Themis Bar Practice Exam

In a spendthrift trust, if the settlor is dead, who must consent to certain actions involving the trust?

The court All creditors The settlor All beneficiaries and trustee

Correct Answer:

All beneficiaries and trustee

Explanation:

Consent to terminate or modify a spendthrift trust after the settlor’s death requires the agreement of all beneficiaries and the trustee. The spendthrift clause protects beneficiaries from creditors and from freely alienating their interests, but it doesn’t give anyone authority to change the trust unilaterally. Once the settlor is gone, there’s no one else with the power to approve changes; the usual rule is that the trustee together with every beneficiary must consent to actions that would alter the terms, terminate the trust, or affect distributions beyond ordinary administration. Courts step in only if required by law or the terms of the trust, and creditors don’t have a say in these consent requirements.

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