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Touro Law Review

Touro Law Review

Abstract

When the need to effectuate a non-judicial trust modification of a New York trust arises, the law in its current form provides corporate trustees with a tremendous amount of power and flexibility to amend, revoke, and establish new trusts with more favorable provisions. Depending upon the facts and circumstances of a particular situation (i.e., whether the settlor is alive, whether minor beneficiaries hold an interest in the trust, and whether there is dissension and discord among the beneficiaries, etc.) there are various statutes that will help a corporate trustee implement a sound strategy to modify a trust to attain favorable results for all interested parties. This article seeks to provide corporate trustees, trust officers, and other Trusts and Estates practitioners with an overview of several statutory mechanisms that can be implemented by a trustee to help mitigate the risk of litigation or judicial intervention. These statutes include EPTL § 7-1.13, which is commonly referred to as the “trustsplitting” statute, EPTL § 7-1.9, which allows for non-judicial trust modifications under circumstances where the settlor is still alive and where consent to reform the trust can be obtained from all interested parties under the instrument, and EPTL § 10-6.6, the so-called trust “decanting” statute, which permits the trustee of a trust to exercise a “special power of appointment” to invade the corpus of an existing trust and appoint the assets into new trusts with modified terms and provisions. This article will also provide a brief overview of general protections afforded to New York trustees under common law.

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