Power to Amend a California Trust NOT the Same as the Power to Revoke
One of the most obvious features of a revocable living Trust is that you can revoke it. It’s right there in the name “revocable Trust.” But you can also amend a revocable Trust because, for a long time, California courts have interpreted the power to revoke (which means to entirely do away with a Trust) as including the lesser power to also amend the Trust. Sounds reasonable enough.
But that has now changed with the California Court of Appeal’s, Fifth District, ruling in King v. Lynch, which holds that the power to revoke may be different from the power to amend—at least in the way in which each is accomplished.
Prior to 1987, there was no statute that provided the manner in which a Trust revocation could be accomplished. With the adoption of Probate Code Section 15401, that changed, and the law provided two distinct ways in which to revoke a California Trust: (1) revoke using the manner provided in the Trust instrument, or (2) revoke by any writing (other than a Will) signed by the Settlor and delivered to the trustee during the Settlor’s lifetime. So if the Trust stated that a revocation required a writing signed and notarized by the Settlor, then you could follow that directive to revoke the Trust. But you could also simply follow number 2 above and revoke by any writing (other than a Will). In other words, either manner was available for revocation as long as the Trust did not expressly say that its manner was the exclusive way in which to revoke.
And it was thought for quite some time that the same rules applied to amending a Trust because under Probate Code Section 15402, it said that the method of amendment is the same and the method of revocation contained in Section 15401. So you could use the Trust terms to amend, or you could amend by any writing (other than a Will). Each method was available for amendments as long as the Trust did not expressly say that its method was the only way in which to amend.
But now, Justice Levy has, for the first time, decided that amendment and revocations are not so similar after all. He holds, under Section 15402 (the amendment language) that a Trust can ONLY be amended by the method specific in the Trust and NOT by any language in Section 15401 that allows any writing other than a Will. He reaches this decision by quoting the following language of Section 15402:
“unless the trust instrument provides otherwise, if a trust is revocable by the settlor, the settlor may modify the trust by the procedure for revocation.”
He reasons that the term “unless the trust instrument provides otherwise” means that any Trust that has an amendment method stated in the Trust instrument does “provide otherwise” and therefore the statutory language for revocation under Section 15401 cannot be used for Trust amendments.
It seems like an odd ruling because there is no logical reason why the method of revocation should be any different from the methods available for amendments.
Whatever may be in the Court’s mind, we now have a ruling that says the methods available to amend a Trust are different from the methods available to revoke. Something good to keep in mind when amending a Trust…or when contesting an amendment to a Trust…food for thought.