Final answer:
An irrevocable trust can be terminated prior to its normal distribution date under court order with unanimous consent of all beneficiaries if the purpose of the trust is satisfied. Simple beneficiary requests or personal tax considerations are not sufficient grounds for termination. option (A)
Step-by-step explanation:
An irrevocable trust is a type of estate planning tool used to pass assets to heirs outside of probate court. Once the creator of the trust passes away, the trust generally becomes irrevocable, meaning its terms cannot be altered. However, there are circumstances under which an irrevocable trust can be terminated prior to its normal distribution date. One such circumstance is under court order with unanimous consent of all beneficiaries, including representation for minors and individuals not yet born, provided that the termination aligns with the original purpose of the trust. For instance, if the trust’s main purpose has already been satisfied or cannot be fulfilled due to unforeseen changes in circumstances, the court may allow for the early termination of the trust.
It's important to note that the simple request of an adult beneficiary or the personal tax circumstances of a beneficiary, such as being in a high tax bracket, are not sufficient grounds for early termination. Additionally, the discretion of the trustee alone, even with auditor approval, does not warrant the termination of an irrevocable trust. The decision to terminate must involve legal proceedings and the unanimous agreement of all relevant parties, often requiring careful legal and judicial consideration.