Petition to Modify or Terminate Trust (Arkansas)

PETITION TO MODIFY OR TERMINATE TRUST

(Ark. Code Ann. §§ 28-73-410, -411, -412, -413, -414, -415, -416)

COURT INFORMATION

IN THE CIRCUIT COURT OF [____________] COUNTY, ARKANSAS

PROBATE DIVISION

Case Number: [________________________________]

Division / Department: [________________________________]

Hearing Date: [__/__/____] Time: [____] Courtroom: [____]

IN THE MATTER OF:

Name of Trust: [________________________________]

Date of Trust Instrument: [__/__/____]

Settlor(s): [________________________________]

Date of Settlor's Death (if applicable): [__/__/____]

Type of Trust:
☐ Revocable Living Trust (now irrevocable by reason of death/incapacity of settlor)
☐ Irrevocable Inter Vivos Trust
☐ Testamentary Trust (under Will of [________________________________])
☐ Charitable Trust (Attorney General notice may be required)
☐ Special Needs Trust (42 U.S.C. § 1396p(d)(4))
☐ Other: [________________________________]

I. PETITIONER INFORMATION

Name of Petitioner: [________________________________]

Capacity of Petitioner (check one or more):
☐ Acting Trustee of the Trust
☐ Co-Trustee
☐ Successor Trustee (appointed [__/__/____])
☐ Settlor (living)
☐ Conservator of the Settlor (court order dated [__/__/____])
☐ Guardian of the Settlor (court order dated [__/__/____])
☐ Beneficiary — current income / mandatory distribution
☐ Beneficiary — discretionary distribution
☐ Beneficiary — remainder / contingent
☐ Attorney-in-Fact for Settlor (express modification authority in POA at § [____])
☐ Other: [________________________________]

Address of Petitioner:
Street: [________________________________]
City: [________________] State: AR Zip: [________]

Telephone: [(___) ___-____] Email: [________________________________]

Attorney for Petitioner:
Name: [________________________________]
Arkansas Bar No.: [________________________________]
Firm: [________________________________]
Address: [________________________________]
Telephone: [(___) ___-____] Email: [________________________________]

II. TRUST IDENTIFICATION

Full Legal Name of Trust: [________________________________]

Date of Trust Instrument: [__/__/____]

Amendments / Restatements (list date and exhibit reference):

1. [__/__/____] — Amendment No. [__], attached as Exhibit [__]
2. [__/__/____] — Restatement, attached as Exhibit [__]

Taxpayer Identification Number (last four): XXX-XX-[____]

Trust Status:
☐ Revocable (settlor living and competent)
☐ Irrevocable by terms of instrument
☐ Irrevocable by reason of settlor's death on [__/__/____]
☐ Irrevocable by reason of settlor's incapacity (determined [__/__/____])

Governing Law: Arkansas Trust Code, Ark. Code Ann. § 28-73-101 et seq.

Principal Place of Administration: [County of ____________], Arkansas

Current Acting Trustee(s): [________________________________]

Approximate Current Fair Market Value of Trust Assets: $[__________]

Summary of Trust Assets (full inventory attached as Exhibit B):

III. JURISDICTION AND VENUE

1. This Court has subject-matter jurisdiction over this proceeding under Ark. Code Ann. § 28-73-203 (subject-matter jurisdiction over proceedings concerning trusts) and § 28-73-201 (role of court in administration of trust), and as a court of general jurisdiction under Amendment 80 to the Arkansas Constitution. The Probate Division of the Circuit Court has trust jurisdiction.

2. Venue is proper in this county pursuant to Ark. Code Ann. § 28-73-204 because [☐ the principal place of administration of the Trust is in this county under § 28-73-108; ☐ a trustee resides in this county; ☐ the Trust property is located in this county; ☐ other: ____________].

3. Petitioner has standing to bring this petition as [☐ a trustee under § 28-73-201; ☐ a beneficiary entitled to notice under § 28-73-813; ☐ the settlor or settlor's fiduciary under § 28-73-411(a)(2)].

