Douglas A. Turner, P.C.

So great grandma created a trust 90 years ago for your benefit. No doubt you don’t like the trust terms, and the corporate trustee ignores your requests… but what can you do about it? Well, perhaps you can bust the trust with something called the Doctrine of Acceleration.

The Doctrine of Acceleration

The Doctrine of Acceleration is a long standing concept of trust law. The doctrine allows for the termination of a trust and acceleration of the interest of remainder beneficiaries when there is no purpose for continuing the trust.

A simple example of the doctrine’s application is where current trust beneficiaries renounce their interest in the trust. According to the Doctrine of Acceleration, the interest of the next class of beneficiaries is accelerated even though the renouncing beneficiaries are still alive. In many cases, the next class of beneficiaries is to receive an outright distribution of the trust assets. Voila! The trust is gone.

The Difficulties of Trust Termination and Interest Acceleration

Now, it is not quite that simple in real life. Corporate trustees are not known for voluntarily terminating trusts that they manage, for many reasons. In fact, most corporate trustees appear unaware of this doctrine. In most cases, some sort of court proceeding is necessary to terminate the trust.

Current beneficiaries may not be willing to renounce their interest in the trust. Even if the amount received by the beneficiaries is small, the current beneficiary may want to keep his or her interest. In addition, by renouncing, gift tax issues may be created. Every trust is different. The terms of a particular trust will control. The primary focus is on the intent of the original creator of the trust. If it is clear that the trust creator would not want the trust terminated, that intent will control.

Get an Attorney to Review Your Trust Options

Trust termination requires a group effort by all the current beneficiaries. In many families, the term “group effort” is an oxymoron.

Perhaps the Doctrine of Acceleration is not applicable. Do not give up. There are many other ways to terminate a trust. The Doctrine of Acceleration is just one example. However, your corporate trustee is not a good source for information about the various options. Your own attorney will be necessary.