Recent changes to Missouri law could make it easier for trustees to terminate “uneconomic” trusts.

Sometimes the cost of administration of an existing trust outweighs the justification for continuing to hold assets in the trust. This may be especially true if there is a corporate trustee and the beneficiaries have no estate tax, creditor, or divorce concerns. For such a situation, Missouri law provides a mechanism by which a trust may be terminated in the discretion of the trustee, without having to go to court, if the total value of trust property is under a certain dollar limit. If the total value of trust property is below the limit and the trustee concludes that the value of the trust property is insufficient to justify the cost of administration, the trustee may terminate the trust after providing notice to certain beneficiaries.

For many years, the dollar limit was $100,000. However, beginning Aug. 28, 2018, trustees are able to terminate “uneconomic” trusts that have trust property with a value less than $250,000.

Trustees will still be required to provide the appropriate notices to certain beneficiaries, and they will need to continue to weigh the advantages of holding the property in trust for tax, asset protection, divorce, or other purposes. Following the termination, the trustee will be required to distribute the assets in a manner consistent with the purposes of the trust.

If you would like more information on options to terminate an uneconomic trust, please contact any of the attorneys in our Trusts & Estates department.