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There are a handful of reasons why a Florida trust might be terminated. Often a trustee no longer wants to serve as a trustee or the beneficiaries no longer want a trust, but the trust may indeed terminate by its very terms. In other words, the trust may have an expiration date.
Other reasons might be the death of a trust’s settlor (the trust’s creator) or if there is a material change in circumstances regarding the trust. See Fla. Stat. 736.04113 and 736.04115.
A settlor or the court can terminate the trust; however, if the court gets involved in terminating a trust, it must consider the best interest of the beneficiaries, considering also the trust’s purpose and the settlor’s intent.
Section 736.04113 of the Florida Statutes provides:
(1) Upon the application of a trustee of the trust or any qualified beneficiary, a court at any time may modify the terms of a trust that is not then revocable in the manner provided in subsection (2), if:
(a) The purposes of the trust have been fulfilled or have become illegal, impossible, wasteful, or impracticable to fulfill;
(b) Because of circumstances not anticipated by the settlor, compliance with the terms of the trust would defeat or substantially impair the accomplishment of a material purpose of the trust; or
(c) A material purpose of the trust no longer exists.
(2) In modifying a trust under this section, a court may:
(a) Amend or change the terms of the trust, including terms governing distribution of the trust income or principal or terms governing administration of the trust;
(b) Terminate the trust in whole or in part;
(c) Direct or permit the trustee to do acts that are not authorized or that are prohibited by the terms of the trust; or
(d) Prohibit the trustee from performing acts that are permitted or required by the terms of the trust.
(3) In exercising discretion to modify a trust under this section:
(a) The court shall consider the terms and purposes of the trust, the facts and circumstances surrounding the creation of the trust, and extrinsic evidence relevant to the proposed modification.
(b) The court shall consider spendthrift provisions as a factor in making a decision, but the court is not precluded from modifying a trust because the trust contains spendthrift provisions.
(4) The provisions of this section are in addition to, and not in derogation of, rights under the common law to modify, amend, terminate, or revoke trusts.
Also applicable is Section 736.04115 of the Florida Statutes, which allows the trust to be modified or terminated if in the best interest of the beneficiaries. This section provides:
(1) Without regard to the reasons for modification provided in s. 736.04113, if compliance with the terms of a trust is not in the best interests of the beneficiaries, upon the application of a trustee or any qualified beneficiary, a court may at any time modify a trust that is not then revocable as provided in s. 736.04113(2).
(2) In exercising discretion to modify a trust under this section:
(a) The court shall exercise discretion in a manner that conforms to the extent possible with the intent of the settlor, taking into account the current circumstances and best interests of the beneficiaries.
(b) The court shall consider the terms and purposes of the trust, the facts and circumstances surrounding the creation of the trust, and extrinsic evidence relevant to the proposed modification.
(c) The court shall consider spendthrift provisions as a factor in making a decision, but the court is not precluded from modifying a trust because the trust contains spendthrift provisions.
(3) This section shall not apply to:
(a) Any trust created prior to January 1, 2001.
(b) Any trust created after December 31, 2000, if:
1. Under the terms of the trust, all beneficial interests in the trust must vest or terminate within the period prescribed by the rule against perpetuities in s. 689.225(2), notwithstanding s. 689.225(2)(f).
2. The terms of the trust expressly prohibit judicial modification.
(4) For purposes of subsection (3), a revocable trust shall be treated as created when the right of revocation terminates.
(5) The provisions of this section are in addition to, and not in derogation of, rights under the common law to modify, amend, terminate, or revoke trusts.
A charitable trust can even be terminated under the cy pres doctrine. The applicable statute for this provides:
736.0413 Cy pres.
(1) If a particular charitable purpose becomes unlawful, impracticable, impossible to achieve, or wasteful, the court may apply the doctrine of cy pres to modify or terminate the trust by directing that the trust property be applied or distributed, in whole or in part, in a manner consistent with the settlor’s charitable purposes.
(2) A proceeding to modify or terminate a trust under this section may be commenced by a settlor, a trustee, or any qualified beneficiary.
If you have questions or concerns about a trust, including the termination of a trust, please speak with your trust attorney.