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Modification of a Trust in Ohio

January 27, 2020, by Daniel McGowan, on New Probate & Trust Cases |

 

 

MODIFICATION, TERMINATION AND REFORMATION OF A TRUST IN OHIO

 

            Pursuant to Ohio Revised Code § 5806.02(A), for trusts created under an instrument executed before January 1, 2007, unless the terms of a trust expressly provide that the trust is irrevocable, the settlor may revoke or amend the trust. 

 

            Pursuant to Ohio Revised Code § 5806.02(G), a trustee who does not know that a trust has been revoked or amended is not liable to the settlor or settlor's successors in interest for distributions made and other actions taken on the assumption that the trust had not been amended or revoked. 

 

            A court may modify, terminate, or reform a trust to further the settlor's intentions:

 

            The four corners of the trust document are critical. 

Pursuant to Ohio Revised Code § 5810.06, a trustee who acts in reasonable reliance on the terms of the trust as expressed in the trust instrument is not liable to a beneficiary for a breach of trust to the extent the breach resulted from the reliance. 

A trust instrument (or written agreement) may also restrict a trustee's duties and resulting liabilities.  Ohio Revised Code § 5815.25(B) states that if an instrument or other applicable written agreement describes, appoints, or directs a fiduciary to handle only the administrative duties and responsibilities of a trust, that administrative fiduciary shall not have any duties, responsibilities, or liabilities to the trust beneficiaries or to other persons interested in a trust except for those administrative duties and responsibilities specifically described in the instrument or written agreement. 

 On January 4, 2017, Ohio's governor signed House Bill 432, the "Omnibus Probate Bill" which serves to modify the Ohio Trust Code, and which became effective April 6, 2017.  Under House Bill 432, Ohio Revised Code § 5804.02 will now include Section (F), which will stipulate that an agent under a power of attorney may create a trust for the principal, whether or not the principal has capacity to create the trust and indicates an intention to create the trust.  This subparagraph also specifically references Ohio Revised Code § 1337.21 to 1337.64 (including Sections Ohio Revised Code § 1337.42 and 1337.58, and their limitations on the creation of trusts, gifts of property of the principal, and the duty of the agent to attempt to preserve the principal's estate plan).