Question

When the terms of an irrevocable living trust become illegal, imprudent, or impossible with which to comply, the trustee (as with a testamentary trust) should __________.

1) petition a court of proper jurisdiction for instruction as to the proper course of action
2) follow regulatory guidance provided by the trustee's primary regulator
3) follow directions of a majority of the beneficiaries

Answer 1

A trustee should petition a court for instruction if the terms of an irrevocable living trust become illegal, imprudent, or impossible to comply with. This is to ensure actions taken align with legal standards and uphold the trust's original intent.

Step-by-step explanation:

When the terms of an irrevocable living trust become illegal, imprudent, or impossible to comply with, the trustee should petition a court of proper jurisdiction for instruction as to the proper course of action. A trust is an important estate planning tool that serves as 'the family bank' and allows for the transfer of assets to heirs without the need for probate court processes.

In such cases where the terms of a trust cannot be executed as intended, it falls upon the trustee to seek guidance from the courts to ensure that actions taken align with legal standards and uphold the intent of the trust.