Masry v. Masry
166 Cal. App. 4th 738, 82 Cal. Rptr. 3d 915 (2008)
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Rule of Law:
Unless a trust instrument explicitly makes its stated method of revocation the exclusive method, a revocable trust may also be revoked by a writing signed by the settlor and delivered to the trustee during the settlor's lifetime, pursuant to Probate Code section 15401, subdivision (a)(2).
Facts:
- In 2004, Edward Masry and Joette Masry, husband and wife, created the Edward and Joette Masry Family Trust (Family Trust), consisting of property acquired during their marriage.
- Edward and Joette were both designated as trustors and trustees of the Family Trust.
- Section 2.1 of the Family Trust provided that each trustor reserved the right to revoke the trust during their joint lifetimes by written direction delivered to the other trustor and to the trustee.
- Shortly before his death, Edward executed a “Notice of Revocation of Interest in Trust and Resignation as Trustee” to transfer his assets from the Family Trust to a new trust, the Edward L. Masry Trust (Edward Trust).
- Edward designated two of his children from a previous marriage, Louis Masry and Louanne Masry Weeks, as successor cotrustees of the Edward Trust.
- Joette was not given notice of Edward’s revocation until two weeks after his death.
Procedural Posture:
- Joette Masry filed a revocation petition and a petition to ascertain beneficiaries in the trial court (court of first instance).
- The trial court found that the Family Trust did not explicitly make delivery of the revocation to Joette during Edward’s lifetime the exclusive method of revocation.
- The trial court ruled that Edward’s delivery of the revocation to himself as trustee satisfied Probate Code section 15401, subdivision (b), and Family Code section 761.
- The trial court also ruled that respondents’ civil action did not violate the no contest provision of the Edward Trust.
- Joette Masry (Appellant) appealed the trial court's judgment to the California Court of Appeal, Second Appellate District.
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Issue:
Does a settlor's written revocation of a revocable trust, delivered to himself as trustee during his lifetime but not to the co-trustor as specified in the trust instrument, constitute a valid revocation under Probate Code section 15401, subdivision (a)(2), when the trust instrument does not explicitly state that its method of revocation is exclusive?
Opinions:
Majority - Gilbert, P. J.
Yes, a settlor's written revocation of a revocable trust, delivered to himself as trustee during his lifetime, constitutes a valid revocation under Probate Code section 15401, subdivision (a)(2), because the Family Trust instrument did not explicitly state that its method of revocation was exclusive. Probate Code section 15401, subdivision (a), provides two alternative methods for revoking a revocable trust: (1) compliance with any method stated in the trust, or (2) by a writing (other than a will) signed by the settlor and delivered to the trustee during the settlor's lifetime. Subdivision (a)(2) further clarifies that its provisions do not apply if the trust instrument explicitly makes its stated method the exclusive method of revocation. Relying on Huscher v. Wells Fargo Bank dictum, the court found that a method is “explicitly exclusive when the trust instrument directly and unambiguously states that the procedure is the exclusive one.” Section 2.1 of the Family Trust, which required notice to the other trustor and trustee, did not contain such direct and unambiguous language of exclusivity. Therefore, Edward's delivery of the notice of revocation to himself as a trustee (since he was a trustee) during his lifetime satisfied the statutory alternative provided by Probate Code section 15401, subdivision (a)(2). The court also noted that Probate Code section 15401, subdivision (b), and Family Code section 761 allow each settlor of a multi-settlor trust to revoke the trust as to their portion of community property unless the trust instrument expressly provides otherwise. The court rejected public policy arguments about “secret” revocations, stating such changes are for the Legislature.
Analysis:
This case significantly clarifies the interpretation of California Probate Code section 15401, establishing a high threshold for a trust's stated revocation method to be considered 'explicitly exclusive.' By requiring direct and unambiguous language to override statutory alternatives, the ruling reinforces the settlor's inherent flexibility in revoking a trust, particularly when the settlor is also a trustee. This decision has a substantial impact on trust drafting, compelling attorneys to include clear and forceful language if they intend to make a trust's specified revocation procedure the sole valid means, thereby preventing unintended statutory bypasses. The court's stance also underscores the principle that default statutory provisions will apply unless explicitly and clearly contracted around within a legal instrument.
