Believe it or not, the question of how to properly amend a trust has been the subject of much debate and controversy in the legal world over the last few years. The California Supreme Court has finally issued a ruling on the subject, so here’s an article going through how this is supposed to work.
In most cases, the answer is pretty simple. If the trust states how it is to be amended, and the settlors (i.e., the people who created the trust) follow the procedure outlined in the trust, then they are golden, the amendment is valid, and everyone can move on with their lives. In most cases, the trust simply states that the amendment must be notarized to be valid.
Sometimes, though, the drafting attorney was sloppy and didn’t write in any instructions on how to amend the trust. When this happens, the Probate Code steps in to fill in the gap, and the settlors can follow the procedure laid out in the Probate Code. Specifically, if they write out the amendment and deliver it to themselves, they have created a valid trust amendment under the Probate Code.
The controversy happens when the settlors create an amendment but don’t follow the procedure outlined in the trust. For example, one recent case involved a trust requiring the amendment be delivered by certified mail to the trustee to be valid. In that case, the settlor made the amendment but did not deliver it to himself by certified mail. So, the amendment would be valid under the Probate Code but not under the terms of the trust. That leads us to the question of which controls?
The lower courts have been going back and forth on this issue for several years now. Some courts maintained that the Probate Code method can always be used unless the trust says it can’t. Other courts maintained that the Probate Code method can only be used if the trust expressly allows it or if the trust says nothing at all. Estate planning lawyers were getting grey hairs from the stress, and estate planning litigators were getting paid by the hour from all the cases coming in.
Finally, a case made it to the California Supreme Court, which issued a ruling in February. Unless the trust expressly says otherwise, the Probate Code method is always available. Our government wants to make trust amendments easy and uncomplicated to better accommodate the wishes of the settlors. So if the settlors (or their lawyer) want to only have one exclusive method for amending, they need to say so in their trust. Now, we can all breathe a sigh of relief, and litigators can find something else to litigate over.
Of course, the best way to avoid all this fuss and bother is to simply follow the amendment procedure outlined in your trust, whatever it may be. If you would like to make sure your amendment is properly executed, you’re welcome to talk to me at kaway@kawaylaw.com.
