In this uncontested proceeding, the trustee and sole remainderman (the petitioner), seeks an order terminating an irrevocable intervivos trust created by his mother who is now under a disability (the settlor), on the ground that it is “uneconomical” within the meaning of EPTL 7-1.19, and directing distribution of all of its remaining assets to him.On or about June 23, 2009 the settlor executed an instrument creating an irrevocable asset protection trust, a deed and transfer documents transferring title in realty located in the Bronx to the trustee and a durable power of attorney in his favor. The realty is the sole trust asset. Its current value is $422,000 and it is encumbered by a mortgage with a principal balance of $50,000. Article Five (1) of the trust permits discretionary payments of income for the benefit of the settlor and expressly prohibits invasions of principal. Article Four (4) of the trust provides that the trust may be revoked or terminated only in accord with EPTL 7-1.9 and that if the settlor is unable to act on her own behalf because of “incompetence” she authorizes any attorney in fact appointed by her, in the attorney-in fact’s sole discretion, to execute any revocation agreement on her behalf.In support of the application, the petitioner states that after executing the trust, the settlor resided for a number of years at the realty but had to move to a rental apartment three years ago because she suffers from Alzheimer’s disease and dementia and can no longer negotiate the stairs. She requires round the clock care and cannot return to the realty because of her deteriorated physical condition. Although the settlor initially paid the expenses for maintaining the realty after executing the trust, she has not maintained it for years. The realty is presently uninhabitable, requires significant repairs and remains vacant. There are no other trust assets. The trustee avers that he has been paying the settlor’s rent and other expenses out of his own funds and intends to continue to do so. He notes that although he is authorized pursuant to Article Five, paragraphs 4 (c) and (I) of the trust agreement to mortgage and borrow funds against the realty, he has been unable to obtain financing because title to the realty is in the trust and also reflects that the settlor has a life estate. He urges that the trust and life estate should be terminated in his favor so that he can refinance the realty, use the proceeds to effectuate repairs and make it habitable so that it can generate rental income to pay for the grantor’s living expenses. The guardian ad litem appointed for the settlor recommends approval of the application.The court can terminate a trust pursuant to EPTL 7-1.19 upon finding that continuation of the trust is economically impracticable, the express terms of the disposing instrument do not prohibit its early termination, and such termination would not defeat the specified purpose of the trust and would be in the best interests of the beneficiaries (see EPTL 7-1.19; Matter of Webman, NYLJ, July 7, 2015 at 26, col 5 [Sur Ct, Bronx County, 2015]; Matter of Bleibtreau, Since the specific purpose of the trust is to provide for discretionary income to be paid to the settlor and a place for her to live, with the remainder principal to be paid to the trustee, its purpose has been frustrated by the inability of the settlor to continue to reside at the realty which remains vacant because of its deteriorated condition and there are no funds to effectuate repairs so that it may be generate rental income. Significantly, although the trust document precludes invasions of principal and income distributions are discretionary, the petitioner avers that he has, and will, continue to pay the settlor’s living expenses as needed and will retain and rehabilitate the realty to generate rental income which will be utilized to assist her. Thus, the request to terminate this asset protection trust appears to be in accord with the settlor’s intent when she established the trust and in her best interests.Under the circumstances presented, including the recommendation of the guardian ad litem, the court finds that the petitioner has satisfied the EPTL 7-1.19 requirements. Accordingly, the application to terminate the trust and life estate and pay the principal to the petitioner is granted.Settle decree.
