Can a Trust With No Assets Be Terminated?
Full Question:
Answer:
A trustee is a fiduciary and must exercise his/her power in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries. The elements of a cause of action for breach of fiduciary duty are:
(1) Plaintiff and Defendant share a relationship whereby:
(a) Plaintiff reposes trust and confidence in Defendant, and
(b) Defendant undertakes such trust and assumes a duty to advise, counsel and/or
protect Plaintiff;
(2) Defendant breaches its duties to Plaintiff; and
(3) Plaintiff suffers damages.
The elements of a claim for breach of fiduciary duty are not fixed as the claim may arise from virtually any case where one party accepts the trust and assumes the duty to protect a weaker party.
Affirmative defenses to a claim for breach of fiduciary duty can include, but are not limited to:
(1) The passing of the statute of limitations for filing the claim.
(2) Lack of fiduciary relationship (for example, when the parties did not enter a fiduciary relationship, but rather conducted business in an arm’s length transaction there is no duty to protect the other party or disclose facts which the other party could have discovered by its own diligence.)
(3)Lack of standing
(4) Approval (for example, if the alleged actions followed full disclosure to and the consent of the Plaintiff)
(5) Business judgment rule (ex. that the corporate fiduciary's actions were motivated by a bona fide interest in the well being of the corporation where shareholders are the ones owed the fiduciary duty)
(6) Due diligence was exercised
The trust terms will govern termination of the trust. A trust may also be terminated if it is uneconomical to continue the trust. Any tax consequences will depend on all the circumstances. I suggest consulting a local attorney who can review all the facts and documents involved.
Please see the following MO statutes:
456.4-414. Modification or termination of uneconomic trust. —
1. After notice to the qualified beneficiaries, the trustee of a trust
consisting of trust property having a total value less than one hundred
thousand dollars may terminate the trust if the trustee concludes that
the value of the trust property is insufficient to justify the cost of
administration.
2. 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.
456.8-809. Control and protection of trust property. —
A trustee shall take reasonable steps to take control of and protect
the trust property, except that this duty does not apply to, and the
trustee is not responsible for, items of tangible personal property
that are property of a trust revocable by the settlor and that are not
in the possession or control of the trustee.
3. 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.
4. This section does not apply to an easement for conservation or
preservation.