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Trust Modifications and Revocations - Part III

As indicated in yesterday's blog, we shall continue with the case of King et al. v. Lynch.

Thetrust agreement created by Zoel and Edna (settlors) provided $100,000 each for their five children, David, Nancy, Mary Jo, Judith, and Thomas. Since Thomas died before his parents, his share was conferred to his two daughters, Sandra and Susan Lynch.

In 2006, Edna suffered a severe brain injury that left her incompetent to handle her own affairs. However, there was no adjudication on her incompetence. And the court did not appoint a guardian on her behalf.

After Edna's injury, Zoel made three amendments to the trust. One of the amendments modified Edna's trustee designation and appointed Zoel as sole trustee. The other two amendments reduced the monetary bequests to the three children, Nancy, Mary Jo, Judith, and two grandchildren, Sandra and Susan. Each of the amendments left intact the bequests made to David as well as his designation as the remainder beneficiary.

Both Zoel and Edna died in 2010. David's lawyer gave notice about the administration of the trust to the interested parties. The remaining beneficiaries filed a petition stating that the three amendments made by Zoel were invalid and without effect given that they were in contravention with the trust instrument, which required the signatures of both settlors. The court granted the petition which was later appealed by David.

In David's appeal, he argued that the amendment provision in the trust instrument was not expressly or impliedly exclusive; accordingly, it can be amended in the same manner that it can be revoked. As you may recall from yesterday's blog, Zoel and Edna's trust instrument stated that the trust may be revoked, in whole or in part, by an instrument in writing signed by either settlor and delivered to the Trustee and the other Settlor. Correspondingly, based on this argument, Zoel alone could amend the trust by the revocation procedures set forth in section 15401.

Tomorrow, we will tackle the Court of Appeal's deliberation on the above case.

Stay tuned!

*This blog entry was not written by an Attorney and should not be construed as professional legal advice.

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