Opinion
No. C3-02-1944.
Filed August 26, 2003.
Appeal from the District Court, Hennepin County, File No. C901004.
Lawrence H. Crosby, Jay D. Olson, Crosby Associates, Roseville West, and Sandra J. Connealy-Zick, Tuzinski Zick, (for appellants)
Olaf J. Griffin, and Ricky Syverson, and Michael Syverson, and Anita Bear, (pro se respondents)
Considered and decided by Peterson, Presiding Judge, Lansing, Judge, and Wright, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
After establishing a revocable trust, Diane Syverson executed a will, the provisions of which differed significantly from the trust. The district court denied appellant Enid Griffin's petition for an order declaring that the will had revoked the trust, reasoning that Syverson had reserved the right to revoke the trust by delivering a written instrument to the trustee, which she had not done. On appeal, Griffin argues that (1) a trust must be deemed to be revoked when the settlor executes a subsequent will that she believes revokes the trust and expresses to others her understanding that the will would revoke the trust; (2) the rule that an amendment of a trust requires a writing need not apply where the settlor and the trustee for the trust are the same person and the testimony establishes that the settlor believed the will had revoked the trust; and (3) a successor-trustee has an obligation to carry out the settlor's desires when the successor-trustee has actual knowledge of the settlor's desires.
FACTS
In January 1994, Diane Syverson established the Diane F. Syverson trust. In the trust, Diane Syverson expressly reserved the right to revoke or amend the trust "by delivering a written instrument to my Trustee." During her lifetime, Diane F. Syverson served as trustee. The trust provided that First Bank National Association would became a trustee when Diane Syverson died. The trust also provided:
Upon my death, my Trustee shall distribute or administer the Trust as the Children's Trust as follows:
(A) If I have made one or more written lists which have been signed by me and otherwise prepared in accordance with the provisions of Minnesota Statutes Section 524.2-513, then I give the property described in such list or lists to the persons named in such lists who have survived me.
(B) My Trustee shall sell any homestead, automobiles and furniture I may own at the time of my death. The proceeds of such sale shall be added to and administered according to the following provisions of this paragraph * * *.
(C) My Trustee shall distribute the sum of One Thousand Dollars ($1,000) to my son, RICKY A. SYVERSON. * * *
(D) My Trustee shall distribute the sum of Five Thousand Dollars ($5,000) to my son, OLAF GRIFFIN. * * *
(E) My Trustee shall divide the residue of my trust into equal shares, one share for my son, MICHAEL W. SYVERSON and one share for my daughter ANITA M. BEAR. My Trustee shall administer each share as a separate trust[.]
* * * *
Assets which are not disposed of by other provisions of this instrument shall be distributed to the persons who would have been my heirs-at-law had I died intestate on the date of such distribution in the proportions specified by the laws of intestacy * * *.
Under the trusts benefiting Michael Syverson and Anita Bear, Michael Syverson would be paid $2,000 plus accumulated income May 1 and October 1 of each calendar year, and Anita Bear would be paid $1,000 (to be increased to $2,000 if she legally divorced her husband) plus accumulated income on May 1 and October 1 of each calendar year. The trustee was granted discretion to distribute additional principal to Michael Syverson and Anita Bear "for care, support, maintenance, education, purchasing a home, and entering a business." Both Anita Bear and Michael Syverson had ongoing chemical-dependency problems.
In September 1999, Diane Syverson was diagnosed with terminal lung cancer. Early in 2000, she expressed a desire to change the trust because she was concerned that when she died and the bank took over as trustee, it would not be attentive enough to Bear's needs. At Diane Syverson's request, Griffin and her daughter, appellant Bonnie Moore, agreed to serve as co-trustees. The record contains no evidence that Diane Syverson ever took any action to amend the trust to change the successor trustee.
In March 2000, Diane Syverson indicated that she had changed her mind concerning the trust. Griffin brought Diane Syverson to an attorney to execute a will. There is no evidence that the attorney who drafted the will knew about the trust.
