Balistreri v. Balistreri

75 Cal.App.5th 511

290 Cal.Rptr.3d 630

Mary A. NIVALA BALISTRERI, as Trustee, etc., Plaintiff and Appellant,

v.Sal J. BALISTRERI, Defendant and Respondent.

A162222

Court of Appeal, First District, Division 3, California.

Filed February 24, 2022

Hartog, Baer & Hand, Ryan J. Szczepanik and Kevin P. O'Brien, for Plaintiff and Appellant.

Ragghianti Freitas, Paul B. Gruwell, for Defendant and Respondent.

Rodríguez, J. Mary A. Nivala Balistreri filed a petition in probate court alleging that, the day before her husband, Sal C. Balistreri, (decedent) died, the two amended their revocable trust. The probate court subsequently deemed the alleged amendment "null and void" and denied Mary's petition to construe the trust and confirm the validity of the amendment. The court concluded the claimed amendment was invalid under Probate Code section 15402¹ because the trust mandated that any amendment "shall be made by written instrument signed, with signature acknowledged by a notary public," and the amendment was not so acknowledged.

Mary appeals. We affirm and hold that, when a trust specifies a method of amendment — regardless of whether the method of amendment is exclusive or permissive, and regardless of whether the trust provides for identical or different methods of amendment and revocation — section 15402 provides no basis for validating an amendment that was not executed in compliance with that method.

BACKGROUND

Mary and the decedent were married and had a daughter, Julia. The decedent also had children from prior marriages, including Sal and Christina.

In 2006, Mary and the decedent created a trust, which they restated, renamed, and amended in 2008. The documents restating, renaming, and amending the trust were notarized. In 2017, Mary and the decedent amended the trust a second time. That amendment was notarized too. On September 6, 2017, Mary and the decedent revoked the trust. Again, the revocation was notarized.

On that same date, Mary and the decedent created the Balistreri Family Trust (Trust), the trust at issue here. They named themselves trustors and trustees, and they placed community property located on 23rd Street in San Francisco (the property) in the Trust. Section 7.2.1 of the Trust provides that upon the decedent's death, the property "shall be distributed equally among" Julia, Sal, and Christina.

In section 5.2.1, a reservation of rights provision, Mary and the decedent agreed that the Trust "may be revoked or terminated, in whole or in part, by either of us as to any separate property of that trustor and as to any of our community property. During our joint lifetimes, this Trust may be modified and amended by either of us acting alone as to any separate property of that trustor, and by both of us acting jointly as to any of our community property." Section 5.2.4 mandates that "[a]ny amendment, revocation, or termination ... shall be made by written instrument signed, with signature acknowledged by a notary public, by the trustor(s) making the revocation, amendment, or termination, and delivered to the trustee."

Mary alleged that in February 2020, the decedent executed a document titled "First Amendment to Trust" (amendment) in his capacity as trustor. As relevant here, the amendment sought to strike section 7.2.1 — which would have distributed the property amongst Julia, Sal, and Christina upon the decedent's death — and states the property "shall remain in the trust." Mary and the decedent signed the amendment and "[a]ccepted and adopted" it as co-trustees. The amendment is not notarized. The decedent died the next day.

Mary thereafter petitioned to construe the Trust and for an order confirming the validity of the amendment. Mary acknowledged the Trust imposed a notary requirement but argued the amendment was effective notwithstanding the "lack of notarization" because section 5.2.4 did not delineate an exclusive amendment procedure. Thus — according to Mary — the Trust could be amended using the revocation procedure described in section 15401, subdivision (a)(2). Mary also posited that "a notary public's acknowledgement may serve a useful purpose when a trust settlor delivers a signed document to a third-party trustee," but it serves "no purpose" when the trustors and trustees "are the same people."²

Sal responded to Mary's petition and filed a petition of his own, to invalidate the amendment. He asserted the decedent "allegedly executed" the amendment, which was prepared by Mary, and that the amendment was void as it was not executed by the "[d]ecedent in the manner and form required" by the Trust and section 15402. Sal also maintained the amendment was void for the additional reason that the decedent was delusional in the days preceding his death, and that Mary exerted undue influence on the decedent with the intent to undermine his "testamentary wishes as delineated" in the Trust. Mary objected to Sal's petition.

At the parties’ request, the probate court decided the validity of the amendment before reaching other issues in the parties’ petitions. Relying on section 15402 and case law interpreting that statute, the court concluded the amendment was "null and void" because the decedent's "signature was not acknowledged by a notary public as required under [s]ection 5.2.4" of the Trust. The court denied Mary's petition to construe the Trust and to confirm the validity of the amendment.

