Buffington Law Firm’s Elder and Trust litigation attorneys have noticed a disturbing estate planning trend in recent years: the fully revocable decedent’s trust. When drafting a revocable or “living” trust, no one doubts that the trustmaker or trustmakers (often called “Trustors”) have (and should have) extremely broad latitude as to how they dispose of their estates. Freedom of testation, i.e. the right to leave one’s property to whomever one likes, is a well-recognized fundamental right in the United States, with a few exceptions that need not concern us here. Perhaps the simplest form of a living trust is the usual kind created by a married couple. In many, probably a majority of such trusts, the provisions are more or less such that when the first spouse dies the trust is divided into two trusts (sometimes three, but we will not address the reasons for that in today’s article) whereby the deceased spouse’s estate is contained in an irrevocable Decedent’s Trust (sometimes called other things, but this is the clearest label) while the surviving spouse’s estate is contained in a Survivor’s Trust. Generally the Survivor’s Trust is still revocable, meaning that the surviving spouse can do whatever he or she likes with it. Most commonly, the surviving spouse can take from the Decedent’s Trust for his or her necessary “health, education, welfare, or support.” Put simply, that means that the surviving spouse has completely unfettered rights to his or her half of the estate, and broad powers to use the Decedent’s Trust assets for necessary expenses for the benefit of that surviving spouse. So, for example, if the surviving spouse had an extraordinary expense such as a large medical expense, that surviving spouse could legitimately take from the Decedent’s Trust (the deceased spouse’s half of the estate) in order to avoid what might otherwise be a financial hardship. The main restriction on a typical Decedent’s Trust is that the surviving spouse cannot disinherit the deceased spouse’s chosen heirs, usually (although not always) the children of the deceased spouse. In perhaps the most “vanilla” form, the idea is that the deceased spouse wishes to provide for his or her spouse, but does not want that surviving spouse to be able to disinherit the deceased spouse’s chosen heirs. It is likely accurate to say that a majority of California Living Trusts are drafted more or less in this way. This can be particularly important if the two spouses have separate children. In such a case, there may (or may not) be much affection between the surviving spouse and the deceased spouse’s children from a prior marriage, thus the deceased spouse protects his or her children from disinheritance by making the Decedent’s Trust irrevocable after his or her death. This can be important even if there are no children from separate marriages. Sometimes late in life a surviving spouse quarrels with, and becomes alienated from, the children from the marriage and seeks to disinherit them. In such a case the surviving spouse can only disinherit the children from his or her half of the estate; not from the deceased spouse’s half.
One variation on this theme can lend itself to abuse. That is a situation wherein two trustmakers (“Trustors”) create a trust that gives the surviving spouse full power to revoke or amend the Decedent’s Trust. This removes the protection against disinheritance for the deceased spouse’s heirs. Again, no one doubts that if both Trustors really want things to be that way that they have the right to do it. Unfortunately, sometimes the language that makes the Decedent’s Trust fully revocable is obscure and convoluted — sometimes suspiciously so. Buffington Law Firm’s trust litigation team has handled lawsuits where it appeared that the language giving the surviving spouse the power to revoke or amend the Decedent’s Trust was deliberately crafted in a way to obscure this revocability provision to anyone other than an experienced trust attorney. Sometimes the plot thickens by the fact that an amendment that accomplishes this is done at a time when the soon-to-be deceased spouse is ill and mentally weak. Sometimes the surviving spouse arranges to have the entire trust restated so that the language amending the Decedent’s Trust to make it revocable is only one of many changes, thereby obscuring this critical change. The dying spouse trustingly signs the new trust, setting the stage for the later disinheritance of his or her chosen beneficiaries by the surviving Trustor spouse. In such cases it is hard to believe that this is by accident, and in the absence of clear evidence to the contrary in a trust litigation action to set aside such an amendment it is equally hard to believe that the trier of fact (i.e. the probate judge) will not see a strong liklihood of undue influence, possibly giving rise to the Court invalidating the amendment allowing for the disinheritance. Buffington Law Firm’s trust litigation team believes that if a living trust is drafted giving the surviving spouse the power to amend both halves of the trust after the first trustor dies, that this fact should be stated in plain clear language and both spouses’ understanding of this provision should be thoroughly documented. Arguably, the standard of care in trust drafting requires that such a provision be clearly written and that the explanation to both spouses of this provision be documented in the file.
If you are involved in a situation involving undue influence, a misbehaving or rogue successor-trustee, or some other trust dispute, Buffington Law Firm invites you to contact us for a Free Legal Consultation. All consultations are with an experienced trust litigation attorney, are protected by attorney-client privilege, and there is never any charge or obligation.
by Roger J. Buffington, Esq.