On March 28, 2000, Diane Syverson executed a last will and testament, which provided:
2. If I have made one or more written lists disposing of tangible personal property which have been signed by me, and otherwise prepared in accordance with the provisions of Minnesota Statutes Section 524.2-513, then I give the property described which in such lists who survive me. All tangible personal property not effectively distributed by the provisions of any such written list shall be sold and added to the residue of my estate.
2.1 I give devise, and bequeath, One Hundred Dollars ($100.00) cash to my son, RICKY A. SYVERSON * * *.
2.2 I give, devise, and bequeath, One Hundred Dollars ($100.00) cash to my son, MICHAEL W. SYVERSON * * *.
2.3 I give, devise, and bequeath, One Hundred Dollars ($100.00) cash to my daughter, ANITA M. BEAR * * *.
3. I give the rest residue and remainder of my estate, consisting of all the property I can distribute by Will and not effectively distributed by the preceding provisions of this Will as follows:
3.1 I give Thirty-Three and One-Third percent (33 1/3%) to my friend, ENID GRIFFIN * * *;
3.2 I give Thirty-Three and One-Third percent (33 1/3%) to my brother, JERRY SWEENEY * * *; and
3.3 I give Thirty-Three and One-Third percent (33 1/3%) to my sister, VICKY KINGSBURY.
The will named Griffin and Moore as co-personal representatives.
In April 2000, Diane Syverson wrote a two-part letter. The first part was to Bear and Ricky and Michael Syverson, expressing her love for them but her disapproval of their lifestyles and explaining why she had left them only $100 each. The second part of the letter was to Griffin, Sweeney, and Kingsbury, thanking them for their friendship and moral support, explaining why she wanted them to inherit her property, directing them not to provide money to her children to enable their addictions, and requesting that they give Bear moral support and help her find treatment and shelter.
Diane Syverson died on June 19, 2000. She was survived by Bear and Ricky and Michael Syverson. A fourth child, Olaf Griffin, had been adopted by Griffin and her husband.
The only trust asset was Diane Syverson's home. The value of probate assets was about $5,000, in part because Diane Syverson gifted many items before her death. The only nonprobate asset was a life-insurance policy with a death benefit of about $22,000. The death benefit was paid to the named beneficiary, Bear.
DECISION
When a trust instrument is unambiguous, its interpretation is a question of law subject to de novo review. In re Trust Created by Hill, 499 N.W.2d 475, 482 (Minn.App. 1993), review denied (Minn. July 15, 1993).
The revocation provision at issue in this case unambiguously provides that the trust can be revoked by delivery of "a written instrument" to the trustee.
It is the general rule that where a settlor reserves the power to revoke a trust by a transaction inter vivos, as for example by notice to the trustee, he cannot revoke the trust by his will.
Conn. Gen. Life Ins. Co. v. First Nat'l Bank of Minneapolis, 262 N.W.2d 403, 405 (Minn. 1977) (citing Restatement, Trusts 2d § 330, comment j; Bogert, Trusts and Trustees, § 1001 (2d ed.); IV Scott on Trusts, § 330.8 (3d ed.) (other citations omitted)).
Appellants concede that under the Connecticut General rule, the will did not revoke the trust. Appellants argue that when the settlor and the trustee are the same person, the Connecticut General rule should not apply. Citing In re Estate of Lowry, 418 N.E.2d 10 (Ill.App. 1981), appellants contend that some states allow a trust to be revoked by a will with an explicit term revoking the trust if the trustee receives a copy of the will.
In Lowry, the settlor and the trustee were the same person. The settlor executed a will that stated:
I hereby revoke any and all other wills, codicils and trusts that I may have heretofore made, Executed or created. More particularly I wish by this instrument, my last will and testament, to revoke, set aside and nullify specifically a certain trust created by me on January 24, 1972 and known as the Katherine Bulkley Lowry Declaration of Trust No. 44995 as amended by amendments no. one through four inclusive.
Id. at 13. Based on the rationale that a will is an instrument, and one instrument can act both as a will and as some other legal document, the Illinois court held that the will was an instrument in writing delivered to the trustee that effectively revoked the trust. Id. at 16. In this case, Diane Syverson's will did not expressly revoke the trust but rather purported to bequeath property assigned to the trust. The Lowry rationale, therefore, does not apply.