DISCUSSION

The de novo standard of review "applies to questions of statutory construction [citation] and to the interpretation of written instruments, including a trust instrument, unless the interpretation depends on the competence or credibility of extrinsic evidence or a conflict in that evidence." ( Pena v. Dey (2019) 39 Cal.App.5th 546, 551, 252 Cal.Rptr.3d 265 ( Pena ); Burch v. George (1994) 7 Cal.4th 246, 254, 27 Cal.Rptr.2d 165, 866 P.2d 92.) "The paramount rule in construing [a trust] ... instrument is to determine intent from the instrument itself and in accordance with applicable law." ( Brown v. Labow (2007) 157 Cal.App.4th 795, 812, 69 Cal.Rptr.3d 417.)

The Probate Code governs trust revocation and modification. Section 15401, subdivision (a) sets out two alternative methods for the revocation of a trust. Under the first method, a trust may be revoked by "compliance with any method of revocation provided in the trust instrument." ( § 15401, subd. (a)(1).) Under the second method, a trust may be revoked in "a writing, other than a will, signed by the settlor ... and delivered to the trustee during the lifetime of the settlor."³ (Id. , subd. (a)(2).) But, if "the trust instrument explicitly makes the method of revocation provided in the trust instrument the exclusive method of revocation," that method must be used. (Ibid .; Pena , supra , 39 Cal.App.5th at pp. 551, 552, 252 Cal.Rptr.3d 265.) To do so, the trust must contain "an explicit statement that the trust's revocation method is exclusive." ( Cundall v. Mitchell-Clyde (2020) 51 Cal.App.5th 571, 581, 584, 265 Cal.Rptr.3d 254.) Thus, " section 15401, subdivision (a)(2) ‘provides a default method of revocation where the trust is silent on revocation or does not explicitly provide the exclusive method.’ " ( Id. at p. 587, 265 Cal.Rptr.3d 254, italics omitted.)

Section 15402, by contrast, governs modification of a trust. It states: "[u ]nless the trust instrument provides otherwise , if a trust is revocable by the settlor, the settlor may modify the trust by the procedure for revocation." ( § 15402, italics added.) Under section 15402, when "the trust instrument is silent on modification, the trust may be modified in the same manner in which it could be revoked, either statutorily or as provided in the trust instrument." ( King v. Lynch (2012) 204 Cal.App.4th 1186, 1192, 139 Cal.Rptr.3d 553 ( King ).) When the trust instrument "specifies how the trust is to be modified," however, that "method must be used to amend the trust." ( Id. at pp. 1192, 139 Cal.Rptr.3d 553, italics added, 1193, 139 Cal.Rptr.3d 553.) Section 15402 " ‘recognizes a trustor may bind himself or herself to a specific method of ... amendment of a trust by including that specific method in the trust agreement.’ " ( King , at p. 1193, 139 Cal.Rptr.3d 553.)

Thus, when a trust specifies an amendment procedure, a purported amendment made in contravention of that procedure is invalid. ( Pena , supra , 39 Cal.App.5th at p. 552, 252 Cal.Rptr.3d 265 [unsigned handwritten interlineation was invalid where trust provided "any amendment to the trust ‘shall be made by written instrument signed by the settlor and delivered to the trustee’ "]; King , supra , 204 Cal.App.4th at p. 1194, 139 Cal.Rptr.3d 553 ["to be effective," the trust could be amended only according to specified method]; Heaps v. Heaps (2004) 124 Cal.App.4th 286, 290–291, 294, 21 Cal.Rptr.3d 239 ["under the literal terms of the trust," trustors "had to write a memo to themselves (or its substantive equivalent) to amend the trust"]; Crook v. Contreras (2002) 95 Cal.App.4th 1194, 1209, 116 Cal.Rptr.2d 319 [where trust "expressly deprived [the decedent] of the power to revoke, modify or amend," documents purporting to amend the trust were "invalid"]; Conservatorship of Irvine (1995) 40 Cal.App.4th 1334, 1343–1345, 47 Cal.Rptr.2d 587 [amendment that did not comply with specified amendment procedure was "invalid"].)

Mary acknowledges section 15402 applies here. And, as she must, Mary concedes the Trust requires that an amendment "shall" be notarized and that the amendment here is not. But she argues it is of no moment, asserting she and the decedent were free to ignore the amendment procedure they included in the Trust in favor of the revocation procedure set forth in section 15401, subdivision (a)(2).

This argument was considered — and rejected — in King , supra , 204 Cal.App.4th 1186, 139 Cal.Rptr.3d 553. There, a married couple's revocable trust permitted revocation by an instrument in writing signed by either settlor, and modification as to...