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When Trust Terms May Require Court Modification


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9/22/2014
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Courts are well aware that a trust’s terms can’t always remain written in stone. In fact, there are many reasons why a trust’s provisions may have to be modified. When changes are necessary, courts try to approve modifications that the settlor would probably have favored in light of the new circumstances.           

In general, trust terms can be modified when a deviation is required for one of the reasons set forth below -- or when the doctrine of cy pres might help fully honor the settlor’s original intentions despite intervening events.

Types of Modifications That Might Be Required                                                                                   

A court may be willing to deviate from trust terms if:  (1) the settlor’s purposes have been fulfilled, (2) it would now be illegal to enforce the trust as written, (3) it is no longer possible to fulfill the terms of the trust, or (4) carrying out the terms of the trust any further might seriously complicate the trustee’s ability to let the trust fulfill the settlor’s overall intentions.            

Once these types of circumstances can be documented for a court, a beneficiary can file a petition, asking the judge to change the trust terms to the extent necessary to more properly realize the settlor’s intentions.

Modifications Required to Uphold the Cy Pres Doctrine

When a settlor has created a trust to benefit a charitable group, courts will do all they can to facilitate this type of gift. However, problems can arise.                                                                          

For example:  Let’s say a scandal develops surrounding a specific homeless shelter and it eventually has to shut down all of its operations. Will the funds to help that local homeless shelter be lost or could a similar outreach group benefitting the homeless be awarded those same funds?                                                                                                                                             

Depending on all of the specific facts involved, a court might rely on the cy pres doctrine to allow the new local homeless group to receive the funding – since this would be directly in keeping with the settlor’s original goals. (Note:  This does not imply that this example situation would definitely lead to a court modification of the trust -- but this scenario illustrates the type of changed circumstances that might motivate a court under cy pres to modify the terms of an original charitable trust.)

To obtain help with satisfying all of your Georgia estate planning needs, please contact the Law Offices of Shane Smith today.  You can schedule your free initial consultation with a knowledgeable Peachtree City estate planning attorney by calling: (770) 487-8999.



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