New York Law (NYLE) Practice Exam

If a grantor has created an irrevocable trust, may the grantor revoke it in case of serious business setbacks?

1. Yes, provided the trustee consents.

2. No, unless his son provides written consent, but his grandson's consent is not required.

3. No, unless both his son and grandson provide written consent.

4. No, because the trust is irrevocable by its terms.

The correct answer is: No, because the trust is irrevocable by its terms.

The correct choice indicates that an irrevocable trust cannot be revoked by the grantor, as specified by the terms of the trust itself. An irrevocable trust is designed to be permanent, meaning that once the grantor has transferred assets into the trust and executed its terms, they relinquish control over those assets and cannot unilaterally change or dissolve the trust. This characteristic is integral to the functioning of irrevocable trusts, serving various purposes, including asset protection, tax planning, and ensuring that the assets are used according to the grantor's wishes after their death. Therefore, even in the event of serious business setbacks, the grantor does not possess the authority to revoke the trust. This finality helps establish reliance by beneficiaries and other parties on the terms of the trust, as they are entitled to expect that the grantor cannot alter the agreed-upon arrangement once it has been established. The other choices suggest varying circumstances under which consent might allow for the revocation of the trust, either requiring family members' approvals or suggesting cases where the trustee's consent could be relevant. However, these scenarios do not align with the fundamental principle that once an irrevocable trust is created, it cannot be revoked or modified without following specific legal frameworks or fulfilling