Setting up a trust allows us to specify how we want our assets to be distributed to our beneficiaries, and to modify those decisions later should circumstances – or just our wishes – change.
But a trust must be drafted carefully, to ensure that it meets legal requirements, and any subsequent changes must be made with equal care, as a case recently decided by the California Court of Appeal demonstrates (Trotter v Van Dyck).
Jerry and Mary Trotter, a married couple, established a revocable trust in 2011, naming themselves as trustees. It specified that upon the death of the last surviving spouse, certain assets were to be distributed to their son, Timothy, with the rest being distributed to several other children, including Wendy Trotter Van Dyck, Jerry’s daughter from a prior marriage.
Jerry died in 2012, and Mary became the sole trustee. A few years later, according to documents in the court record, Mary decided to exclude Wendy as a beneficiary, believing that she had “been fairly provided for” by assets she received in 2015.
The trust authorized Mary to amend the trust “by an instrument in writing signed” by Mary and delivered to the trustee – who at the time was Mary herself.
In June of 2020, Mary and her estate planning attorney exchanged emails about amending the trust. On June 25, before going into the hospital for surgery scheduled for July 1, she emailed her son, Timothy, about her progress.
“My mind is quite clear now as [to] how to move forward on the house and will. I will write it out and then we need to see that the lawyer gets a copy asap and start redoing the will and trust.”
Timothy sent an email to the attorney the following day, June 26, with a copy to his mother, saying he and Mary were “working on getting the financials all up to date,” and asking if the attorney was available for a phone or virtual meeting the following week.
The attorney responded by sending them a questionnaire and another document on which they could specify the changes Mary wanted to make.
Mary filled out the forms by hand, omitting some information about which children should receive specific assets. Next to Wendy’s name, she wrote, “NO CONTACT – WOULD PREFER TO DROP FROM WILL – IF POSSIBLE.”
On July 1, 2020, Mary went into the hospital. While there she contracted an infection, suffered two heart attacks, and died a few weeks later.
Timothy became the successor trustee, and in that role asked the San Diego County Probate Court to rule that Mary’s emails, and the questionnaire she completed, qualified as an amendment to the trust, thus allowing the removal of Wendy as a beneficiary.
Although Mary’s writings did not meet the formal requirements specified in the Probate Code and in the Trotter trust itself, he argued that the California’s Uniform Electronic Transactions Act ("UETA") does allow an “electronic signature” to be recognized in some circumstances.
The probate court denied his request, noting that the UETA’s own language said it did not apply to “the creation and execution of wills, codicils, or testamentary trusts,” which it said included the Trotter trust.
It instructed Timothy to distribute the assets in the trust to the beneficiaries as specified in the original document, meaning Wendy would be included.
Timothy appealed, but got a similar ruling from the appellate court as the justices agreed that the UETA did not apply in this instance.
In addition, they said, Mary’s writings showed that she was in the process of deciding what changes she might make and that she was aware there were additional steps she would have to take as well as information she needed to provide before any such changes would become effective.
Thus, the justices ruled, there was no legal basis to regard the documents that she did fill out were intended to serve as a formal amendment to the trust.
They affirmed the lower court’s ruling, and awarded Wendy her costs on appeal.
By Lynda I. Chung