How to Terminate an Irrevocable Trust in California
Irrevocable trusts are built to last. Unlike a revocable trust, which can be changed or terminated at the will of the creator -- legally called the grantor or settlor -- California law establishes that irrevocable trusts cannot be changed easily. The settlor gives up control of the assets placed in the trust, and in return she gains greater tax and estate-planning benefits than with a revocable trust. If you establish an irrevocable trust in California, the state law does give you ways to change or terminate it.
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Instructions
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Find out the value of the trust's contents. California law states that if the value of the assets have become so low compared to the cost of administering the trust that the trust is useless, it can be terminated. If the trust's contents are worth less than $20,000, the same applies. As grantor, you don't have the authority to do this yourself; you'll have to request the trustee or a beneficiary to petition the court to end the trust.
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Check whether the trust still has a purpose. California law requires settlors create trusts with a purpose in mind, whether it's to pass property to their heirs, provide lifetime support for a widowed spouse or to care for a pet after the owner dies. If the trust's purpose can't be fulfilled -- the pet it was created to support has died, for instance -- then you can ask a judge to terminate the trust.
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Contact the beneficiaries and ask for their support. If all the beneficiaries and the settlor agree to terminate the trust, California law will usually allow it. If a minority of the beneficiaries disagree, termination is still possible if a judge decides that the interests of the opposing beneficiaries aren't substantially hurt by terminating the trust.
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Tips & Warnings
If some of the trust beneficiaries are too young to participate in a decision on termination, the court may appoint a guardian ad litem to defend their interests.
