When All Beneficiaries Agree
An irrevocable trust is designed to be permanent. But permanence does not always serve the people the trust was created to protect. Arizona law recognizes that circumstances change, and it provides a path for beneficiaries to modify or end a noncharitable irrevocable trust if they all consent.
A noncharitable irrevocable trust may be terminated on consent of all of the beneficiaries if the court concludes that continuance of the trust is not necessary to achieve any material purpose of the trust. A noncharitable irrevocable trust may be modified on consent of all of the beneficiaries if the court concludes that modification is not inconsistent with a material purpose of the trust.
A.R.S. § 14-10411(A)The key phrase is "material purpose." A spendthrift clause, a staggered distribution schedule, or an incentive provision may all qualify. If the trust was structured with a specific protective goal in mind, the court will weigh whether ending or changing it would defeat that goal.
When Some Beneficiaries Do Not Consent
Not every beneficiary may agree. Some may be minors. Others may be unborn or simply opposed. Arizona law still allows the modification or termination to proceed if the court is satisfied of two things: first, that the trust could have been changed if all beneficiaries had consented, and second, that the interests of any non-consenting beneficiary will be adequately protected.
If not all of the beneficiaries consent to a proposed modification or termination of the trust under subsection A, the modification or termination may be approved by the court if the court is satisfied that: 1. If all of the beneficiaries had consented, the trust could have been modified or terminated under this section. 2. The interests of a beneficiary who does not consent will be adequately protected.
A.R.S. § 14-10411(C)This balanced approach protects everyone involved. The court acts as a safeguard, ensuring that no beneficiary is left worse off by the change.
