In RE ESTATE OF McCREATH
2009 Colo. App. LEXIS 1962, 2009 WL 4981894, 240 P.3d 413 (2009)
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Rule of Law:
If a trust agreement specifies an exclusive method for revocation to be exercised during the settlor's lifetime, that method must be strictly followed, and an attempt to revoke the trust by will is ineffective because a will is ambulatory and only takes effect upon the testator's death. Furthermore, where a trust requires the concurrence of co-trustees, a conveyance of trust property by only one trustee is invalid.
Facts:
- Hazel I. McCreath (mother) established a revocable trust, naming herself and her daughter, Charlotte M. Ritchey, as co-trustees.
- The trust's primary asset was the family farm, and its terms stipulated that upon termination, the assets were to be divided equally among the mother's three children.
- The trust agreement specified that revocation required 'an instrument in writing signed by [mother] and delivered to Trustees' during her lifetime.
- The trust also required that a 'majority of all fiduciaries in office at the time must concur in decisions.'
- On March 13, 2001, the mother, acting alone as a trustee, executed a quitclaim deed conveying the family farm from the trust to her daughter, Charlotte, individually.
- On May 25, 2005, the mother executed a handwritten will that stated, 'revoke all prior wills and trusts' and bequeathed 80% of her residuary estate to her daughter and 10% to each of her two sons.
- The will was delivered to the daughter, and the mother passed away over a year later.
Procedural Posture:
- Milford and Elton McCreath (sons) commenced an action in the trial court seeking a declaratory judgment on the legal effect of a quitclaim deed and their mother's will.
- Charlotte M. Ritchey (daughter) filed for formal probate of the mother's will, and the two cases were consolidated.
- The sons filed a motion for determination of questions of law, asking the court to rule that the deed was ineffective and the will did not revoke the trust.
- The trial court granted the sons' motion, concluding the quitclaim deed was ineffective to transfer trust assets and the will did not revoke the trust.
- The trial court certified its order as a final judgment under C.R.C.P. 54(b), permitting an immediate appeal.
- Charlotte M. Ritchey (daughter), as appellant, appealed the trial court's order to the Colorado Court of Appeals.
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Issue:
Does a will purporting to revoke all prior trusts, or a quitclaim deed executed by only one of two co-trustees, effectively revoke an inter vivos trust that specifies revocation must be done by a written instrument signed by the settlor and delivered to the trustees during the settlor's lifetime?
Opinions:
Majority - Judge Roy
No. A will cannot revoke an inter vivos trust when the trust instrument specifies an exclusive method of revocation to be exercised during the settlor's lifetime, nor can a quitclaim deed executed by only one of two required co-trustees validly transfer trust property or revoke the trust. The court reasoned that if a trust provides a specific method for revocation, that method must be strictly followed. A will is ambulatory, meaning it has no legal effect until the testator's death. Therefore, it cannot satisfy a trust provision requiring revocation during the settlor's lifetime through a delivered written instrument. The trust's provision that the estate be returned to the mother upon revocation further reinforces the requirement of a lifetime action. Regarding the quitclaim deed, the trust required co-trustees to act jointly. Because the mother acted alone in executing the deed, the conveyance was ineffective to transfer the property out of the trust. A settlor-co-trustee cannot unilaterally transfer trust assets free of the trust.
Analysis:
This case reinforces the principle of strict compliance with the formal requirements set forth in a trust instrument, particularly for acts of revocation or conveyance. It establishes a clear precedent in Colorado that a will's ambulatory nature makes it an ineffective tool for revoking an inter vivos trust that requires a lifetime revocation method. The decision prioritizes the explicit terms of the trust over the settlor's later, informally expressed intent, thereby protecting the integrity of trust documents against posthumous challenges. This holding underscores the critical distinction between testamentary instruments and inter vivos trusts, limiting the power of a will to alter arrangements made outside of the probate system.
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