Opinion ID: 2282256
Heading Depth: 1
Heading Rank: 1

Heading: the circuit court has the power to modify the trust.

Text: The circuit court concluded that, although it may terminate a trust in certain instances, it does not have the power to continue the trust, yet at the same time distribute trust funds to the remaindermen. We disagree. It may be deduced that if a court has the power to terminate a trust it necessarily has the power to take less drastic measures and modify that same trust. [2] A trust may be terminated when all the objects and purposes of the trust which are inconsistent with the full beneficial ownership and control of the cestui are fulfilled, all the parties who are or may be beneficially interested in the trust property are in existence and sui juris, and they all consent and agree to the ending of the trust. Manders v. Mercantile Trust Co., 147 Md. 448, 457, 128 A. 145, 148-49 (1925). It is a well-settled tenet of Maryland law that a spendthrift trust may not be prematurely terminated, even with the consent of all the beneficiaries, because it would defeat the intentions of the testator. Mahan v. Mahan, 320 Md. 262, 276-77, 577 A.2d 70, 77 (1990); Kirkland v. Mer.-Safe Trust Co., 218 Md. 17, 24, 145 A.2d 230, 233 (1958). The trust in the instant case clearly is not a spendthrift trust and may be terminated upon the agreement of the life beneficiary and the remaindermen, with the approval of the court. The settlor did not place a restraint on alienation of the beneficiaries' interests, and thus, termination with the consent of the life beneficiary and the remaindermen would not undermine the settlor's designs. Since the court may, when all the beneficiaries consent, terminate the trust, it follows that the court may authorize the mere modification of the trust when all the beneficiaries so consent. It serves no useful end to require that Mildred, Nancy, Lois, and Patricia (the trust beneficiaries), in order to provide Mildred with her $200.00 monthly payment, engage in the wasteful exercise of terminating the trust, only to reestablish a new trust with the same assets. Partial termination of a trust may be sanctioned by the court. Where the court, for any reason, would end the trust as a whole if all the beneficiaries applied, it may terminate the trust in part, and direct the trustee to deliver over part of the principal to a beneficiary. G.G. Bogert & G.T. Bogert, The Law of Trusts and Trustees § 1007, at 407-08 (rev.2d ed. 1983). A trust need not be kept intact if such action would only serve as a burden on the beneficiaries without furthering the settlor's purpose. Where the continuance of the trust of the whole of the trust property is not necessary to carry out a material purpose of the trust, and all the beneficiaries consent and none of them is under an incapacity, they can compel the termination of the trust as to a part of the property. 4 A. Scott, The Law of Trusts § 337.8, at 2683-84 (3d ed. 1967) (hereinafter Scott on Trusts ). If partial termination of the trust would best accomplish the testator's intent, then the court should so order. Ames v. Hall, 313 Mass. 33, 46 N.E.2d 403, 405 (1943). In Ames, the court allowed the partial termination of a trust where the settlor provided that each of his daughters would receive income from the trust property and could provide, by so stating in her will, an annuity for her husband in an amount not to exceed one third of her individual trust share. One daughter devised to her husband one third of her share of the income from the trust property. The court found that it would not serve a worthwhile purpose to hold the entire amount of the daughter's share in trust for the husband's lifetime, and therefore, the court released two thirds of the share for distribution among the settlor's surviving children, perceiving [n]o good reason ... why they should be compelled to wait an indefinite period for the death of [the husband]. Id., 46 N.E.2d at 405. See also In re Bayley Trust, 127 Vt. 380, 250 A.2d 516 (1969), where a partial termination of a trust was allowed since keeping the entire trust intact was not necessary in order to pay the required annuities. It was declared, When all the beneficiaries of a trust desire to terminate it in part, they can compel that result unless the continuation of the entire trust estate is necessary to carry out a material purpose of the trust. Id., 250 A.2d at 519. In the instant case, the partial distribution of the trust assets would not be adverse to the testator's intent. He sought to provide a modest monthly payment to his children, Mildred and Eugene, and to disburse the remainder of the trust assets to his three grandchildren. These ends will not be circumvented by the early distribution of a relatively small portion of the trust to the intended beneficiaries.