Estate Law Questions? Ask an Estate Lawyer.
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1. There is some question as to whether the trustees could have legally name an new settlor. This is for three reasons. One, you never resigned as settlor; two, by definition, the settlor is the one that creates the trust through an irrevocable grant of his property to the trust [the new settlor does not meet this criteria by definition and lapse of time]; and three, the trsutees cannot breach the trust of the author [you] or the purpose of the trust.
2. It is doubtful that the bank has any duty to release you from guarantorship status even if what the trust did was deemed to be valid; this is because your obligations to the bank arise from a direct contractual relationship with it.
3. You may have to obtain a court order to deem what has been done be undone as it appears to be an invalid transaction.