§2046. Effect of revocation or rescission

The settlor may stipulate the effect of revocation or rescission of a disposition. Unless the trust instrument otherwise provides, the following rules shall govern:

(1) Revocation or rescission shall cause the trust to fail and the trust property held by the trustee at the time such revocation or rescission takes effect shall revert to the settlor or his heirs, legatees, or assignees;

(2) Revocation or rescission of a disposition affecting an income beneficiary has the same effect as if the beneficiary had died on the effective date of the revocation or rescission;

(3) Revocation or rescission at any time of a disposition in favor of a principal beneficiary operates a substitution of the settlor, or his heirs, legatees, or assignees as the beneficiary of the interest involved, without affecting the interest of the income beneficiaries; if there are two or more settlors, each disposition affecting principal shall be divided into as many separate dispositions as the number of settlors, and each settlor or his heirs, legatees, or assignees shall receive a share in proportion to the amount of his contribution to the trust principal;

(4) Revocation or rescission affects property added to a trust according to the rules of this section.

(5) Acts of the trustee with regard to the trust property shall not be affected by the subsequent revocation or rescission of a disposition in trust. After a trust has been revoked or rescinded, the trustee shall have only those powers necessary to carry out the effects of the revocation or rescission.

(6) A person receiving trust property as a result of the revocation or rescission of the trust shall be personally liable for the obligations and liabilities of the trust existing on the date of revocation or rescission to the extent of the value of the trust property received by such beneficiary unless existing trust property is sufficient to satisfy the obligations and liabilities of the trust.

Amended by Acts 1974, No. 128, §1; Acts 1995, No. 344, §3.