“By signed instruments delivered to the Trustee, during my life, I may revoke this agreement in whole or in part from time to time in any respect.”
This seemingly simple statement, included in a living trust agreement, caused a significant amount of litigation over the attempt by Clarice Dauberman (“Clarice”) to change the distribution of her trust assets.
Clarice had two children, Carol and Andrew. Andrew died in 1990, leaving one son, Scott. After Andrew’s death, Clarice signed a will in which she directed that after her death 75% of her assets would be distributed to Carol and 25% to Scott. In 1997, she signed a living trust which provided that 100% of her assets would be distributed to Carol. Thereafter, Clarice wrote a letter to Carol that read something like this: “Dear Carol, I love you very much and don’t want to upset you, but I want Scott to have his father’s share. Love, Mom.” After writing the letter, Clarice placed it in a sealed envelope and gave it to her housekeeper, with instructions that she should deliver it to Carol after her own death.
After Clarice’s death, Carol received the letter and, according to Mary, shared its contents with Mary, as well as her plan to distribute the assets 50% to herself and 50% to Scott, seemingly in accordance with her mother’s living trust. Carol then discovered Clarice’s 1990 will wherein she would have received 75% of the estate rather than 50%. Carol then stated she would only distribute 25% of the assets to Scott. Scott filed a declaratory action claiming that Clarice’s handwritten letter constituted an amendment to the trust by which Scott would receive 50% of the assets of the trust.
The issue was whether Clarice’s handwritten note constituted an amendment to the trust in view of the trust provision quoted at the beginning of this article. The court said three requirements must be met in order for the handwritten note to be a valid amendment of Clarice’s trust: (1) there must be a signed instrument; (2) it must be delivered to the trustee; and (3) such deliver must have occurred during her lifetime.
The court in this case held the note – signed “Mom” – was a signed instrument; since Clarice was the trustee and authored the note, and she effectively delivered to herself as trustee; and these actions all took place while Clarice was alive.
While Clarice’s intent that Scott receive 50% of her assets seemingly prevailed, it came at quite a cost to Scott and Mary who were forced to litigate the issue. Trust amendments can be accomplished simply and quickly, and usually at a relatively nominal cost, by communication with an attorney, and then following the prescribed procedures. If you have any questions regarding an amendment of a trust agreement or any part of your estate plan, please do not hesitate to telephone us.