IV. STATUTORY BASIS FOR RELIEF

Petitioner seeks relief on each of the following grounds (check all that apply):

A. § 28-73-411(a) — Modification or Termination by Consent of Settlor and All Beneficiaries

☐ The Settlor is living and competent (or consent is given through an agent under a power of attorney expressly so authorized, the settlor's conservator with court approval, or the settlor's guardian with court approval per § 28-73-411(a)(2)).

☐ The Settlor and ALL beneficiaries consent in writing to the proposed modification or termination. Their written consents are attached as Exhibit C.

☐ The proposed modification or termination is enforceable under § 28-73-411(a)(1) even if inconsistent with a material purpose of the Trust.

B. § 28-73-411(b) — Modification or Termination by All Beneficiaries (Without Settlor)

☐ All beneficiaries consent in writing (attached as Exhibit C).

☐ Continuance of the Trust is NOT necessary to achieve any material purpose of the Trust (for termination); OR

☐ The proposed modification is NOT inconsistent with a material purpose of the Trust (for modification).

☐ Material purpose analysis: [________________________________].

C. § 28-73-411(c) — Spendthrift Provision

☐ The Trust [☐ does not ☐ does] contain a spendthrift provision. Under § 28-73-411(c), a spendthrift provision IS PRESUMED to constitute a material purpose. Petitioner [☐ rebuts that presumption on the following grounds; ☐ concedes the presumption and seeks relief notwithstanding]: [________________________________].

D. § 28-73-412 — Unanticipated Circumstances or Inability to Administer Effectively

☐ Owing to circumstances NOT anticipated by the Settlor, modification or termination will further the purposes of the Trust. Those unanticipated circumstances are: [________________________________].

☐ Continuation of the Trust on its existing terms would be impracticable, wasteful, or impair the Trust's administration because: [________________________________].

☐ To the extent practicable, the modification will be made in accordance with the Settlor's probable intention.

E. § 28-73-413 — Cy Pres (Charitable Trusts Only)

☐ The Trust is a charitable trust. A particular charitable purpose has become [☐ unlawful; ☐ impracticable; ☐ impossible to achieve; ☐ wasteful] because: [________________________________].

☐ The Court is requested to apply cy pres to modify or terminate the Trust by directing application of trust property to a charitable purpose that reasonably approximates the Settlor's charitable intent.

☐ The Arkansas Attorney General has been served notice of this petition.

F. § 28-73-414 — Uneconomic Trust

☐ The fair market value of the Trust is $[__________].

☐ The requested § 28-73-414 relief does not concern an easement for conservation or preservation; this section does not apply to such an easement.

☐ Value is less than $100,000 — trustee termination authority. After notice to qualified beneficiaries, the Trustee has determined (or seeks confirmation) that the value of the Trust property is insufficient to justify the cost of administration. Petitioner [☐ has terminated; ☐ seeks court confirmation of termination] under § 28-73-414(a).

☐ Court relief regardless of $100,000 threshold. The Court is requested to modify or terminate the Trust, or remove the Trustee and appoint a successor, because the value of the Trust property is insufficient to justify the cost of administration under § 28-73-414(b).

G. § 28-73-415 — Reformation for Mistake

☐ A mistake of fact or law (whether in expression or inducement) caused the Trust's terms to depart from the Settlor's actual intent. Clear and convincing evidence of the Settlor's actual intent and of the mistake is set out in Section V and Exhibits [____].

H. § 28-73-416 — Modification to Achieve Settlor's Tax Objectives

☐ The proposed modification is necessary or appropriate to achieve the Settlor's tax objectives, including: [☐ qualifying for marital deduction; ☐ qualifying for charitable deduction; ☐ preserving GST exemption / grandfathered status; ☐ qualifying as a Qualified Subchapter S Trust; ☐ qualifying as a Special Needs Trust; ☐ other: ____________].

☐ The modification is not contrary to the Settlor's probable intention.

☐ Petitioner requests that any modification be given retroactive effect to the date specified in § 28-73-416 to achieve the Settlor's tax objectives.

