Published on:

How One Word Can Affect Your Estate Plan

In estate planning a single word can make all the difference. Your will or trust is designed to express your wishes regarding your property. In the event of a legal dispute, a judge will attempt to strictly enforce the terms of your estate planning documents as written.

Court Rules “Trustee” Means Husband and Wife Acting Together

Here is a recent example of how one word can change the meaning of a trust. This is a case from Alameda County and is not considered binding precedent in the rest of California, but it still offers a useful illustration of how courts interpret an estate planning document.

At the center of this case is a joint revocable living trust executed by a husband and wife in 1991. The trust identified both spouses as the “trustee.” Of importance here, the trust stated that the document could only be revoked or amended through “a written instrument signed by the person or persons exercising the power and delivered to the trustee.”

Two weeks before her death in 2001, the wife signed a notice withdrawing her portion of the trust assets, which she then placed in a separate trust. These actions altered the distribution of the wife’s share of the couple’s community property, which included their home in Alameda County. Under the joint trust, the wife’s share would pass to the husband if she died first. But under the wife’s separate trust, her share would remain in trust until her husband died, at which time it would pass to her children from a prior marriage.

Following the wife’s death, the husband remarried and subsequently revoked the joint trust. Like his previous wife, the husband created a separate trust, which provided that his current wife should be allowed to remain in the Alameda County home after his death; upon her death, the property would then be distributed to his children.

When the husband passed away in 2013, litigation ensued between his widow and the children of his previous wife. The children argued they retained a one-half interest in the house due to their mother’s revocation and reassignment of her share of the community property to her separate trust. The widow, in turn, argued the previous wife’s revocation was not valid, and therefore the property passed to her late husband under the terms of the joint trust. This would mean the previous wife’s children had no legal interest in the property.

The California courts agreed with the widow’s position. The First District Court of Appeal, affirming a probate judge’s earlier decision, said the use of the word “trustee” in the joint trust referred to both the husband and wife together, not either spouse acting alone. In other words, the previous wife was required to notify both herself and her husband before removing assets from the trust. The husband never received such a notice. Consequently, the terms of the joint trust governed the disposition of the wife’s property at her death, which gave the husband 100% ownership of the house.

Get Help From a California Estate Planning Lawyer

A trust or will is not something you can just throw together. You need to carefully consider the language used and how it may affect the distribution of your assets after your death. If you need help from an experienced San Diego estate planning lawyer, contact the Law Office of Scott C. Soady today.

Contact Information