REVOKNG A REVOCABLE TRUST
Wikipedia defines a Trust as:
“A trust is a legal relationship in which the legal title to property is entrusted to a person or legal entity with a fiduciary duty to hold and use it for another’s benefit. In the Anglo-American common law, the party who entrusts the property is known as the “settlor”, the party to whom the property is entrusted is known as the “trustee”, the party for whose benefit the property is entrusted is known as the “beneficiary”, and the entrusted property itself is known as the “corpus” or “trust property”. With the strategic and legal use of Trusts, individuals can ensure that their children and grandchildren or chosen beneficiaries are able to benefit completely from the inheritance they want them to receive.”
As the title implies, a revocable Trust is one that remains revocable for a period of time. Generally, it is for the lifetime of the settlor(s).
METHODS OF REVOCATION
Probate Code Section 15401 typically controls the method for revocation of a revocable Trust. Probate Code Section 15401 says:
“(a) A trust that is revocable by the settlor or any other person may be revoked in whole or in part by any of the following methods:
(1) By compliance with any method of revocation provided in the trust instrument.
(2) By a writing, other than a will, signed by the settlor or any other person holding the power of revocation and delivered to the trustee during the lifetime of the settlor or the person holding the power of revocation. If the trust instrument explicitly makes the method of revocation provided in the trust instrument the exclusive method of revocation, the trust may not be revoked pursuant to this paragraph.
(b)(1) Unless otherwise provided in the instrument, if a trust is created by more than one settlor, each settlor may revoke the trust as to the portion of the trust contributed by that settlor, except as provided in Section 761 of the Family Code.”
THE CASE OF CUNDALL v. MITCHELL-CLYDE
Of course, with all things legal, it is not quite that simple. There is room for interpretation and the topic of revocability and how to revoke a Trust has been the subject of many, many cases over the years. One of the more recent cases was decided by the Second Appellate District Court of Appeal of the State of California in June of last year. In the case of Cundall v. Mitchell-Clyde, B293952, the court was asked to decide the validity of a Revocation of Trust that was signed by the settlor and delivered to the trustee (who was also the settlor). I found this case particularly interesting, because I too had a case several years ago involving whether or not a Trust had properly been revoked by a wife who was separated from her husband and wrote him an email indicating she had revoked the Trust as to the assets she had contributed to their joint “revocable” Trust. Ours was of course complicated by whether or not an email rose to the standard of a “writing signed by the settlor,” but nonetheless, we were attempting to enforce the revocation to ensure that her share of the assets went to her children, rather than her estranged spouse.
The Cundall case was brought by the sole beneficiary of the February 2009 Trust of John W. Martin. Mr. Cundall brought suit in September 2010 after the death of John Martin in January of 2010. Mr. Cundall argued that the provision of the February Trust required that Mr. Martin have his attorney, Frances Diaz, approve any revocation based on the language in the February Trust requiring her to sign any Trust Revocation. Mr. Cundall claimed that Mr. Martin’s failure to follow that method of revocation made his attempt to revoke the February Trust by executing a Revocation of Trust and a new Trust in May of 2009 made the revocation ineffective. Since the May 2009 Trust completely disinherited Mr. Cundall, his argument was that the May 2009 Trust had no effect and that the February 2009 Trust was the controlling instrument for the distribution of Mr. Martin’s assets. In 2018, after a 23-day trial, the Los Angeles Superior Court found that Mr. Martin’s execution of a Revocation of Trust as the settlor and delivery of the Revocation of Trust to himself as trustee complied with the method set forth in Probate Code Section 15401.
Mr. Cundall appealed and argued that a) The Probate Code does not apply to the February Trust, because it set forth the “method,” but it did not establish who had the authority to revoke the Trust — who in this case was Ms. Diaz and she did not consent; and b) If the Court believed that Probate Code Section 15401 applied to this case, the method for revocation described in the Trust was explicitly stated and the only way the Trust could be revoked. Since Ms. Diaz’ signature was missing, there was no compliance with the method and therefore it was invalid.
The Appellate Court found that Probate Code Section 15401 set forth both the method and the person with the authority to revoke, namely: the settlor or any other person with authority to revoke the Trust. Additionally, the Appellate Court held that Probate Code Section 15401 allowed for the settlor to revoke a revocable Trust by a writing signed by the settlor or any other person with authority to revoke the Trust that is then delivered to the trustee — if the Trust instrument did not have explicit instructions that were clearly defined as the exclusive method of revocation. The Appellate Court considered Mr. Cundall’s argument that the revocation requiring Ms. Diaz’ consent was an exclusive method of revocation. However, the Appellate Court cited Huscher v. Wells Fargo Bank (2004) 212 Cal.App. 4th 956 stating that the term “explicitwas equated with the term ‘express’ and means directly and distinctly stated in plain language that is unequivocal and unambiguous.” Since the provision for revocation in the February 2009 Trust did not state that the method for revocation requiring Ms. Diaz’ signature was the only method of revocation, the alternative method set forth in Probate Code Section 15401 was appropriate and effective for revoking the February 2009 Trust. As such, Mr. Martin had successfully revoked the February 2009 Trust and the May 2009 Trust was deemed the controlling instrument for purposes of distributing Mr. Martin’s assets.
While ultimately Mr. Martin’s final wishes were carried out, it is notable that he died in January 2010 and this ruling was issued in June of 2020 – over 10 years later – and that was the appellate ruling of a case that was brought in September 2010 and decided after a 23-day trial 8 years after the lawsuit was initially filed. The norm for these types of case may be a 3 to10-day trial held within 18 to 36 months of the date of filing, but these types of delays and trials are not unique. While it is not always possible to avoid litigation, ensuring that your estate plan is drafted by a qualified attorney, who not only understands the laws, but takes the time to carefully review any prior versions of your estate plan to ensure that amendments or revisions are compliant with the terms of any previous estate planning documents can mean the difference between your wishes being carried out or ignored.
CANNON LEGAL FIRM CAN HELP
If you or someone you know are considering drafting or revoking a Trust or need to litigate the terms of a Trust, we can help. We have 15 years’ experience with Trust and Estate litigation, administration and planning. Many firms focus on planning, but not litigation or litigation and not planning. However, we draw upon our litigation experience to craft better plans for our clients and know that our understanding of planning is often beneficial to our litigation clients. Contact Cannon Legal Firm for a free consultation.
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