Interesting recent decision regarding amending trusts from the Washington State Court of Appeals:
At Lloyd Meeks's death in 2002, a bypass trust was to be funded, with the remaining assets passing to a marital trust for his wife, Mabel. At her death, assets remaining in either trust were to pass 80% to the couple's only child, Mary, with the remainder to be divided among several charities. The trust could not be amended after Lloyd's death, but Mabel was given a limited power of appointment over the bypass trust.
Because the trust at Lloyd's death was less than the amount excluded from estate tax, all assets were to be placed in the bypass trust. Mabel didn't retitle the assets in the trust's name. Instead, she consulted a lawyer about making changes. She wanted to reduce Mary's share to 75% and leave the remaining assets to a charity for cancer research. At Mary's death in 2005, Mabel again sought to change the distribution, making several smaller charitable bequests, with the rest of the estate going to two charities for cancer research.
When Mabel died in 2015, the successor trustee asked the court to determine the validity of the trust amendments. the trial court determined that the intent was to allow the survivor to have a power of appointment, but added that it might not be appropriate for the court to reform the trust. Instead, the court reformed Mabel's Will, incorporating her power of appointment in favor of the charities. The trustee appealed.
The Washington State Court of Appeals found that state law permits the court to reform a valid Will to conform to the testator's intent, but does not allow the court to import terms from a different document that was not executed with the formalities of a Will. There was no evidence that, when the Will was executed in 1994, Mabel intended to make the charitable distributions incorporated 11 years later. If the amendments to the trust had met the formalities required of a Codicil, it might have been possible to conclude that it was a Codicil. Lacking that, the second amendment fails, said the Court. In re Estate of Meeks, No. 35270-6-III.
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