A revocable trust normally can be revoked or amended by the settlor without any limitation. But what if the trust as originally drafted and executed by the settlor provides that the trust can only be amended or revoked if certain rules or followed? The case of Grassfield v. Grassfield, 2D22-600 (2nd DCA 2023) provides that an amendment to a revocable trust that does not follow the terms set forth in the trust for amendment is not valid.
The amendment language in the trust provided as follows:
The Donor reserves the power, at any time, or from time to time, to alter, amend, restate, terminate or revoke, in whole or in part, the terms and provisions of this Trust, and the Trust hereby created, by an instrument, in writing, signed by the Donor, acknowledged before a Notary Public, and delivered to the Trustee during the Donor’s lifetime.
The settlor and his son Paul were the trustees. The settlor amended the trust three times. Each of the three times, the settlor signed the amendment and the amendment was notarized. But the settlor never delivered the trust amendments to the other trustee, Paul. As these things go, the people who benefited from the three amendments claimed the amendments were valid in that delivery of the amendment to the other trustee was not necessary. The people harmed by the amendments claimed that the lack of delivery of the amendments to the trustee made the amendments invalid.
The appellate court invalidated the amendments, as follows:
Section 736.0602(3)(a) of the Florida Trust Code provides that a “settlor may revoke or amend a revocable trust . . . [b]y substantial compliance with a method provided in the terms of the trust.” The code does not define “substantial compliance,” nor has any appellate court defined it since the legislature adopted section 736.0602 in 2007. Cf. § 736.0103 (defining other terms used in the Florida Trust Code); Bernal v. Marin, 196 So.3d 432, 435 (Fla. 3d DCA 2016) (stating in dicta that a “settlor need only substantially comply with the method provided in the terms of the trust” under section 736.0602(3)(a)).
The Uniform Trust Code (UTC) also provides guidance. In discussing a section of the UTC that largely mirrors the language of section 736.0602(3)(a), the UTC explains:
Under subsection (c) [of UTC section 602], the settlor may revoke or amend a revocable trust by substantial compliance with the method specified in the terms of the trust …. Only if the method specified in the terms of the trust is made exclusive is use of other methods prohibited. Even then, a failure to comply with a technical requirement, such as required notarization, may be excused as long as compliance with the method specified in the terms of the trust is otherwise substantial. While revocation of a trust will ordinarily continue to be accomplished by signing and delivering a written document to the trustee, other methods, such as a physical act or an oral statement coupled with withdrawal of the property, might also demonstrate the necessary intent. These less formal methods, because they provide less reliable indicia of intent, will often be insufficient, however. The method specified in the terms of the trust is a reliable safe harbor and should be followed whenever possible.
Even more, Bruce expressed his method for amendment in the conjunctive. His method required a written, signed, notarized instrument “and” delivery to the trustee during Bruce’s lifetime. We must give effect to this term in determining Bruce’s intent, and it shows that delivery to the trustee was not optional. See Summitbridge Credit Invs. III, LLC v. Carlyle Beach, LLC, 218 So.3d 486, 489 (Fla. 4th DCA 2017) (explaining that construing a contract as a whole “includes giving effect to conjunctions used in phrases”); Buie v. Bluebird Landing Owner’s Ass’n, 172 So.3d 519, 521 (Fla. 1st DCA 2015) (” ‘And’ is conjunctive and means that both conditions apply.”); see also DecisionHR, Inc. v. Mills, 341 So.3d 448, 457 (Fla. 2d DCA 2022) (holding that a rule written in the conjunctive requires that all stated factors be satisfied); Antonin Scalia &Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 116 (2012) (discussing conjunctive/disjunctive canon).
We acknowledge that section 736.0602(3)(a) requires “substantial” (not “strict”) compliance with the method a settlor prescribes for amendment of her or his trust. But given the emphasis Bruce’s trust instrument placed on having two trustees, we conclude that delivery to only one of them did not substantially comply with the method Bruce prescribed for amendment of his trust.
The Court then further explains its reasoning by reference to the rights and responsibilities of a trustee, which calls into question, somewhat, whether the court is correct.
A trustee, unlike a notary, is not an outside observer whose involvement in amending or revoking a trust could be viewed as merely technical. The trustees here had certain rights and responsibilities, had to act by unanimous consent, and any instrument purporting to alter or revoke the trust had to be delivered to both of them during Bruce’s lifetime. Because delivery of the purported amendatory instruments to Paul was never made or even attempted, substantial compliance with the method Bruce prescribed is lacking. See Restatement (Third) of Trusts § 63 cmt. i (Am. Law Inst. 2003) (discussing substantial compliance and explaining that “if a settlor reserves the power to revoke the trust ‘only by a notice in writing delivered to the trustee,’ revocation requires the delivery of such a notice to the trustee[, but] [i]t is sufficient delivery . . . if the notice is mailed to the trustee by the settlor even though it is not received by the trustee until after the settlor’s death”).
The Florida Trust Code has two provisions to protect a trustee who is not informed of a trust amendment or revocation. Section 736.0602(7) provides as follows:
(7) A trustee who does not know that a trust has been revoked or amended is not liable for distributions made and other actions taken on the assumption that the trust had not been amended or revoked.
Section 736.1009 provides as follows:
Reliance on trust instrument.—A trustee who acts in reasonable reliance on the terms of the trust as expressed in the trust instrument is not liable to a beneficiary for a breach of trust to the extent the breach resulted from the reliance.
So the reason for requiring compliance with the trustee notification requirement – to protect the trustee – does not really hold up because the trustee is already protected against trust amendments that the trustee is never made aware of. Curiously, the opinion does not make mention of either of these sections of the Florida Trust Code. Nevertheless, at least for now, a trustee notification requirement will be enforced in Florida if written into the trust instrument.