In Pena v. Dey, the court was tasked to determine whether the settlor and trustee of a California revocable trust validly amended the trust when he made handwritten interlineations to the First Amendment to the trust, adding a beneficiary, Grey Dey.
How Do You Amend A Trust In California?
The terms of the trust govern the method of amendment. Here, the Trust specifically required amendments “be made by written instrument signed by the settlor and delivered to the trustee.”
Anderson created the trust in 2004. The Trust permitted revocation and amendment, and set forth a method for revocation and amendment of the Trust:
Any amendment, revocation, or termination of this trust shall be made by written instrument signed by the settlor and delivered to the trustee. An exercise of the power of amendment substantially affecting the duties, rights, and liabilities of the trustee shall be effective only if agreed to by the trustee in writing.
Anderson amended the trust pursuant to these terms in 2008. In 2010 Anderson was diagnosed with abdominal cancer, and then brain cancer. Grey Dey moved in with Anderson and cared for Anderson for several years until is death in 2014.
In February 2014 Anderson called an attorney regarding amending his trust and estate planning documents. The attorney requested that Anderson send him copies of the documents that Anderson sought to amend. Anderson made proposed changes on the trust document. Anderson crossed out some beneficiaries, added Dey and two other beneficiaries, and changed the distribution percentages. Attached to the trust documents was a Post-it note that said:
Hi Scott, Here they are. First one is 2004. Second is 2008. Enjoy! Best, Rob.
Anderson died before the formal amendment was prepared for him to sign.
The successor trustee, Margaret Pena, petitioned the California probate court for instructions regarding the validity of the interlineations. The California probate court determined that the handwritten interlineations were not a valid amendment to the California trust as a matter of law.
Handwritten Interlineations and a Post-it Note Do Not Validly Amend A California Trust
California Probate Code § 15402 states: “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.”
The procedure for revocation under the California Probate Code is:
A trust that is revocable by the settlor or any other person may be revoked in whole or in part by any of the following methods:
(1) By compliance with any method of revocation provided in the trust instrument.
(2) By a writing, other than a will, signed by the settlor or any other person holding the power of revocation and delivered to the trustee during the lifetime of the settlor or the person holding the power of revocation. If the trust instrument explicitly makes the method of revocation provided in the trust instrument the exclusive method of revocation, the trust may not be revoked pursuant to this paragraph.
Under this statute, a trust can be revoked by the method set forth in in the trust instrument or by another writing, other than a will, signed by the settlor, unless the trust provides an exclusive method. The same procedure applies to modify a trust under California law.
Where the trust instrument specifies how the trust is to be modified, as in this case, “that method must be used to amend the trust.”
Here, the trust required amendments to be “made by written instrument signed by the settlor and delivered to the trustee.”
Do Interlineations Constitute A Written Instrument Separate From The Trust?
Yes. Here, the Court relied on precedent to determine that the interlineations in this case constituted a written instrument separate from the trust instrument, explaining:
Moreover, the handwritten interlineations meet the definition of an ‘instrument.’ They are a ‘writing that designates a beneficiary or makes a donative transfer of property.’ The fact that this writing is physically part of, and must be read in the context of, the original Trust instrument does not change its status as an instrument ‘other than the instrument containing the no contest clause.’
The court also had no problem determining that Anderson delivered the interlineations to the trustee as required by the trust’s amendment provision. As settlor and trustee, Anderson delivered the interlineations to himself when he made them.
The Interlineations Did Not Effectively Amend the Trust Because Anderson Did Not Sign Them
Because the trust’s amendment provision requires an amendment be “signed by the settlor,” the court concluded that the interlineations did not effectively amend the trust.
Dey made two unsuccessful arguments. First, Dey relied on holographic will cases to argue that Anderson validly adopted his 2008 signature on the First Amendment to the Trust when he made the interlineations to that document in 2014. The Court rejected the argument, stating:
In the context of a holographic will, “the signature and the material provisions [of which] are in the handwriting of the testator” (§ 6111, subd. (a)), subsequently added handwritten interlineations become part of that signed holographic will. The holographic will and handwritten interlineations become a single testamentary document, the whole of which is to be judged under section 6111. (See Estate of Archer, supra, 193 Cal.App.3d at p. 243 [rejecting the argument that handwritten additions to a holographic will must be formally integrated or incorporated by reference in the will in order to adopt the will’s original signature, noting, “integration and incorporation apply only to separate writings”].) In contrast, as we have explained, handwritten interlineations on a trust document are a separate writing regardless of the fact that “this writing is physically part of, and must be read in the context of, the original Trust instrument.” (Cory, supra, 174 Cal.App.4th at p. 1045.) The trust instrument in this case requires such an amendatory writing to be signed by the settlor. This signature requirement would be rendered nugatory if the settlor could simply adopt the signature on the original trust instrument.
Dey also urged that the Post-it note attached to the trust documents supplies the missing signature was effective to validly amend the California trust. The Court refused to conclude that the Post-it note, stating: “Hi Scott, Here they are. First one is 2004. Second is 2008. Enjoy! Best, Rob,” were part of the written instrument comprised of the interlineations such that the signature on the note effectively signed the interlineations. The court stated:
Instead, the Post-it Note was a separate writing, simply identifying the enclosed documents. If Anderson intended the interlineations and signature on the Post-it® note to amend the trust by themselves, there would have been no need to have Shuttleworth prepare the amendment for his signature.
In sum, the evidence established Anderson made interlineations to the First Amendment to the trust and sent this document, along with the original trust instrument, to his attorney with the intent to have the interlineated changes incorporated into a second amendment to the trust, which he intended to sign upon the completion of that document. Unfortunately, he died before that could be accomplished, and therefore his attempt to amend the trust was invalid under California law.
The court concluded:
While we must construe a trust instrument, where possible, to give effect to the intent of the settlor, that intent “must be ascertained from the whole of the trust instrument, not just separate parts of it.” (Scharlin v. Superior Court (1992) 9 Cal.App.4th 162, 168 [11 Cal. Rptr. 2d 448].) Dey asks us to give effect to the intent expressed in the interlineations. However, the manifest intent expressed in the trust instrument itself, stated explicitly in its amendment provision, is that a written instrument must be signed in order to constitute a valid amendment to the trust. Because Anderson did not sign the interlineations, they did not effectively amend the trust.