One of the best aspects of having a revocable living trust in place is the ability to amend or modify it in the future. You can set your trust up for what works for you right now, while having peace of mind that you can always adjust and tweak in the future if you need to. Further, you can revoke the trust altogether.
However, those same advantages can turn disadvantageous for some. A common scenario that loved ones try to protect against is someone unscrupulous taking advantage of an elderly parent’s good nature. As long as your parent has capacity, they have the ability to amend or revoke their trust at any time (with some nuances). You always have the option of seeking legal redress later if this was done improperly or under duress, but that’s often not a reasonable solution.
The California Legislature has long sought to balance the interests of not enabling undue influencers to manipulate vulnerable Grantors into improperly modifying or revoking their trusts, while also trying to make sure that Grantors are not unnecessarily burdened when making a completely reasonable change to their estate plans.
Section 15401 of the Probate Code governs revocation of revocable trusts, while Section 15402 governs modification. The general rule of thumb is that the trust instrument itself governs how revocation and modification, but if it is silent or does not designate an exclusive way to modify or revoke, then the statutory method may be used. The statutory method involves the Grantor signing a writing other than a will to effectuate the modification or revocation.
Conflicts have historically arisen over what happens when someone has a specific method of modification in the trust instrument that goes beyond the requirements of the Probate Code, but it does not say that it is only way to modify. Such is the situation with a recent case before the California Supreme Court, Haggerty v. Thornton.
In this case, Brianna Haggerty appealed the order of a probate court which found that her aunt’s trust was validly amended. In 2016, Haggerty’s aunt executed an amendment by signing and notarizing it. The 2016 amendment included Haggerty as a beneficiary. Then, in 2018, Haggerty’s aunt executed another amendment by signing it, but not notarizing. The amendment removed Haggerty’s distribution, replacing it with distributions to various other beneficiaries. Haggerty filed a petition to determine whether the 2018 amendment was valid, as the trust required an “acknowledged instrument” to revoke or amend it. The other beneficiaries from the 2018 amendment argued that the 2018 amendment was valid because it adhered to the statutory method requirements. Haggerty appealed, and the Court of Appeal affirmed that where a trust provides a specific modification method, that method or the statutory method may be used unless the trust explicitly states that the trust’s method is the sole method.
However, this ruling created a split of authority, meaning that two separate Court of Appeals ruled differently on substantially similar issues. Another case, King v. Lynch in 2012, ruled that in the event that a trust provides a specific modification procedure, only that procedure can be used to modify the trust.
The Supreme Court decided to clarify this in Haggerty v. Thornton earlier this month (February 2024), by officially ruling with the Haggerty Court of Appeal. Thus, when the trust specifies a method of medication, both that method as well as the statutory method may be used to modify the trust.
What does this mean for you? If you want your trust instrument to be modified only in one specific manner, that needs to be specifically and exclusively spelled out in your trust. Otherwise, the statutory method will always be available if the specific procedure provided for in the trust itself is not followed. For most people, you’ll likely always go to your estate planning attorney when you need an amendment, and you’ll likely always be provided with a writing that is signed and notarized. However, in the event that you want strict barriers around how you can amend, excluding the statutory method may be a wise option.
Have questions? Give us a call at (916) 525-7980 if you’d like to set up an appointment to discuss how this might impact your trust.
This post is not intended to create an attorney-client relationship with readers, and it does not constitute legal advice. This was written for an audience of the general public with no specific prospective client in mind.