I. § 28-73-111 — Nonjudicial Settlement Agreement (Alternative)

☐ In the alternative or as a supplement, Petitioner has executed (or proposes to execute) a Nonjudicial Settlement Agreement under § 28-73-111 attached as Exhibit H, and seeks court approval (if desired) under § 28-73-111(e) to determine that the NJSA does not violate a material purpose and contains terms a court could properly approve.

V. FACTUAL BACKGROUND

4. The Trust was established by [________________________________] (the "Settlor") by instrument dated [__/__/____], a true and correct copy of which is attached as Exhibit A.

5. The Settlor [☐ is living and competent; ☐ is living but incapacitated; ☐ died on __/__/____].

6. The original Trustee was [________________________________]. The current acting Trustee(s) is/are [________________________________], having accepted office on [__/__/____].

7. The Trust currently holds assets with an approximate fair market value of $[__________], described in the inventory attached as Exhibit B.

8. The principal purposes of the Trust, as expressed in the trust instrument, are:
   (a) [________________________________]
   (b) [________________________________]
   (c) [________________________________]

9. Petitioner is informed and believes, and on that basis alleges, the following operative facts giving rise to this petition:

[________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________]

10. Specifically, with respect to material purposes, unanticipated circumstances, mistake, tax objectives, or uneconomic administration (as relevant to the statutory basis checked in Section IV):

[________________________________________________________________________
________________________________________________________________________
________________________________________________________________________]

11. The position of each beneficiary as to the proposed modification or termination is summarized in Section VI and, where applicable, in the written consents attached as Exhibit C.

VI. PARTIES; BENEFICIARIES; PERSONS ENTITLED TO NOTICE

Pursuant to Ark. Code Ann. §§ 28-73-109 and 28-73-813, notice of this petition and of the hearing has been or will be served on each of the following:

A. Trustees

B. Qualified Beneficiaries (current, contingent, and remainder)

C. Settlor

☐ Settlor (if living): [________________________________], Address: [________________________________]
☐ Conservator / Guardian of Settlor (if any): [________________________________]
☐ Agent under POA of Settlor (if any): [________________________________]

D. Arkansas Attorney General (if charitable interest is implicated)

☐ Office of the Attorney General, State of Arkansas, 323 Center Street, Suite 200, Little Rock, AR 72201 — notice given because a charitable interest is implicated under §§ 28-73-110(c) and 28-73-405.

E. Persons Under Legal Disability — Representation Under §§ 28-73-301 to -305

☐ Minor beneficiaries (list): [________________________________]
☐ Beneficiaries lacking capacity (list): [________________________________]
☐ Unborn or unascertained beneficiaries

Petitioner requests that the Court [☐ approve virtual representation under §§ 28-73-301 to -305; ☐ appoint a guardian ad litem under Ark. R. Civ. P. 17(c) and § 28-73-305 to represent the interests of: ____________].

VII. PROPOSED MODIFICATION OR TERMINATION TERMS

12. Petitioner proposes the following specific modification, reformation, or termination of the Trust:

A. If Modification or Reformation:

The following provisions of the Trust shall be modified to read as follows:

B. If Termination:

☐ The Trust shall terminate effective [__/__/____].

☐ The Trustee shall, after payment of all debts, taxes, expenses, and fees, distribute the remaining trust property as follows: [____________ (set forth distribution scheme, identifying recipients, shares, and any specific assets)].

☐ The Trustee shall continue to have the powers reasonably necessary to wind up the affairs of the Trust under § 28-73-817 (distribution upon termination).

C. Effect on Material Purpose

The proposed modification/termination is consistent with — or, alternatively, where necessary, overrides — the Settlor's material purpose because: [________________________________].

VIII. PRIOR PROCEEDINGS AND RELATED MATTERS

13. There are no prior court proceedings concerning this Trust except: [☐ None ☐ Case No. ____________ in [court], styled [____________]].

14. There is no pending litigation involving the Trust or its assets except: [☐ None ☐ ____________].

15. No trust protector has acted (or available action by a trust protector has been considered and is insufficient) to address the issue in this petition, OR the trust protector has acted as follows: [☐ N/A ☐ ____________].

