.

Contact each of the beneficiaries and ask for consent to terminate the trust.

File in state court a petition to dissolve the trust. This step is only required if the trustee and/or the beneficiaries won't all consent to dissolving the trust.

Obtain court permission to dissolve the trust. This is not an easy process, and it will require you to appear in court and argue to the judge why the trust should be dissolved.

Have the trustee transfer all of the trust property to you. This step, of course, is only necessary if you successfully obtain consent or a court order to dissolve the trust.

Tip

Dissolving an irrevocable trust requires persuasion. You need to convince the trustee, the beneficiaries, or a judge that dissolution of the trust is, for some reason, the best option available. If you have an uncooperative trustee or beneficiaries, you will probably need to hire an attorney to help you negotiate the dissolution or file a petition for dissolution.

Warning

Many states have specific, detailed laws that state when an irrevocable trust may or may not be dissolved by a court. For example, in many states a judge can order a trust dissolved if the value of the trust property is small enough that it doesn't make economic sense to keep the trust in operation. The point is, you will need to educate yourself on your state's laws before you file a petition for dissolution of the trust.

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Things Needed

  • Trust document
  • Trustee
  • Beneficiaries
  • Petition for dissolution

About the Author

The Constitution Guru has worked as a writer and editor for "BYU Law Review" and "BYU Journal of Public Law." He is an experienced attorney with a law degree and a B.A. degree in history with an emphasis on U.S. Constitutional history, both earned at Brigham Young University.

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