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California Probate and Trust Legal Summary – Winter 2023

Catanese & Wells, A Law Corporation provides a quarterly newsletter to the California probate and trust professional community including lawyers, accountants, professional fiduciaries and insurance providers.

This issue of the Probate and Trust Legal Summary will address current legal trends related to amending estate documents that follow the statutory requirements, but fail to follow the estate document’s requirements for any amendment.

California appellate courts have wrestled with the issue of an amendment to a trust instrument that meets the Probate Code requirements, but fails to satisfy the required elements for an amendment imposed by the trust instrument itself. California has a sharp split in case law on what to do in this situation. Some cases – King v. Lynch (2012) 139 Cal. App.4th 1186 and Balistreri v. Balistreri (2022) 75 Cal. App.5th 511 – have held that where a trust itself provides for the method of amending the trust instrument the language is the controlling and exclusive procedure to amend the trust document even where the trust language does not state that it is the exclusive means to modify the subject trust. These cases hold that in this fact situation an amendment that conforms to the Probate Code is insufficient effectively modify the trust. See California Probate Code Sections 15401 and 15402. In other cases – Haggerty v. Thornton (2021) 68 Cal. App.5th 1003 – have held that unless the trust itself by its terms expressly prohibits the use of the statute as the method to amend the subject trust, the trust may be amended either by the statutory scheme or by the language authorizing the amendment in the trust instrument.

Recently, in the case of Diaz v. Zuniga (2023) 91 Cal. App.5th 916 the appellate court held that the method to amend a trust instrument would be respected by the court so long as the subject trust document did not have its own stated provision on how the trust is to be amended. Otherwise, any amendment by the statutory means would be invalid in the face of a provision in the trust directing how an amendment is to be effected.

The California Supreme Court on February 8, 2024, issued its decision on these issues in the case of Haggerty v. Thornton (2024) 15 Cal.5th 729. The Supreme Court affirmed the appellate court holding in the Haggerty case. In short, the Supreme Court held that a settlor could modify a trust using any method permitted by Section 15401 of the California Probate Code for revocation unless the trust instrument expressly stated the settlor could not do so, either by providing a method of modification and explicitly making it exclusive or otherwise expressly precluding the use of revocation procedures for modification. The holding was issued notwithstanding that the settlor’s attempted amendment of the trust instrument did not comply with the trust’s nonexclusive method for modification. In other words, the Supreme Court held that in the absence of a prohibition for the use of Section 15401 in a trust instrument, the settlor could use any method permitted by Section 15401.

Now that the California Supreme Court has spoken if a settlor wishes to provide an exclusive method to modify a trust instrument the settlor needs to clearly express the settlor’s intent to make a modification exclusive by means of the trust instrument. Otherwise, the trust instrument may be modified by any means permitted under Section 15401.

For further guidance regarding the above, the reader is encouraged to contact the law offices of Catanese & Wells, A Law Corporation at www.cataneselaw.com or by telephone at (818)707-0407.