16. No nonjudicial settlement agreement under § 28-73-111 has been executed concerning the matter, OR an NJSA has been executed and is attached as Exhibit H.

IX. ATTORNEY'S FEES AND COSTS

17. Petitioner has incurred, and will continue to incur, reasonable attorney's fees and costs in bringing this petition for the benefit of the Trust and its beneficiaries, recoverable under Ark. Code Ann. § 28-73-1004 (the court may award costs and reasonable attorney's fees, in its discretion, as justice and equity require, payable from the trust that is the subject of the controversy).

18. Petitioner requests such fees and costs be charged against [☐ the Trust as a whole; ☐ specific shares as the Court directs; ☐ another party if the Court finds bad-faith opposition].

X. PRAYER FOR RELIEF

WHEREFORE, Petitioner prays that the Court enter an order:

A. Finding that the Court has jurisdiction under §§ 28-73-201 and 28-73-203 and that all persons entitled to notice under §§ 28-73-109 and 28-73-813 have been duly served;

B. Finding that the statutory grounds for relief checked in Section IV are satisfied, including specific findings as to material purpose (§ 28-73-411(b)-(c)), unanticipated circumstances (§ 28-73-412), uneconomic administration (§ 28-73-414), mistake (§ 28-73-415), and/or tax objectives (§ 28-73-416), as applicable;

C. ☐ Modifying the Trust as set forth in Section VII.A;

D. ☐ Reforming the Trust under § 28-73-415 to conform to the Settlor's actual intent as set forth in Section VII.A;

E. ☐ Modifying the Trust under § 28-73-416 to achieve the Settlor's tax objectives, with retroactive effect to [__/__/____];

F. ☐ Terminating the Trust effective [__/__/____] under § 28-73-411 / § 28-73-412 / § 28-73-414 and directing distribution as set forth in Section VII.B;

G. ☐ Approving cy pres modification or termination under § 28-73-413 as set forth in Section VII.A;

H. ☐ Approving any Nonjudicial Settlement Agreement under § 28-73-111 attached as Exhibit H;

I. ☐ Approving virtual representation under §§ 28-73-301 to -305 or appointing a guardian ad litem for any minor, incapacitated, unborn, or unascertained beneficiary;

J. Approving the Trustee's account, if filed concurrently, and discharging the Trustee from liability for acts taken in accordance with the Court's order;

K. Awarding Petitioner's reasonable attorney's fees and costs payable from the Trust under § 28-73-1004 and common-benefit principles;

L. Granting such other and further relief as the Court deems just and proper.

XI. VERIFICATION

STATE OF ARKANSAS )
) ss.
COUNTY OF [________________] )

I, [________________________________], being first duly sworn, depose and state that I am the Petitioner named in the foregoing Petition to Modify or Terminate Trust; that I have read the Petition and know its contents; and that the factual allegations stated therein are true and correct of my own knowledge, except as to those matters stated on information and belief, and as to those matters I believe them to be true.

Signature of Petitioner: ______________________________

Printed Name: [________________________________]

Subscribed and sworn to before me this [__] day of [____________], 20[__].

______________________________
Notary Public
My Commission Expires: [__/__/____]

(SEAL)

XII. SIGNATURE OF ATTORNEY

Respectfully submitted,

Dated: [__/__/____]

________________________________
[Attorney Name]
Arkansas Bar No. [____________]
[Firm Name]
[Address]
[Telephone] | [Email]
Attorney for Petitioner

EXHIBITS

• Exhibit A: Trust Instrument dated [__/__/____] and all amendments
• Exhibit B: Inventory of Trust Assets as of [__/__/____]
• Exhibit C: Written consents of settlor and/or beneficiaries (if applicable under § 28-73-411)
• Exhibit D: Evidence of unanticipated circumstances / mistake / tax-objective basis (correspondence, tax returns, expert declarations)
• Exhibit E: Order appointing conservator or guardian of settlor (if applicable)
• Exhibit F: Notice list and proof of service per §§ 28-73-109 and 28-73-813
• Exhibit G: Trustee accounting (if filed concurrently)
• Exhibit H: Nonjudicial Settlement Agreement under § 28-73-111 (if applicable)
• Exhibit I: [Other supporting documentation]

