See this IRS article: http://www.irs.gov/newsroom/article/0,,id=257050,00.html
In California, a trust terminates when any of the following occurs:
- The term of the trust expires.
- The purpose of the trust is fulfilled.
- The trust purpose becomes unlawful.
- The trust purpose becomes impossible to fulfill.
- The trust is revoked.
On termination of the trust, the trustee continues to have the powers reasonably necessary under the circumstances to wind up the affairs of the trust. (California Probate Code section 15407.)
But when can the trust be terminated because it has become uneconomically low compared to the costs of keeping the trust (costs such as cpa fees, trustee fees, attorney fees, investment fees, and taxes)? California probate code 15408 gives the court authority to terminate a trust if the court determines that the fair market value of the trust has become so low in relation to cost of administration that continuation of the trust will defeat or substantially impair the trust purpose.
And, for California trusts, if the value of the trust does not exceed $40,000, then the trustee has the power to terminate the trust. (California probate code section 15408 (c).)
See this article in Trusts and Estates: http://trustsandestates.com/wealth_watch/president-obama-budget-proposal-estate-planning-0622/index.html
The Death Tax Repeal Permanency Act was introduced in the Senate last month. The bill has 34 co-sponsors and is very similar to H.R. 1259, the Bipartisan Death Tax Repeal Permanency Act, which was introduced in the House of Representatives in March 2011 and would repeal both the federal estate tax and the federal generation-skipping transfer tax. It would also set a $5 million lifetime gift tax exemption and 35% gift tax rate.
See this IRS article at http://www.irs.gov/newsroom/article/0,,id=256350,00.html