Beneficiaries: How to Dissolve or Modify an Irrevocable Trust

How to dissolve an irrevocable trust after death varies by state. In most cases, the courts will look at the beneficiaries' relationship. Some states allow modification or termination with all the beneficiaries' consent.

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: May 6, 2022

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When the law says a trust is irrevocable, this means “unable to revoke.”


Most of the time. But not always, because trust law treats modification differently than revocation.

Can you modify or dissolve an irrevocable trust?

The definition of an irrevocable trust is also partially defined by its opposite: a revocable trust can be revoked at any time, until death. This suggests something slightly flexible about trusts (demise as a point of departure), and for this discussion, the focus really becomes: when is dissolving a trust after death possible?

There are several things to consider when answering this question. For one, jurisdiction makes an enormous difference in answering the question. California, for example, is famously free in allowing changes, or even termination, to an ‘irrevocable’ trust instrument: stating: “(O)wing to circumstances not known to the settlor and not anticipated by the settlor, the continuation of the trust under its terms would defeat or substantially limit the accomplishment of the purposes of the trust.” (CA. Probate Code Sec. 15409) New York also provides that where all beneficiaries agree, an irrevocable trust may be amended or terminated if all beneficiaries consent and the purpose of the modification outweighs the purpose of the trust.

Courts look closely at the relationships of the parties who are joined together in a trust. At heart, every trust has one important thing in common: the law treats trusts as ‘fiduciary instruments.’ This applies standards of personal responsibility that many other legal documents do not have to meet. Contracts, for example, do not have to be fiduciary instruments, and are frequently upheld, despite being unfair, so long as the parties have had the chance to deal “at arms length” in reaching their agreement. Trusts, however, very often flow from a desire to protect special or even intimate understandings: trusts don’t keep people at arms length. Trusts are very commonly used for intimate dealings. As a result, beneficiaries in a trust have a unique status, and power, if they can work together, and that extends to the prospect of dissolving an irrevocable trust.

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Powers of the Beneficiaries Under an Irrevocable Trust

The general rule is that if all the beneficiaries can agree, they may sign a waiver in order to change the terms of the trust. The waiver is commonly presented to probate to effect the desired change.

In attempting to change an irrevocable trust, however, courts are required to look at their state’s specific laws regarding the type of trust. Some states will rely on contract cases to resolve the issue, but in drafting an irrevocable trust, or in attempting to change it, federal consequences are increasingly in flux. For example, IRS rules now allow a new series of changes to an irrevocable trust related to the development of something new, called a ‘trust protector.’

Despite the changing rules, the most universal procedural standard to safeguard the trust purposes is that beneficiaries may not agree to do something that would defeat the purposes of the trust. However, if the beneficiaries can establish the purpose of the trust has been met or is no longer possible, they may similarly establish grounds to modify, or in extremity terminate, the trust.

So, if you’re wondering how to break a trust, the general rule remains. In virtually all states, under certain narrow circumstances, if all the beneficiaries agree, an irrevocable trust can be changed, or possibly broken.

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Estate planning is tricky, and trust law occupies a unique niche. Unlike wills, where clear language—even if it yields some manifest unfairness–is upheld, courts frequently employ equity to impose, change, or modify a trust relationship. Though the burden may be high, changes to an irrevocable trust may on these occasions reflect more of the spirit of the law than its letter. If you need to make such a change, you may wish to consult with an attorney for help.

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