The case of Patterson v. Patterson, 266 P.3d 828 (Utah 2011), decided by the Utah Supreme Court this past November, confirms that a trust revocation or amendment need not precisely comply with the method of revocation or amendment prescribed in the trust instrument. An amendment need only substantially comply with that method. Alternatively, if the method prescribed is not made exclusive, the trust may be amended by any method that manifests the settlor’s intent by clear and convincing evidence. The Court relied on the language of Utah Code §75-7-605(3).
In the Patterson case, the settlor created her revocable trust in 1999. The trust contained the following language, which is common in many Utah trusts: “The interests of the beneficiaries are presently vested interests subject to divestment which shall continue until this Trust is revoked or terminated other than by death.” In 2006, the settlor purported to remove one of her sons as a trust beneficiary by amending (but not revoking) the trust. After the settlor’s death, the son argued that the amendment was invalid because, under the terms of the trust, his interest could be revoked only if the trust were revoked.
The Court rejected the son’s argument, holding that Utah Code §75-7-605(3) validates amendments that substantially comply with the method of amendment prescribed by the trust or that manifest the settlor’s intent by clear and convincing evidence where the trust instrument does not make the prescribed method exclusive. The Court held that Utah Code §75-7-605(3) statutorily overrules the Court’s holding in Banks v. Means, 52 P.3d 1190 (Utah 2002), which required that amendments literally comply with the terms of the trust.
For a detailed discussion of Banks v. Means and other cases addressing similar “divestment” language in Utah revocable trusts, including Hoggan v. Hoggan, 169 P.3d 750 (Utah 2007), see Section 4.2 of The Utah Law of Trusts & Estates, an online legal reference treatise available at The Utah Trust & Estate Educational Resource Center.
For a discussion of Warne v. Warne, 2012 UT 13, which addressed nearly identical issues, see the related post on this blog site.
Rust Tippett is the author of this blog post.
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This blog post in no way creates an attorney-client relationship between the reader and either Robert S. (Rust) Tippett or Bennett Tueller Johnson & Deere, P.C. The reader should consult with his or her own estate planning attorney regarding his or her particular circumstances.