The First District Court of Appeal recently joined the widening chasm amongst California appellate courts concerning trust modification procedure. Probate Code section 15402 is seemingly straightforward, consisting of a lone sentence: “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.” As noted in prior posts, these 25 words have led to a robust split of appellate authority.
On the one hand, the Third District Court of Appeal, in Pena v. Dey (2019) 39 Cal.App.5th 546, and the Fifth District Court of Appeal, in King v. Lynch (2012) 139 Cal.App.4th 1186, have united under one banner. They have followed a restrictive approach, limiting amendment to the method set forth in the instrument, regardless of whether that method is explicitly exclusive. On the other hand, the Fourth District Court of Appeal, in Haggerty v. Thornton (2021) 68 Cal.App.5th 1003, stitched its own flag. It has followed a permissive approach, allowing amendment by the statutory method of section 15401(a)(2) unless the amendment procedure is explicitly exclusive.
The First District Court of Appeal Picks Sides
Last month, the First District Court of Appeal joined the fray in Balistreri v. Balistreri (2022) ___ Cal.App.5th ____.
Mary Balistreri created a trust with her husband in 2017. It provided for a method of modification, stating “[a]ny amendment, revocation, or termination . . . shall be made by written instrument signed, with signature acknowledged by a notary public, by the trustor(s) making the revocation, amendment, or termination, and delivered to the trustee.” Mary and her husband signed an amendment to the trust the day before he died. But it was not notarized.
Mary thereafter filed a petition to confirm the validity of the amendment, which her stepson opposed. Agreeing with the trial court, the First District held the trust amendment was invalid. It reasoned that when, as here, a trust instrument specifies how the trust is to be modified, that method must be used to amend the trust. Any specified procedure is mandatory regardless of whether: (1) the method of amendment is exclusive or permissive; and (2) the trust provides identical or different methods of amendment and revocation.
The Unwary May Fall Into the Abyss
In adopting this restrictive approach, the First District Court of Appeal joined the Third and Fifth District Courts of Appeal. While the Fourth District Court of Appeal seemingly stands alone, the California Supreme Court granted review of Haggerty in December 2021 in Case No. S271483. The High Court is poised to resolve the schism with its own “decree.”
It is unclear how quickly the Supreme Court will decide Haggerty and provide a decisive interpretation of section 15402, though a decision in 2022 seems unlikely. For now, anyone modifying a trust subject to California law would be well advised to follow very closely any procedure specified in the trust instrument. Otherwise, if the Supreme Court closes the chasm by reversing Haggerty, lawyers and settlors modifying trusts will not be able to fall back on the statutory method.