Amendments to revocable trust must follow procedure specified in trust instrument to exclusion of statutory method

April 27, 2012
By Justice Steven Vartabedian (Ret.) on April 27, 2012 6:00 AM |

Dissents appear in published opinions of the California Court of Appeal, Fifth Appellate District about as frequently as meteors crash to Earth. King v. Lynch (filed April 10. 2012) 2012 DJDAR 4516) is such a cosmic event. The court majority affirmed the trial court's invalidating amendments to a trust, even though those amendments comply with the revocation method established in Probate Code section 15401, subdivision (a) (2). The majority found the trust specified a modification method, and thus, under section 15402 the trust could only be amended in that manner.

The trust in question provided that, during the joint life of the two settlors, who were also the initial trustees, the trust "may be amended" by a writing signed by both settlors and delivered to the trustee. Nowhere does the instrument explicitly state this is the exclusive method of amendment.

After one of the settlors, Edna, suffered a severe brain injury, leaving her incompetent, an amendment to the trust was executed by her co-settlor, Zoel. That amendment stated that because Edna could no longer serve, Zoel was appointed as sole trustee. Two further amendments were executed by Zoel changing monetary bequests to the settlors' beneficiaries. These three amendments are the subject of the challenge in this case. The trial court found all three of these amendments invalid, and was affirmed on appeal.

The best way to explain the majority's ruling is to first set forth the reasoning of the dissenting opinion. The dissent cites dicta in Huscher v. Wells Fargo Bank (2004) 121 Cal.App.4th 956, 967 that, under section 15402, "procedure for modifying a trust can be used unless the trust provides a modification procedure and explicitly makes that method exclusive." This is entirely consistent with legislative history (found in reports of the California Law Revision Committee): when section 15401 was being proposed, the intent was to make it clear that a revocable trust may be revoked by the manner provided by statute unless a manner specified in the trust was made exclusive; this allows a trust to be responsive to changing needs. The legislative history further points to section 15402 as adopting the same flexible approach for modification as applies to revocation in 15401. Thus the legislative adoption of these sections in 1987 reflected these concerns.

The majority views sections 15401 and 15402 differently than the dissenting justice. It treats 15402 as stating that if the trust instrument specifies how the trust is to be modified, then the trust has provided otherwise than the statutory method in 15401; accordingly, section 15401 (a) (2) does not come into play to allow the statutory rules for revocation to become applicable to modifications or amendments. Because the express modification provision in the trust required both signatures, this was specific as to modification requirements and controlled.

I do not think that trust-drafting practitioners should totally ignore the analysis of the dissent in this case. When drafting modification provisions in a trust, one should, out of an abundance of caution, specifically state that modification method described therein is exclusive, if that is the intent of the party or parties. To the contrary, if the parties wish to be afforded the flexibility of statutory procedures, it would be a good idea, in light of the majority ruling here, to expressly state the method prescribed is nonexclusive.

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