What happens if the settlor expresses clear intent to amend her trust, but fails to sign the written amendment before she passes? This scenario recurs with some frequency and estate planners should bear in mind that, depending on the language of the governing instrument and the circumstances, non-execution affirmation of the amendment may be sufficient. If that occurs, the Trustee will have a duty to administer the trust as amended and commonly will petition the Court to declare the oral amendment effective.
Both the MA and NH Trust Codes provide that a revocable trust may be amended by complying with an amendment method set forth in the trust and any other “method manifesting clear and convincing evidence of the settlor’s intent” with the qualification in NH that the trust must “not expressly prohibit… [such other] methods.” M.G.L. c. 203E § 602 (c)(2); RSA 564-B:6-602(c)(2). While trust instruments commonly prescribe amendment methods, such as delivery of a writing signed by the settlor to the trustee, they less often prohibit other amendment means, raising the prospect of potential amendments by such means.
We confronted this situation in The Judith E. Tierno Revocable Trust of 2003. While a hospital patient, Tierno, who was both the settlor and co-trustee, advised her fellow trustee that she wished to amend her trust to disinherit nephews and a niece. This trustee then advised counsel who went to the hospital and confirmed with Tierno the amendment instructions. Unfortunately, when counsel returned with the draft documents, Tierno was not able to participate in meaningful discussions and ultimately passed before they could be signed.
On behalf of the now sole trustee, who was quite familiar with Tierno’s intent, we petitioned the Probate Court to declare the oral amendment valid. The would-be disinherited relatives moved to dismiss, arguing in part that the following trust provision set forth the exclusive amendment method:
This trust agreement, and any amendments hereto, shall be effective when executed by the Grantor, notwithstanding that the signature of the Trustee is provided for, the Trustee’s signature being intended to denote the acceptance of the Trustee to serve in that capacity only
The relatives argued that the trust thus contemplated and required an amendment “executed by the Grantor.” In opposition, we argued that the above language was not exclusive and, therefore, the trust could be amended by other means per the UTC.
In an Order dated March 21, 2013, the Probate Court (Weaver, J.) agreed with our position, denying the Motion to Dismiss:
Section 6-602(c) of the Uniform Trust Code as adopted in New Hampshire allows the amendment of a trust “by any method manifesting clear and convincing evidence of the settlor’s intent if the terms of the trust do no . . . expressly prohibit methods other than methods provided in the terms of the trust.” Given this language, the statute contemplates that a trust may be amended in any number of ways so long as those methods are not expressly prohibited by the trust and there is clear and convincing evidence that the settlor intended to amend the trust.
The case law in this area, although limited, supports this conclusion. In the case of In re Wendland-Reinter Trust, 677 N.W.2d 117 (Neb 2004), the Court noted that the modern trend in trust cases is to allow an amendment to a trust by any method so long as the amendment is established by clear and convincing evidence as the intent of the settlor, unless the trust provides an exclusive method for amendment. See id. at 701-02 citing Restatement (Third) of Trusts § 63(3) at 443, Unif. Trust Code § 602(c)(2)(B).
Here, the Trust does not contain language stating that the only way it may be amended is by a writing signed by the settlor. In section 16 of the Second Amendment and Restatement of the Trust, the language reserves to the settlor the right to amend the trust by filing notice of the change with the trustee, which in this case would have included Ms. Tierno as a co-trustee. Although Paragraph 19 provides that the amendments are effective when executed by the Grantor, it does not specifically exclude any other method of amendment. Given the general and broad language contained in Paragraph 16, and the provisions of RSA 564-B:6-602(c) requiring that a trust “expressly” prohibit those methods not provide din the trust, this Court finds that the plaintiff has pled sufficient facts which, if proven as true, would permit the relief sought.
Order, pp. 3-4 (emphasis added).
Death or disability may intervene to prevent a client from signing a clearly intended trust amendment. If that occurs, counsel should evaluate whether the trust instrument expressly prohibits a non-execution amendment, and, if it does not, whether the trustee should treat the client instructions as an effective amendment and/or petition the Court for declaratory relief.
(Note: Ralph Holmes is currently retired from McLane Middleton. For information on this or other probate litigation issues, please contact Alexandra Cote at alexandra.cote@mclane.com.)