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This entry was published on 2014-09-22
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SECTION 7-1.19
Application for termination of uneconomical trust
Estates, Powers & Trusts (EPT) CHAPTER 17-B, ARTICLE 7, PART 1
§ 7-1.19 Application for termination of uneconomical trust

(a) Notwithstanding sections 7-1.5 and 7-2.4 of this article or any
other contrary provision of law:

(1) Any trustee or beneficiary of a lifetime or testamentary express
trust (other than a wholly charitable trust) may, by application to the
surrogate's court having jurisdiction over the trust, seek a termination
of such trust when the expense of administering the trust is
uneconomical.

(2) If, upon such application, the court finds that continuation of
the trust is economically impracticable, that the express terms of the
disposing instrument do not prohibit its early termination, and that
such termination would not defeat the specified purpose of the trust and
would be in the best interests of the beneficiaries, the court may make
an order or decree terminating the trust and directing the distribution
of the trust assets to and among those beneficiaries who at the time are
entitled (or entitled in the discretion of the trustee) to the income
and/or principal of the trust and those beneficiaries who would be
entitled (or entitled in the discretion of the trustee) to the income
and/or principal of the trust if it were to terminate immediately before
such order or decree. The distribution of the trust assets shall be made
in such manner, proportions and shares as in the judgment of the court
will effectuate the intention of the creator.

(b) Notice of the application shall be given to such persons and at
such time and in such manner as the court, in its discretion, may
direct.

(c) If the application or the possibility of the application of this
section to any trust would reduce or eliminate a charitable deduction
otherwise available to any person under the income tax, gift tax, estate
tax or generation-skipping transfer tax provisions of the United States
Internal Revenue Code, or the laws of any state of the United States or
of the District of Columbia, this section shall not apply to such trust.

(d) This section shall not apply to a supplemental needs trust which
conforms to the provisions of section 7-1.12 of this part.