How to Break a Trust in Missouri

By Wayne Thomas

In Missouri, trusts are an effective way to safeguard and transfer property. The person establishing the trust, known as the settlor, has wide discretion in determining when and how the trust assets are to be distributed to named individuals, referred to as beneficiaries. In some cases, it becomes desirable for the beneficiaries to "break" the trust and allocate the remaining assets. However, the authority to terminate a trust is governed by Missouri law, which provides only limited grounds for termination.

Overview of Trusts

In simple terms, a trust is a legal relationship in which one person, known as the trustee, holds property for the benefit of another person, known as the beneficiary. It is the job of an appointed trustee to manage and allocate trust property, referred to as the corpus, to the beneficiaries in accordance with the wishes of the settlor as expressed by the trust's terms. A trust can be either irrevocable or revocable. The settlor has no power to terminate an irrevocable trust, but may terminate a revocable trust at any time.

Express Terms

In Missouri, a trust may terminate by its terms. An example might be setting up a trust for the benefit of minor children until they reach 18. Upon that date, the trust would end and the remaining assets would be distributed to the beneficiaries based on the settlor's instructions. A trust may also be terminated in Missouri if a beneficiary can show that its purpose is either impossible to achieve, illegal or contrary to public policy. For example, a trust that is established for the benefit of a couple's children despite evidence that the parents are medically unable to have children might be terminated for impossibility. Likewise, a trust set up to pay for an illicit drug habit could be terminated on the grounds of both illegality and being contrary to public policy.

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Irrevocable trusts established for noncharitible purposes may be terminated by consent in Missouri. This requires unanimous agreement of the beneficiaries and the settlor, but does not require the consent of the court. In fact, a trust may be terminated by consent even if it conflicts with the material purpose of the trust. An example might be breaking a trust that was set up to support your education at a time when you are currently enrolled in school. The remaining assets of a trust dissolved in this manner are distributed by any method agreed upon by the beneficiaries.

Uneconomic Trusts

If you believe there are insufficient assets in a trust to justify the administrative costs, you may request that the trustee terminate the trust on the grounds that it is uneconomic. To qualify in Missouri, the trust must be valued at less than $100,000 and notice must be provided to all beneficiaries. Any remaining funds will be distributed in a manner consistent with the purpose of the trust.

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North Carolina Law on Irrevocable Living Trusts


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Tennessee Law on a Living Trust

A living trust can be used to safeguard your property during your lifetime and help avoid probate at death. In Tennessee, it is common for the creator of a living trust to oversee the distribution of the trust's funds and receive trust income during his lifetime. Knowing the requirements for creating a living trust and the circumstances in which it may be modified will ensure that your trust operates according to your wishes in Tennessee.

What if You Violated an Irrevocable Trust?

The person appointed to oversee an irrevocable trust must act according to the terms of the trust and in the best interest of those who benefit under the trust. While all states recognize this duty, the type of recourse available in cases of breach can vary. Knowing when you may petition the court for removal of a trustee and when he may be personally liable for financial losses will help ensure that your trust operates according to the wishes of its creator.

How to Break an Irrevocable Trust

Two types of trusts are possible: a revocable trust and an irrevocable trust. Although the grantor can unilaterally revoke a revocable trust, even a revocable trust becomes irrevocable when the grantor dies. The assets of an irrevocable trust belong to the trust beneficiaries, not the grantor. Even an irrevocable trust can be revoked under certain circumstances, although it is almost impossible for a creditor of the grantor or a beneficiary to revoke it. Although the trust laws of the various states differ on the grounds and procedures for revocation, they are all based on similar principles.

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