The Georgia Legislature recently made several changes to Georgia’s Trust Code, including revisions to the statutes that allow for modification or termination of noncharitable irrevocable trusts. A trust agreement already may contain provisions that allow a trustee or certain other persons to modify or terminate a trust without first obtaining court approval. But if the trust agreement does not include such provisions, the settlor (the person who established the trust), the trustee, or some or all of the beneficiaries can file a petition in Superior Court seeking to modify or terminate the trust.
If the settlor of the trust is still living, the court will approve a petition to modify or terminate the trust, even if the modification or termination is inconsistent with an essential purpose of the trust, if the settlor and all beneficiaries consent to the modification or termination and the trustee has received notice of the proposed modification or termination.
If the settlor of the trust is deceased, the court will approve a petition to modify the trust if all beneficiaries consent, the trustee has received notice of the proposed modification, and the court concludes that the modification is not inconsistent with any essential purpose of the trust. The court will approve a petition to terminate the trust if all beneficiaries consent, the trustee has received notice of the proposed termination, and the court concludes that the continuation of the trust is not necessary to achieve any essential purpose of the trust.
As to modification of a trust under other circumstances, the court may approve a settlor’s, trustee’s or beneficiary’s petition if the proposed modification would further the purpose of the trust; if continuation of the trust under its existing provisions would impair the administration of the trust; if the modification seeks the appointment of an additional trustee necessary to administer the trust; or if the modification would help achieve the settlor’s tax objectives, either prospectively or retroactively.
As to termination, the court may approve a petition to terminate a trust if the costs of administration are such that the continuation of the trust would defeat or impair the purpose of the trust, or if the purpose of the trust has been fulfilled or becomes impossible or illegal.
If you are a settlor, trustee, or beneficiary considering whether to modify or terminate a trust, please contact Baumbusch Law for legal advice.