How to Dissolve a Trust in Court

By Heather Frances J.D.

Setting up a trust allows you to safeguard your funds for certain purposes. For example, you can create a trust that both protects your assets after your death and distributes income to your beneficiaries on a regular basis. However, trusts can be dissolved under some circumstances, with or without going to court, depending on the type of trust, trust terms and your state’s laws. Laws and procedures vary from state to state regarding what you’ll need to do to dissolve a trust in court.


A trust is a legal arrangement that creates a separate entity, the trust, to own assets placed in it. You, the grantor or settlor, can give the manager of your trust, the trustee, certain authority within your state’s laws to manage the trust’s assets. For example, trustees typically have power to invest the trust’s funds, or assets, in real estate, stocks or other investments for the benefit of the trust’s named beneficiaries. Since trusts operate under the terms of the trust, you may wish to check your trust document, state laws and local court for specific dissolution procedures that apply to your trust.

Revocable Trusts

Revocable trusts, sometimes called living trusts, allow you to keep control over your assets while they are in the trust because you control the trust. Oftentimes, grantors of a revocable trust also serve as trustee and beneficiary of the trust. Since this type of trust arrangement gives you continued control over the trust’s property, it does not carry some of the tax benefits and asset protection found in irrevocable trusts. However, revocable trusts can be dissolved at any time without a court order, though your state’s laws may require you to send certain notifications after dissolving the trust.

Protect your loved ones. Start My Estate Plan

Dissolution After Grantor's Death

Since irrevocable trusts are generally designed to be more restrictive than revocable trusts, dissolving an irrevocable trust is more complex. Your state may require certain evidence, such as proof that the material purpose of the trust cannot be achieved, in addition to consent to the dissolution from all beneficiaries, before the court will order dissolution of an irrevocable trust. This allows your beneficiaries to terminate the trust after you have died and can no longer provide consent to the trust’s dissolution. For example, New York courts can dissolve a trust if all beneficiaries agree and the reasons for the dissolution outweigh the material purpose of the trust.

Dissolution Before Grantor's Death

Your state may allow the court to dissolve an irrevocable trust if you and the trust’s beneficiaries agree, even if the dissolution is inconsistent with the trust’s material purpose. For example, Oregon permits courts to terminate irrevocable trusts under this condition, but the Oregon attorney general must consent to the dissolution if the trust is considered a charitable trust. Once the trust is terminated, the trustee distributes the trust’s assets to the beneficiaries.

Protect your loved ones. Start My Estate Plan
How to Dissolve an Irrevocable Trust


Related articles

How to Dissolve Inheritance Trust

An inheritance trust, usually called a testamentary trust, is a trust that is created by language contained in the last will and testament of the trust grantor. Since the trust does not go into effect until the grantor dies, it is considered an irrevocable trust under state probate law. Although the basic principles applicable to the termination of a testamentary trust are accepted by all states, procedures and details vary from state to state.

Can the Powers of the Successor Trustee Be Revoked?

A successor trustee is a trustee who takes over management of a trust after the original trustee leaves office. He may be a party named in the trust deed, consented to by the trust grantor or beneficiaries, or appointed by a court. State laws provide several ways in which a successor trustee's powers can be revoked and the trustee removed from the position.

Does a Living Trust Need to Be Registered in North Carolina?

Living trusts, also called revocable trusts, are popular estate planning tools because they avoid the costs and delays of probate courts. Wills must be probated and become part of the public record when they are filed with the court. However, most states, including North Carolina, afford privacy to a living trust's creator and beneficiaries by not requiring public registration of trusts.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help.

Related articles

How to Break an Irrevocable Trust

Two types of trusts are possible: a revocable trust and an irrevocable trust. Although the grantor can unilaterally ...

How to Terminate Blind Trusts

A blind trust is a special type of trust where the beneficiaries are unaware of the trust's assets and a designated ...

Does an Irrevocable Trust Automatically Terminate Upon a Certain Date?

An irrevocable trust is an estate planning tool that the grantor can use for a variety of reasons, including minimizing ...

How to Dissolve My Revocable Living Trust in California

The settlor of a California revocable living trust may dissolve all or part of the trust at any time. A revocable ...

Browse by category
Ready to Begin? GET STARTED