Also known as: material purposes
Written by attorneys · grounded in primary & secondary sources — see below
A core objective of the settlor that the trust was designed to achieve. A court evaluates this objective when beneficiaries seek to modify or terminate a noncharitable irrevocable trust without the settlor's consent.
Miles Montgomery placed his family farm into an irrevocable trust directing that it remain in agricultural use and family hands. After his death, his widow Melissa Mills and adult son Mustafa Mahmoud petition the court to sell the farm and distribute proceeds. The court may grant the modification only if it finds that the sale would not undermine the settlor's core objective of preserving the land for family agricultural purposes.
Donor directs that Donee exercise a power of appointment by an inter vivos instrument. Donee instead executes a will exercising the power in favor of her issue. The appointment substantially complies because it accomplishes the donor's core objective of directing the property to Donee's descendants without impairing that objective.
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Madison Meyers created an irrevocable trust holding startup shares with instructions to retain them until her grandchildren reach age 35. All qualified beneficiaries petition to remove the trustee after an IPO. The court may order removal if it finds that removal best serves the beneficiaries and does not contradict the settlor's core objective of protecting younger beneficiaries through delayed distribution.
A court may terminate the trust if all beneficiaries consent and continuation is not necessary to achieve any material purpose of the trust. The court must determine whether the settlor's core objective remains viable under the proposed change.
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No. A spendthrift provision is not presumed to constitute a material purpose of the trust. The court must examine the trust instrument and surrounding circumstances to decide whether the provision reflects a core objective of the settlor.
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The court may still approve the modification if it could have done so with unanimous consent and the interests of any nonconsenting beneficiary can be adequately protected. The court evaluates whether the change would impair a core objective of the settlor.
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The court looks to the trust instrument's language and the settlor's overall objectives. Provisions that preserve a specific asset for a stated use or protect beneficiaries until a designated age often embody core objectives that modification must respect.
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…terminate it and to distribute the proceeds to the life tenants. We reverse. The primary issue raised on appeal is whether any material purpose of the trust remains to be accomplished, thus barring its termination. The appellant/trustee also raises the closely related issue of whether all beneficiaries are before the court, i.e.,…