Creators of trusts (also known as settlors or trustors) usually think long and hard about how their property should pass when they die. It’s therefore common for trustors, or their lawyers, to incorporate protective safeguards into their trust instruments to shield trustors from their own whim and indecision, and ensure nobody trifles with their wishes should they become vulnerable to undue influence. Among these safeguards are revocation procedures, which may require that a revocation document be signed by a particular person and/or delivered to the trustee.
The California Legislature has, however, codified its own “default” method of revocation, allowing – under Probate Code section 15401(a)(2) – a trust to be revoked by a writing signed by the trustor and delivered to the trustee during the trustor’s lifetime. But what happens when the trustor’s chosen revocation procedure is stricter than that permitted under section 15401(a)(2)? Must the trustor follow his chosen revocation procedure, or is he or she permitted to simply comply with the Legislature’s default method? In Cundall v. Mitchell-Clyde (2020) __ Cal.App.5th __, the Second District Court of Appeal held that for a trust’s revocation procedure to be the exclusive revocation method, it must expressly specify that it is the only such method.
Trusts’ Revocation Procedures Should “Get to the Point” About Their Exclusiveness
John and Robert were neighbors in West Hollywood who met in 2007 and became friends. In February 2009, John retained Frances – an attorney and fellow neighbor – to prepare a trust, naming himself as trustee, and Robert as the sole beneficiary and successor trustee. The trust contained a revocation procedure, allowing it to be revoked by delivering a written revocation to John and Robert that both John and Frances would then need to sign.
After John executed the February 2009 trust, he had a falling out with Robert and created a new trust in May 2009, which instead named his friends Vanessa and Ronald as beneficiaries. Because John’s relationship with Frances also deteriorated during this time, John retained a new estate-planning attorney, Paul, to prepare this trust. John executed this new trust, including the revocation, and Paul forwarded executed copies to John. Frances, however, never signed the revocation, and the trust was therefore not properly revoked under the trust’s revocation procedure. On January 25, 2010, John died. A bitter clash of litigation swords followed.
Robert, Vanessa, and Ronald filed dueling petitions for instructions concerning the validity of the February trust and May trust. A 23-day trial – extended over a whopping two years – resulted. At the end of it, the Los Angeles Superior Court found that the February trust did not provide an exclusive means of revocation, and that John’s revocation of the February trust was therefore proper under Probate Code section 15401(a)(2)’s default revocation method because John had executed the revocation and Paul sent him copies of the trust documents. Specifically, section 15401(a) provides that a trust may be revoked by any of the following methods:
- By compliance with any method of revocation provided in the trust instrument.
- 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.
The Court of Appeal affirmed the trial court’s decision, parrying Robert’s two counterarguments for why section 15401(a)(2) was inapplicable. Robert first argued that the February trust established Frances as a “trust protector” and that section 15401(a)(2) does not apply in such circumstances because it is limited to the method of revoking a trust rather than the authority to revoke. The court reasoned that the theoretical distinction between a “method” and “authority” was mere semantics, section 15401(a)(2) addresses the authority to revoke a trust anyway, and that its terms plainly provided that the default revocation method could be used unless the trust provided an “exclusive method of revocation.”
Robert second argued that section 15401(a)(2) was inapplicable because the February trust specified an “exclusive method of revocation.” Relying in part on Masry v. Masry (2008) 166 Cal.App.4th 738, the Court of Appeal responded that the mere creation of a revocation method does not “explicitly” make that method exclusive. A trust must instead contain “a direct statement of exclusivity” for its chosen revocation method; a mere inference isn’t enough.
Finally, the Court of Appeal briefly considered two wrinkles in the law. It first explained how, as the court in Huscher v. Wells Fargo Bank (2004) 121 Cal.App.4th 956 found, it used to be that a trust’s revocation method could be either explicitly or implicitly exclusive, but that section 15401 changed this to allow its default revocation procedure to be used unless the trust’s revocation procedure explicitly made its method exclusive. It also suggested that the validity of a trust modification is subject to a different statutory analysis – a topic touched upon in our blog post last year.
Tips of the Sword
Cundall teaches that it’s all well and good if a trustor wants to incorporate a revocation procedure into his or her trust, but if the trustor wants to ensure that it – and only it – must be followed to successfully revoke a trust, he or she should explicitly say so in the trust. Trustors should also be wary about incorporating revocation procedures requiring something from a particular person. It’s difficult to predict how that relationship will change over time, and – as happened in Cundall – such a specific requirement may later become a thorny obstacle.
Finally, trusts created before July 1, 1987 are not governed by section 15401, as stated in its subsection (e). Trustors should therefore be mindful of when their trusts were created in determining the extent to which their chosen revocation methods will be enforced. This will better position them to duck any swipes taken by potential assailants to the trust.