Earlier this year, the California Supreme Court ruled unanimously to clarify the rules on how a California resident can amend a revocable living trust.
Haggerty v. Thornton (2024) 15 Cal. 5th 729, involved a dispute over which living trust amendment would be enforced. In 2015, Jeane Bertsch, a California resident and a widow with no children, created a living trust. Her living trust reserved in her the right to revoke and amend the trust by an acknowledged instrument. Acknowledged means notarized.
One year later, in 2016, Bertsch signed and notarized an amendment that named her niece, Brianna Haggerty, as a beneficiary.
Shortly thereafter, Bertsch moved to Chicago. And in 2018, while in Chicago, she handwrote a second amendment to her living trust. In this second amendment, she removed Haggarty as a beneficiary and replaced her with two individuals and the Union of Concerned Scientists, a nonprofit. However, although she signed the second amendment, she did not notarize it. Bertsch died later that year.
After the parties received copies of the living trust and the amendments, The beneficiaries of the second amendment took the position that the second amendment superseded the first amendment, and that Haggerty was disinherited. Haggerty was not happy.
Let's take a step back and review the California law the Haggerty court had to navigate.
California Probate Code sections 15401 and 15402 govern living trust revocation and modification. References in the probate code to "trust modification" has a similar meaning as "trust amendment."
Section 15401 describes how to revoke a living trust:
a living trust 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, or
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 grantor or the person holding the power of revocation.
Section 15401 says a settlor can revoke a living trust in two ways: One, as the trust provides. Let's call this the "trust method." And, two, by the method described in the code section, which we will call the "statutory method."
But section 15401 also includes a restriction. It says if the living trust mandates that its stated method is the exclusive way to revoke a trust, then the living trust cannot be revoked with the statutory method.
In summary, California Probate Code section 15401 says a living trust may be revoked according the terms of the trust, and it may also be revoked by a writing signed by the settlor. However, if the living trust states that its revocation method is the only way the settlor can revoke it, then the statutory method cannot be used.
So much for the rule on revoking a trust. But is that different from modifying, or amending, a trust? Yes. The court and the California Probate Code have distinguished the rules for revoking a trust and modifying/amending a trust
But fortunately, section 15402 provides guidance on how to modify a trust.
Unless the trust provides otherwise ... the settlor may modify the trust by the procedure for revocation."
The Haggerty court explained section 15402 as follows:
if the trust is silent on how to modify (or amend) the trust, the trust may be modified in the same manner in which it could be revoked, by either the statutory method or the (stated) method provided in the trust. However, this rule does not apply if the trust "provides otherwise.
Now back to the case. After Bertsch's death, Haggerty filed a petition with the probate court in the California Superior Court in San Diego County to invalidate the second amendment. Bertsch's living trust included a provision that Bertsch, as the trust settlor, reserved the right to revoke or amend her trust by "an acknowledged instrument in writing." Haggerty argued that the second amendment was not valid because it was not notarized. The probate court issued an order that the second amendment was valid.
Haggerty then appealed the probate court ruling to the California Court of Appeal. But the appellate court affirmed the probate court. It held that the second amendment was a valid modification under the statutory method. It reasoned that the statutory method was available for modification because Berrtsch's living trust did not distinguish between revocation and modification and because the method of revocation and modification described in the trust is not explicitly exclusive.
The niece and her attorneys would not accept no from the probate court or the Court of Appeal. So they filed an appeal to the California Supreme Court. The Supreme Court granted review of the case to "resolve a split of authority regarding the circumstances under which the statutory method is available for modification when a method of modification is specified in the trust."
The court reviewed how the prior cases interpreted Probate Code sections 15401 and 15402 and found no consistency. It also reviewed the legislative history of these code sections, and it determined that:
"the legislative history supports the view that the settlor may modify the trust using any procedure for revocation unless the trust says the settlor may not. If a trust were to provide that it "may only" be modified by an acknowledged instrument in writing," then the trust would preclude modification via any different method of revocation, including the statutory method, regardless of whether the trust distinguishes between revocation and modification. But if a trust were to simply provide that it "may be modified by an acknowledged instrument in writing," then the trust would not preclude modification via any method of revocation, again regardless of whether the trust treats modification and revocation differently."
The California Supreme Court reached unanimous opinion in ruling that under California Probate Code sections 15401 and 15402, the procedure for revocation can be used for modification (amendment) unless the trust provides a method of modification and makes it exclusive, or otherwise expressly precludes the use of revocation procedures for modification.
But the niece and her attorneys were not ready to give up. They made one more plea. They argued that the court's ruling should only apply to new cases and not to this one. Unfortunately for them, the court shot them down again. The court ruled that its construction of a statute is an authoritative statement of what the statute meant before as well as after the decision of the case giving rise to that construction. In other words, the niece is out of luck and the second amendment is valid.
The California Supreme Court's ruling in Haggerty v. Thornton brings clarity to the hot mess of California case law regarding living trust amendments. The new and simple rule is that unless the trust says otherwise, living trusts can be amended according to the revocation provisions of the trust or by the statutory method.
You should review your living trust and read the provision that authorizes you to amend it. Most people need to amend their living trust several times during their life. You should understand what your trust says about how it can be amended and make sure it is done correctly when you amend it.
In our living trusts, we include the amendment provision in Article One of the trust. It says:
Any amendment, restatement, or revocation must be made in writing and delivered to our then-serving Trustee.
We don't include a requirement that the amendment be notarized. However, with a document as important as a living trust amendment, we recommend that amendments be notarized. Notarization adds another layer of certainly and is a deterrent against fraud and potential litigation.
Estate planning should not be complicated. And the estate planning laws should not be complicated. But, sometimes, the law is complicated. Thankfully, the California Supreme Court's ruling in Haggerty simplified the law on amending a living trust.