Citing In re Florance, 343 N.W.2d 297 (Minn.App. 1984), aff'd in part and rev'd in part on other grounds, 360 N.W.2d 629 (Minn. 1985), and Lemke v. Schwarz, 286 N.W.2d 693 (Minn. 1979), appellants argue that the will constitutes sufficient compliance with the requirement that the trust be revoked by a written instrument. Florance is not on point. Florance involved the interpretation of a trust provision governing amendment of the trust. Id. at 301-02.
Lemke involved applying the substantial-compliance doctrine to determine whether an insured had effected a change of beneficiary of his life-insurance policies. Lemke, 286 N.W.2d at 695. The substantial-compliance doctrine applied in Lemke is consistent with the method for amending or revoking a trust set forth in the Restatement (Third) of Trusts § 63 (Tentative Draft No. 3, 2001). The Minnesota Supreme Court, however, has adopted the Restatement (Second) of Trusts, providing that when a settlor reserves inter vivos power to revoke a trust, the settlor cannot revoke by will. Kohler v. Fletcher, 442 N.W.2d 169, 171-72 (Minn.App. 1989) (citing Conn. Gen. Life Ins. Co., 262 N.W.2d at 405), review denied (Minn. Aug. 25, 1989).
Adopting the proposed Restatement (Third) position would change the existing law in Minnesota. Changing existing law is the role of the supreme court or the legislature, not of this court. See Tereault v. Palmer, 413 N.W.2d 283, 286 (Minn.App. 1987) (stating that "the task of extending existing law falls to the supreme court or the legislature, but does not fall to this court"), review denied (Minn. Dec. 18, 1987). We, therefore, decline to adopt the proposed Restatement (Third) position.
Finally, appellants argue that if Diane Syverson did not revoke the trust, this court should terminate it because its purpose has become impossible to accomplish due to Bear's addiction problems. We disagree. As the district court concluded, "the trust's provisions were designed to make the assistance available only in small regular amounts over a long period, plus some amounts distributed only in the trustee's discretion for specified purposes."
Affirmed.
The central question raised in this appeal is whether Diane Syverson could revoke or amend a trust she established in 1994 by the clear and convincing evidence of revocation contained in her will, executed in 2000, and her repeated and consistent statements of her intent to revoke, including statements in a letter to her three children, her brother, her sister, and a long-time friend.
Diane Syverson established a trust in 1994 that expressly reserved her right to revoke or amend "by delivering a written instrument to my Trustee." Syverson served as her own trustee during her lifetime, thus the terms of the trust required that to revoke or amend, Syverson, herself, must receive the written instrument that revoked or amended the trust. In 2000 Syverson indicated to others that she had changed her mind about the trust and obtained the assistance of an attorney to draft a new will. The disposition of her assets in the will differed significantly from the disposition in the trust.
The majority concludes that Syverson could not revoke or amend her trust through her will because of the supreme court's holding in Conn. Gen. Life Ins. Co. v. First Nat'l Bank of Minneapolis, 262 N.W.2d 403, 405 (Minn. 1977). I respectfully disagree.
The rule created by Connecticut General is that a revocable nontestamentary life-insurance trust expressly requiring that any revocation or amendment must be made by a written instrument delivered to a named trustee cannot be revoked or amended by a will that was not delivered to the trustee. This rule protects an institutional trustee by notifying the trustee of any major changes in its duties. Id. at 405-06. But the Connecticut General rule does not apply to an amendment or revocation of Syverson's trust. Because Syverson functioned as her own trustee, a written instrument that Syverson received could revoke or modify the trust.
The Restatement (Third) of Trusts recognizes the importance of the settlor's intention in determining whether a trust has been revoked or modified:
Absent contrary provision in the terms of the trust, the settlor's power to revoke or modify the trust can be exercised in any way that provides clear and convincing evidence of the settlor's intention to do so.
