California Appeals Court Holds Trust Modifications Invalid Unless they Comply With Method Stated in Trust Instrument

California’s Fifth Appellate District held recently in King v. Lynch that amendments to a trust were not valid although they complied with Section 15401 of the California Probate Code because the amendments failed to comply with the method specified in the trust documents.

In the case, a married couple, Zoel and Edna Lynch, created a revocable trust designed to support them during their lifetimes. Both spouses were the only trustees. One article of the trust stated that it could be amended through a written instrument signed by both spouses and delivered to the trustee, as long as both spouses were still living. After the death of one spouse, the survivor retained his or her right to amend or revoke the trust. The trust documents also stated the trust could not be amended or revoked by anyone else unless authorized by a court of law.

Originally, the Lynch trust specified that an equal cash distribution be provided to each of the couple’s five children except one, David Lynch, who was to receive any remainder and become the successor to the trust following the death of both parents. Later, both parents jointly amended the trust to also provide four real estate parcels to David. In 2006, however, Edna reportedly became incompetent following a brain injury. Following her injury, Zoel modified the trust without Edna’s signature and appointed himself as the sole trustee. He also reduced the cash distribution to each child significantly through several trust amendments. Zoel did not amend David’s inheritance.

Zoel died a few months before Edna in 2010. Following the death of both spouses, David provided notice regarding the administration of the trust. A few months later, David’s siblings filed a petition seeking to have the trust amendments made after Edna’s incapacitation invalidated. A trial court declared the amendments invalid because they failed to comply with the express terms of the trust. David then appealed to California’s Fifth Appellate District.

According to the court, Section 15401 of the Probate Code provides that a revocable trust may be revoked by a signed writing delivered to the trustee unless the trust instrument explicitly states the method for revocation outlined in the document is exclusive. Section 15402 allows a revocable trust to be modified using specified procedures outlined in the code unless the trust documents state otherwise. Although David argued the modification provisions outlined in the trust were not exclusive and Zoel’s amendments following Edna’s incapacitation were proper, the Fifth Appellate District disagreed.

The court stated the law prior to enactment of the Probate Code provided that a trustee was required to follow the procedures outlined in a trust instrument in order to revoke the trust only where the procedure was explicitly or implicitly exclusive. Because there was no law to the contrary, the same reasoning was also applied to trust modifications. When Section 15401 of the Probate Code was written, the California Legislature codified this law with regard to the revocation of a trust. At the same time, Section 15402 was created to address the modification of a trust. According to the Fifth District, the language of Section 15402 requires any procedure for modification outlined in a trust instrument to be followed. The court held because the Lynch trust was not silent on the process for modification, any valid amendments to it had to be signed by both spouses. Since the modification method outlined in the Lynch trust instrument was not complied with when the amendments being challenged were made, the California appellate court declared them invalid and affirmed the trial court’s holding.

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Additional Resources:

King v. Lynch, No. F062232, California Court of Appeal, Fifth Appellate District (April 10, 2012).