The Great Divide: California Appellate Courts Split Over Trust Modification Methods

The First District Court of Appeal recently joined the fray amongst California appellate courts over trust modification procedures. The question causing the split: What is the procedure for modification of a revocable trust under Probate Code section 15402?

Probate Code section 15402 is one seemingly simple sentence: “Unless the trust instrument provides otherwise, if a trust is revocable by the settlor, the settlor may modify the trust by the procedure for revocation.”

But what is “the procedure for revocation?” Those four words created a divide in appellate authority over this question: Can a person modify their revocable trust by the statutory revocation procedure if the trust document sets forth a different means of modification that is not explicitly exclusive?[1]

Our appellate courts adopted both restrictive and permissive approaches.

The Permissive Approach

Last year, in Haggerty v. Thornton (2021) 68 Cal.App.5th 1003, the Fourth District Court of Appeal diverged from its counterparts and instead adopted a “permissive” approach. The permissive approach allows amendment by the statutory method of section 15401(a)(2) unless the amendment procedure is explicitly exclusive.

The Restrictive Approach

Until recently, only the Third and Fifth District Courts of Appeal were on the other side of the issue. The Third District Court of Appeal, in Pena v. Dey (2019) 39 Cal.App.5th 546, and the Fifth District Court of Appeal, in King v. Lynch (2012) 139 Cal.App.4th 1186, adopted a “restrictive” approach to trust modification.

The restrictive approach limits a person’s ability to modify their trust to the method set forth in the trust document, regardless of whether the trust’s language explicitly states that method is the exclusive means of modification. In other words, the restrictive approach precludes the statutory trust modification method if the trust provides an alternative means of modification.

The First District Court of Appeal Takes Sides

This year, the First District Court of Appeal joined the debate in Balistreri v. Balistreri (2022) 75 Cal.App.5th 511.

In 2017, Mr. and Mrs. Balisteri created a trust that specified a method of modification:

“Any amendment, revocation, or termination . . . shall be made by written instrument signed, with signature acknowledged by a notary public, by the trustor(s) making the revocation, amendment, or termination, and delivered to the trustee.”

(Id. at p. 514.) The Balisteris signed an amendment the day before Mr. Balisteri died, but the amendment was not notarized. (Ibid.) Mrs. Balisteri filed a petition to confirm the validity of the amendment, since the amendment complied with the requirements of 15401(a)(2). (Id. at p. 516.) Her stepson opposed the petition. (Id. at p. 515.)

The First District Court of Appeal held that the amendment was invalid. (Id. at p. 522.) The First District reasoned that when a trust instrument specifies a means of modification, that method must be used. (Ibid.) Any specified procedure is mandatory, regardless of (1) whether the method of amendment is exclusive and (2) whether the trust specifies different means of amendment and revocation.

In adopting this restrictive approach, the First District Court of Appeal joined the Third and Fifth District Courts of Appeal.

Trust Modifiers Beware

While the Fourth District Court of Appeal seemingly stands alone in Haggerty v. Thornton (2021) 68 Cal.App.5th 1003, the California Supreme Court granted review in December 2021. The High Court is thus poised to resolve the rift.

It is unclear how quickly the Supreme Court will decide Haggerty and provide a decisive interpretation of section 15402. For now, anyone modifying a California trust should consult a lawyer and proceed with caution.