Delaware Code Title 12 Sec. 3542 – Termination of small trusts
(a) Unless otherwise provided by the terms of the trust instrument, and subject to the other subsections of this section, a trustee of a trust (other than a trustee who is a settlor or beneficiary of the trust or who may be removed as trustee, by action of 1 or more settlors or beneficiaries and replaced as trustee, by action of the person or persons exercising the removal power, with a successor trustee who is either among the persons exercising the removal and replacement power or who is related or subordinate, within the meaning of § 672(c) of the Internal Revenue Code of 1986 (26 U.S.C. § 672(c)), as amended, to any such person exercising the removal and replacement power), who finds that the costs of administration thereof are such that the continuance of the trust would defeat or substantially impair the purpose of the trust, may, after written notice to all interested persons, or their legal or natural guardians, terminate the trust and distribute the trust property to 1 or more of the beneficiaries in the trustee’s discretion. No court proceedings or approval is required to effect such a termination.
Terms Used In Delaware Code Title 12 Sec. 3542
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Continuance: Putting off of a hearing ot trial until a later time.
- Court: means the Court of Chancery. See Delaware Code Title 12 Sec. 39A-101
- Remainderman: One entitled to the remainder of an estate after a particular reserved right or interest, such as a life tenancy, has expired.
- State: means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, a federally recognized Indian tribe, or any territory or insular possession subject to the jurisdiction of the United States. See Delaware Code Title 12 Sec. 39A-101
- Trustee: A person or institution holding and administering property in trust.
(b) Any interested person shall have 30 days after receiving written notice in accordance with this section to object to the termination or plan of distribution in writing to such trustee. If the trustee has received no written objection to the proposed termination or plan of distribution within such 30-day period, it may proceed to terminate the trust.
(c) A trustee which receives a written objection to the proposed plan of distribution of a trust within 30 days of the last day on which any interested person received written notice may reformulate the proposed plan of distribution and renotify all interested persons of its intentions. Such renotification shall begin again the 30-day period referred to in subsection (b) of this section.
(d) A trustee which receives a written objection to the termination or plan of distribution of a trust within 30 days of the last day on which any interested person received written notice may proceed to terminate the trust in accordance with the plan of distribution, without court proceeding or approval, notwithstanding the objection, provided that all interested persons have been further notified in writing of such objection, of the trustee’s intention to proceed to terminate such trust notwithstanding such objection, and of their right to petition the Court to prevent the termination or modify the plan of distribution within 6 months from the mailing of such further notice, and provided that at least 6 months have elapsed since such further notice was sent by the trustee, or the trustee has received a written waiver of the right to petition the Court from all interested persons.
(e) Any interested person, within 6 months of the mailing of such further notice of the trustee’s intention to proceed with termination, notwithstanding an objection, may petition the Court to prevent such termination or modify the plan of distribution, or may send to the trustee a written waiver of such right to petition.
(f) The written notice required by this section shall state:
(1) That the trustee intends to terminate the trust in accordance with this section;
(2) The plan of distribution;
(3) That any interested person may object to such termination or plan of distribution in a writing received by the trustee within 30 days of receipt of such notice by such interested person; and
(4) That the trustee may proceed to terminate the trust, notwithstanding any objection to such termination or plan of distribution, 6 months after the trustee further notifies all interested persons of such objection and its intention to proceed with the termination notwithstanding such objection;
provided, that such notice shall inform interested persons that application may be made to the Court of Chancery to prevent the proposed termination.
(g) For purposes of this section, the term “interested person” means any living person or existing organization who is a current income beneficiary, or who would be a vested remainderman of the trust if the trust were to terminate at the time of the notification, and the Delaware Attorney General in the case of a charitable trust.
(h) The existence of spendthrift or similar protective provisions in a trust shall not make this section inapplicable.
65 Del. Laws, c. 422, § ?7; 70 Del. Laws, c. 186, § ?1; 80 Del. Laws, c. 153, § ?4;