TSEM6353 - Legal Background to Trusts and Estates: Settlor decides to cancel a trust

A settlor can revoke a trust, if the original trust document allows this action. The trust is fully valid. It only comes to an end when the settlor fully revokes it.

If the settlor has no power to revoke the trust he must get court approval to cancel the trust. He must satisfy the court that he made the trust as a result of

• fraud, or
• undue influence, or
• mistake.

In these circumstances the trust would be void from its creation.

These situations have different tax consequences.