Restatement (Third) of Trusts § 63 (2003). If the terms of the trust reserve to the settlor a power to revoke or amend the trust exclusively by a particular procedure, the settlor may exercise the power only by substantial compliance with the method prescribed in the trust. Id. at cmt. i. But when the terms of the trust do not make that method of revocation exclusive, the settlor's power can be exercised either in the specified manner or by: (1) any way that provides clear and convincing evidence of the settlor's intention to revoke; or (2) a definitive manifestation by the settlor during life of her intention that the trust is revoked. Id. at cmt. h.
The comment indicates that, absent an exclusive method of revocation contained in the trust, clear and convincing evidence of the settlor's revocation can be shown by a will that is executed after the creation of the trust and remains unrevoked at the settlor's death, and that either (1) expressly refers to the trust; or (2) refers to the settlor's power to revoke; or (3) clearly manifests the settlor-testator's intent to exercise the power to revoke. Id. at cmts. h i.
The Restatement (Third) of Trusts is consistent with Uniform Trust Code § 602, in providing that clear and convincing evidence of the settlor's intent to revoke or modify the trust, including the terms of a subsequent will, is sufficient to effect the revocation or modification:
A trust that is revocable by the settlor may be revoked or amended: (1) by substantially complying with a method provided in the terms of the trust; or (2) if the terms of the trust do not provide a method or the method provided in the terms is not expressly made exclusive, by: (A) a later will or codicil that refers to the trust or specifically devises property that would have otherwise passed according to the terms of the trust; or (B) any other method manifesting clear and convincing evidence of the settlor's intent.
Id., Reporter's Notes on cmts. h i at 455 (quoting Unif. Trust Code § 602(c)).
The revocation provision in Diane Syverson's trust states that Syverson "reserve[d] the right to revoke or amend [her Trust] [a]greement or any part of it at any time by delivering a written instrument to [her] Trustee." Syverson served as the trustee of the trust until her death and was trustee at the time she executed her last will.
Importantly, the revocation provision in Syverson's trust did not make the specified written method of revocation exclusive. See Restatement (Third) of Trusts § 63 cmt. i (stating that revocation " only by a notice in writing delivered to the trustee" is an example of an exclusive revocation procedure) (emphasis added). Thus, under the Restatement, Syverson could have revoked her trust by (1) putting her revocation in writing; or (2) any way that provided clear and convincing evidence of her intention to revoke the trust; or (3) a definitive manifestation during life of her intention that the trust be revoked.
Applying the reasoning of the Restatement and the Uniform Trust Code, Syverson revoked her trust by the provisions of her will and her repeated and consistent expression of that intent, contained in a letter to all three of her children and to her brother, her sister, and a friend. The will states that it is Syverson's last will and testament, which revokes any prior wills and codicils, and the provisions of the will direct two personal representatives to dispose of Syverson's entire estate upon her death. The will effectively disposes of the same assets that were to be disposed of in Syverson's trust. Syverson's disposal of her entire estate in the will manifests Syverson's clear intent to exercise her power to revoke the trust.
Consistent with this intent, Syverson wrote a letter to her three children advising them that she intended to leave her estate to others due to their propensity to waste their inheritance on drugs and alcohol. The second part of the letter went to Syverson's brother, sister, and a friend, explaining why she wanted them to inherit her propery. The evidence is uncontradicted that she told Enid Griffin, her designated personal representative, that she had revoked the trust. She also told another friend that the will overrode or superseded all other documents. These statements provide clear and convincing evidence of Syverson's intention to revoke the trust and are a definitive manifestation by Syverson during her life that she revoked the trust.
Syverson's financial assets are not substantial by most measures. Nonetheless, the disposition was important to her. She devoted time and energy to the purposeful planning of how to distribute the assets remaining at her death. The court's ultimate purpose in interpreting a trust is to effectuate the intent of the settlor. In re Trust of Tufford, 275 Minn. 66, 71, 145 N.W.2d 59, 64 (1966). These intentions should not be set aside for the sake of adhering to the rule in Connecticut General, which does not apply to the facts of this case, or in adherence to a restatement principle, in effect in 1979, that has been revised and restated to allow the person who established the trust to effectuate more fully his or her intent.