Party alterations
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Party Alterations. 1. By the Settlor -- § 112.051. Presumption = Settlor may revoke, modify, amend, etc. Settlor can make trust irrevocable by express language. Tax benefits Beneficiary protection Creditor protection. 1. By the Settlor -- § 112.051. Revocation Methods

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Party Alterations

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Party alterations

Party Alterations


1 by the settlor 112 051

1. By the Settlor -- § 112.051

  • Presumption = Settlor may revoke, modify, amend, etc.

  • Settlor can make trust irrevocable by express language.

    • Tax benefits

    • Beneficiary protection

    • Creditor protection


1 by the settlor 112 0511

1. By the Settlor -- § 112.051

  • Revocation Methods

    • In writing, if trust created in writing.

      • Sanderson – p. 166 (allowed revocation language to be in a will).

    • Follow method settlor specified in the trust.


2 by the trustee

2. By the Trustee

  • Generally, no power to modify.

  • Possible situations:

    • Settlor granted power in the trust.

    • Division or combination of trusts on identical terms -- § 112.057

    • Non-judicial cy pres -- § 113.026


3 by trustee and beneficiaries acting together

3. By Trustee and Beneficiaries Acting Together

  • Merger -- § 112.034

  • But, no merger of spendthrift trust unless settlor is the beneficiary.


4 by beneficiaries

4. By Beneficiaries

  • General U.S. Rule = Allowed as long as no material trust purpose remained unfulfilled (Claflin rule).


4 by beneficiaries1

4. By Beneficiaries

  • Texas under Frost Nat’l Bank v. Newton (Tex. 1977) = Allowed only if all purposes satisfied.

  • Texas under § 112.054(a)(5) if:

    • Obtain court approval,

    • Change not inconsistent with material purpose, and

    • All beneficiaries agree or are deemed to have agreed.


5 settlor and all beneficiaries

5. Settlor and All Beneficiaries

  • Musick v. Reynolds – p. 170, 173

    • “[I]f a settlor of a trust is alive and all of the beneficiaries of an irrevocable spendthrift trust consent * * *, the settlor and all beneficiaries may consent to a modification or termination of the trust.”


6 family settlements

6. Family Settlements

  • Favored by courts on public policy grounds.

  • But, courts make certain controversy is genuine.


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