CERTIFICATE / PROOF OF SERVICE

I certify that on [__/__/____], I caused a true and correct copy of the foregoing Petition to Modify or Terminate Trust, together with all exhibits and the Notice of Hearing, to be served on each person identified in Section VI in the manner indicated below, in accordance with Ark. R. Civ. P. 5 and Ark. Code Ann. § 28-73-109.

________________________________
[Name of Person Serving]

ARKANSAS-SPECIFIC PRACTICE NOTES

• Filing court: Circuit Court (Probate Division) in the county of principal place of administration (§§ 28-73-108, -203, -204). Under Amendment 80, Arkansas Circuit Courts are the courts of general jurisdiction; trust matters are heard in the Probate Division.
• Notice (§§ 28-73-109, -813): Serve all qualified beneficiaries and other interested persons. Method must be reasonably calculated to give actual notice. Arkansas does not specify a uniform 30-day pre-hearing window in the ATC itself — follow local probate rule and Ark. R. Civ. P. 6 for time computation.
• Spendthrift presumption (§ 28-73-411(c)): Arkansas retains the UTC default — spendthrift IS presumed a material purpose. To terminate, petitioner must either obtain settlor + all-beneficiary consent (§ 28-73-411(a)) or rebut the presumption with clear evidence.
• Uneconomic trust threshold (§ 28-73-414): $100,000. Trustee may terminate without court order on notice to qualified beneficiaries. Court may modify/terminate regardless of threshold where cost is not justified. This section does not apply to an easement for conservation or preservation.
• Reformation (§ 28-73-415): Clear and convincing evidence required. Available even for unambiguous instruments.
• Tax modifications (§ 28-73-416): Retroactive effect available. Coordinate with tax counsel for GST grandfathering, marital deduction, charitable deduction, QSST, and SNT issues.
• NJSA (§ 28-73-111): Often the better path for routine non-controversial changes — avoids litigation, but cannot violate material purpose or include terms a court could not approve. Court approval may be sought for certainty (§ 28-73-111(e)).
• Charitable trusts: Notice to Arkansas Attorney General is recommended where charitable interest is implicated (§§ 28-73-110(c), -405); cy pres available under § 28-73-413.
• Representation (§§ 28-73-301 to -305): Virtual representation available; appoint guardian ad litem where conflict or no adequate representative exists.
• Special Needs Trusts: Modifications to a (d)(4)(A) or (d)(4)(C) trust must preserve public benefits qualification; coordinate with DHS notice. Section 28-73-411 cannot be used to defeat the federal trust requirements.
• No-contest clauses: Arkansas enforces no-contest clauses but probable-cause exceptions apply (compare Pinkston v. Lovell, Ark. case law). A good-faith petition under §§ 28-73-411-416 should not trigger forfeiture, but analyze the specific clause.

SOURCES AND REFERENCES

• Arkansas Trust Code, Ark. Code Ann. § 28-73-101 et seq. (Subchapter 4, §§ 28-73-410 to -417)
• Ark. Code Ann. § 28-73-111 (Nonjudicial Settlement Agreements)
• Ark. Code Ann. §§ 28-73-201, -203, -204 (Jurisdiction and Venue)
• Ark. Code Ann. §§ 28-73-301 to -305 (Representation)
• Ark. Code Ann. § 28-73-813 (Duty to Inform and Report)
• Ark. Code Ann. § 28-73-1004 (Attorney's Fees and Costs)
• Amendment 80 to the Arkansas Constitution (Unified Circuit Court Jurisdiction)
• Ark. R. Civ. P. 5, 6, 17 (service, time, capacity)
• Uniform Trust Code (2000, as amended) — official comments
• Restatement (Third) of Trusts §§ 65-66 (Modification, Termination)
• Bogert, The Law of Trusts and Trustees §§ 991-1011