Last year we delved into some of the problems associated with trust termination. And we learned that some jurisdictions, like Maine, abolished the presumption that a spendthrift provision is a material purpose of a trust. Therefore, in states like Maine, a spendthrift clause may not necessarily prohibit the termination of a trust.
Today, we turn to Arkansas, a state that – unlike Maine - has codified the common law presumption that “[a] spendthrift provision in the terms of the trust is presumed to constitute a material purpose of the trust.” Ark. Code Ann. § 28-73-411(c). But, that’s not our focus today. Today, we want to look at what type of situation might permit termination of a trust when a statute permits trust termination where “the trust’s purposes, as expressed in or implied by the circumstances surrounding the trust, as a result of circumstances not foreseen to the settlor are not effectively being fulfilled or are frustrated.” Ark Code Ann. § 28-69-401(a). In other words, what is an unforeseen circumstance that might warrant trust termination?
In Buckalew v. Arvest Trust Company, N.A., Kathy Buckalew argued that changes in circumstance between the establishment of a trust and the settlor’s death warranted termination of the trust. What were these alleged changed or unforeseen circumstances? (more…)