How Do I Terminate a Trust in Texas?
Full Question:
Answer:
The declaration of trust sets forth the terms and conditions of the living trust. If the trust doesn't provide terms for termination, it is possible to petition the court to do so on the basis that continuing the trust would defeat or substantially impair the accomplishment of its purposes.
Please see the following TX statutes:
§ 112.054 PROP. Judicial Modification or Termination of Trusts
(a) On the petition of a trustee or a beneficiary, a court may order that the trustee be changed, that the terms of the trust be modified, that the trustee be directed or permitted to do acts that are not authorized or that are forbidden by the terms of the trust, that the trustee be prohibited from performing acts required by the terms of the trust, or that the trust be terminated in whole or in part, if:
(1) the purposes of the trust have been fulfilled or have become illegal or impossible to fulfill;
(2) because of circumstances not known to or anticipated by the settlor, the order will further the purposes of the trust;
(3) modification of administrative, nondispositive terms of the trust is necessary or appropriate to prevent waste or avoid impairment of the trust's administration;
(4) the order is necessary or appropriate to achieve the settlor's tax objectives and is not contrary to the settlor's intentions; or
(5) subject to Subsection (d):
(A) continuance of the trust is not necessary to achieve any material purpose of the trust; or
(B) the order is not inconsistent with a material purpose of the trust.
(b) The court shall exercise its discretion to order a modification or termination under Subsection (a) in the manner that conforms as nearly as possible to the probable intention of the settlor. The court shall consider spendthrift provisions as a factor in making its decision whether to modify or terminate, but the court is not precluded from exercising its discretion to modify or terminate solely because the trust is a spendthrift trust.
(c) The court may direct that an order described by Subsection (a)(4) has retroactive effect.
(d) The court may not take the action permitted by Subsection (a)(5) unless all beneficiaries of the trust have consented to the order or are deemed to have consented to the order. A minor, incapacitated, unborn, or unascertained beneficiary is deemed to have consented if a person representing the beneficiary's interest under Section 115.013(c) has consented or if a guardian ad litem appointed to represent the beneficiary's interest under Section 115.014 consents on the beneficiary's behalf.
§ 112.059 PROP. Termination of Uneconomic Trust
(a) After notice to beneficiaries who are distributees or permissible distributees of trust income or principal or who would be distributees or permissible distributees if the interests of the distributees or the trust were to terminate and no powers of appointment were exercised, the trustee of a trust consisting of trust property having a total value of less than $50,000 may terminate the trust if the trustee concludes after considering the purpose of the trust and the nature of the trust assets that the value of the trust property is insufficient to justify the continued cost of administration.
(b) On termination of a trust under this section, the trustee shall distribute the trust property in a manner consistent with the purposes of the trust.
(c) A trustee may not exercise a power described by Subsection (a) if the trustee's possession of the power would cause the assets of the trust to be included in the trustee's estate for federal estate tax purposes.
(d) This section does not apply to an easement for conservation or preservation.
§ 115.002 PROP. Venue
(a) The venue of an action under Section 115.001 of this Act is determined according to this section.
(b) If there is a single, noncorporate trustee, an action shall be brought in the county in which:
(1) the trustee resides or has resided at any time during the four-year period preceding the date the action is filed; or
(2) the situs of administration of the trust is maintained or has been maintained at any time during the four-year period preceding the date the action is filed.
(c) If there are multiple trustees or a corporate trustee, an action shall be brought in the county in which the situs of administration of the trust is maintained or has been maintained at any time during the four-year period preceding the date the action is filed, provided that an action against a corporate trustee as defendant may be brought in the county in which the corporate trustee maintains its principal office in this state.
(d) For just and reasonable cause, including the location of the records and the convenience of the parties and witnesses, the court may transfer an action from a county of proper venue under this section to another county of proper venue:
(1) on motion of a defendant or joined party, filed concurrently with or before the filing of the answer or other initial responsive pleading, and served in accordance with law; or
(2) on motion of an intervening party, filed not later than the 20th day after the court signs the order allowing the intervention, and served in accordance with law.
(e) Notwithstanding any other provision of this section, on agreement by all parties the court may transfer an action from a county of proper venue under this section to any other county.
(f) For the purposes of this section:
(1) "Corporate trustee" means an entity organized as a financial institution or a corporation with the authority to act in a fiduciary capacity.
(2) "Principal office" means an office of a corporate trustee in this state where the decision makers for the corporate trustee within this state conduct the daily affairs of the corporate trustee. The mere presence of an agent or representative of the corporate trustee does not establish a principal office. The principal office of the corporate trustee may also be but is not necessarily the same as the situs of administration of the trust.
(3) "Situs of administration" means the location in this state where the trustee maintains the office that is primarily responsible for dealing with the settlor and beneficiaries of the trust. The situs of administration may also be but is not necessarily the same as the principal office of a corporate trustee.