March 27, 2025

By Mark Mikulasik

How does a trust come to an end?

There are several possible ways:

• The settlor may retain an express power to revoke the trust, but absent that the settlor cannot reclaim any of the trust property. A power of revocation must be clearly and expressly reserved at the time of creation of the trust (constitution). It will not be inferred. A power of amendment will not be read to allow revocation, or return of the property, without clear language to that effect- a general power is not sufficient. Termination by the settlor may attract adverse tax consequences so must be approached with care.
• The trust may provide for its termination on the happening of a certain event or after a specified time.
• The trust can be collapsed on the consent of all potential beneficiaries. This rule has three elements:
  • the beneficiaries must all be of full legal capacity—that is, they must all be adult and have the mental capacity to appreciate the nature and effect of the termination of the trust and the terms on which the trust is being terminated;
  • the beneficiaries applying to terminate the trust must, collectively, have all the beneficial interest in the trust property (and, therefore, persons with contingent interests must also agree to the termination of the trust); and
  • the beneficiaries must all agree to the termination of the trust.
• Once all the property is distributed, and an accounting provided,
• By order of a court upon application by the settlor in cases of fraud, duress, misrepresentation or mistake.

TAKEAWAYS

• All trusts will eventually end
• careful drafting is required to make sure the settlor’s intention is followed if that is desired. There are conflicting cases that consider the importance of intention in varying circumstances. .
• Where circumstances change, variation or termination of the trust is possible.

WHAT WEILERS LLP CAN DO TO HELP YOU

Whether you want to establish a trust, are a trustee, or are a beneficiary, our lawyers can give you sound advice on the entire life cycle of the trust, from establishing it to administering it and to variation of termination. If you have questions about a trust, give us a call. We might be the right lawyers for you.