In one of my very first cases out of law school, an aging client asked us to review a trust that his deceased father had created for the client’s benefit. The trust was old, and its terms were strict. Under the trust, our client received a cash payment each month – an allowance that never changed, no matter the circumstances.
The client had been receiving this trust allowance for close to 30 years. Now in his senior years, a problem developed. Times had changed. Not only was the allowance not worth today what it was 30 years ago, but the client’s needs had changed as well – particularly with regard to his health. We couldn’t change the circumstances, so we helped the client change his father’s trust and raise the allowance to a realistic amount that took his present needs into consideration.
Under the Texas Trust Code, our courts are given the power to modify trusts under certain circumstances. Given the right facts, our probate judges can add to or take away from the Trustee’s authority, or even terminate the trust entirely.
If a trustee or a trust beneficiary files a petition, the probate court can take these steps if:
- The purposes of the trust have been fulfilled or have become illegal or impossible to fulfill;
- Because of circumstances not known to or anticipated by the person creating the trust, the order is necessary to further the trust’s purposes;
- Modification of the administrative part of the trust is necessary to prevent waste;
- An order is necessary to achieve certain tax objectives; or
- Continuance of the trust is not necessary, and all of the beneficiaries agree.
Ultimately, this provision of the Trust Code demonstrates a sound policy. Control and direction by people that create trusts, which can often extend years beyond that person’s lifetime, should yield to present realities. In a nutshell, the probate courts don’t mind dead-hand control – they just don’t like it when it produces a result that could harm someone.