Taxation & Estate Planning

?I am revoking my trust.? Courts says: “So what”

By Michael D. Bonasera, Esq.

The settlor sent a letter to the corporate trustee of her revocable lifetime trust stating , ?I am revoking my trust.? (Seems pretty clear right?)

The settlor made statements indicating that she intended to revoke the trust but also made statements to a bank officer and an attorney which led them to conclude that she intended only to remove the bank as trustee and the attorney prepared documents to do so. The settlor died from injuries sustained in an accident before she could execute the papers. (ok, getting fuzzier…)

In In re Trust Created by Isvik (Neb. 2007), 741 N.W.2d 638, the court held that the Nebraska Uniform Trust Code applied to the question of whether the trust was revoked; that the letter could be subject to reformation because it met the definition of a ?term of the trust?; that under Nebraska precedents dealing with the reformation of written instruments, the trial court was correct in hearing extrinsic evidence in determining whether to reform the letter to express an intent to remove the bank as trustee; and that the evidence of the grantor?s intent not to revoke was not clear and convincing.

Thanks again to Professor Beyer for this one.

Full post as published by The Ohio Trust & Estate Blog on March 02, 2008 (boomark / email).