Haggerty v. Thornton

318 Cal.Rptr.3d 25

542 P.3d 645

Brianna McKee HAGGERTY, Plaintiff and Appellant,

v.Nancy F. THORNTON et al., Defendants and Respondents.

S271483

Supreme Court of California.

February 8, 2024

Fourth Appellate District, Division One, D078049, San Diego County Superior Court, 37-2019-00028694-PR-TR-CTL, Julia Craig Kelety, Judge

Blut Law Group, Elliot S. Blut; Keiter Appellate Law and Mitchell Keiter for Plaintiff and Appellant.

Ragghianti Freitas and Paul B. Gruwell for Sal J. Balistreri as Amicus Curiae on behalf of Plaintiff and Appellant.

Artiano Shinoff, Howard A. Kipnis, San Diego, Steven J. Barnes, Orange; Spero Law Office and Leah Spero for Defendant and Respondent Patricia Galligan.

Cross Law and Oleg Cross, San Diego, for Defendant and Respondent Racquel Kolsrud.

Higgs Fletcher & Mack, John Morris, Roland H. Achtel, Scott J. Ingold, San Francisco, and Rachel M. Garrard for Defendant and Respondent Union of Concerned Scientists.

No appearance for Defendants and Respondents San Diego Humane Society, Nancy F. Thornton, Jill Bousman, George Bousman, Jack Hebert, Larry Guentherman, Gail Spielman and Dean Spielman.

Hartog, Baer, Zabronsky & Verriere, David W. Baer, Orinda, and Kevin P. O’Brien for Mary A. Nivala Balistreri as Amicus Curiae on behalf of Defendants and Respondents.

Opinion of the Court by Liu, J.

This case concerns the methods for modifying a revocable trust. Section 15402 of the Probate Code states that "[u]nless the trust instrument provides otherwise, … the settlor may modify the trust by the procedure for revocation." (Prob. Code, § 15402; all undesignated statutory references are to this code.) Section 15401 sets out the procedures for revocation: Trusts may be revoked by complying with any method provided in the trust instrument. (§ 15401, subd. (a)(1).) If the trust instrument explicitly makes that method exclusive, then the trust may be revoked only in that manner. (§ 15401, subd. (a)(2).) If not, then the trust may also be revoked by the statutory method — "a writing, other than a will, signed by the settlor or any other person holding the power of revocation and delivered to the trustee during the lifetime of the settlor or the person holding the power of revocation." (Ibid.)

[1, 2] It is undisputed that if the trust instrument is silent on modification, the trust may be modified in the same manner in which it could be revoked, either via the statutory method or via any revocation method provided in the trust instrument. In this case, we consider the circumstances under which the statutory method is available for modification if the trust instrument specifies a method for modification. We hold that under section 15402, a trust may be modified via the section 15401 procedures for revocation, including the statutory method, unless the trust instrument provides a method of modification and explicitly makes it exclusive, or otherwise expressly precludes the use of revocation procedures for modification.

I.

Brianna McKee Haggerty appeals an order of the probate court finding a trust agreement was validly amended, thereby excluding her from distribution. Haggerty’s aunt, Jeane M. Bertsch, created a trust in 2015. The trust agreement included a provision reserving "[t]he right by an acknowledged instrument in writing to revoke or amend this Agreement or any trust hereunder." In 2016, Bertsch drafted an amendment providing for a distribution to Haggerty. The amendment was signed by Bertsch and notarized.

In 2018, Bertsch drafted an amendment providing that half of her assets would go to various beneficiaries upon her death, including the Union of Concerned Scientists, Patricia Galligan, and Racquel Kolsrud, who are respondents in this case. Haggerty was not listed as one of the beneficiaries. The 2018 amendment was signed by Bertsch but not notarized. Thus, the 2018 amendment was compliant with the statutory method but not with the method of modification specified in the trust instrument.

After Bertsch’s death, Haggerty filed a petition to determine the validity of the 2018 amendment. Haggerty argued that the amendment does not qualify as an "acknowledged instrument" because it was not notarized and therefore was not modified pursuant to the method of modification specified in the trust instrument. In a minute order, the probate court held that the 2018 amendment was valid.

The Court of Appeal affirmed, holding that Bertsch’s 2018 amendment was a valid modification pursuant to the statutory method. (Haggerty v. Thornton (2021) 68 Cal.App.5th 1003, 1012, 284 Cal.Rptr.3d 32 (Haggerty); see §§ 15401, subd. (a)(2), 15402.) The court concluded that the statutory method was available for modification because Bertsch’s trust agreement "does not distinguish between revocation and modification" and because "the method of revocation and modification described in the trust agreement is not explicitly exclusive." (Haggerty, at p. 1012, 284 Cal. Rptr.3d 32.)

We granted review to resolve a split of authority regarding the circumstances under which the statutory method is available for modification when a method of modification is specified in the trust instrument.

II.

Assembly Bill No. 2652 (1985-1986 Reg. Sess.) enacted sections 15401 and 15402 in 1986 as part of a general reorganization of trust laws recommended by the California Law Revision Commission (Commission). (See Huscher v. Wells Fargo Bank (2004) 121 Cal.App.4th 956, 960, fn. 2, 18 Cal. Rptr.3d 27 (Huscher); Recommendation Proposing the Trust Law (Dec. 1985) 18 Cal. Law Revision Com. Rep. (1986) pp. 567-569 (Recommendation Proposing the Trust Law).) Revocation was previously governed by Civil Code former section 2280. (Huscher, at p. 961, 18 Cal.Rptr.3d 27.) No statute specifically addressed mod- ification. Rather, courts held that, in general, the power of revocation implied the power of modification, and they applied the rules governing trust revocation to trust modification. (Id., at p. 962, fn. 5, 18 Cal. Rptr.3d 27; see Estate of Lindstrom (1987) 191 Cal.App.3d 375, 385, fn. 11, 236 Cal. Rptr. 376 ["[Revocation and amendment are fungible. ‘The unrestricted power to revoke implies a power to amend without revoking; i.e., it is unnecessary for the trustor to take the circuitous steps of complete revocation and creation of a new trust with the desired changes.’ "].)

Since 1986, two separate statutory provisions have governed trust revocation and modification. Section 15401 governs the procedures for revocation. Under this provision, a revocable trust "may be revoked in whole or in part by any of the following methods: [¶] (1) By compliance with any method of revocation provided in the trust instrument. [¶] (2) By a writing, other than a will, signed by the settlor or any other person holding the power of revocation and delivered to the trustee during the lifetime of the settlor or the person holding the power of revocation." (§ 15401, subd. (a)(1)–(2).) We will refer to the second method as the statutory method. Section 15401 further provides: "If the trust instrument explicitly makes the method of revocation provided in the trust instrument the exclusive method of revocation, the trust may not be revoked pursuant to [the statutory method]." (§ 15401, subd. (a)(2).)

Section 15402 governs the procedures for modification. It provides: "Unless 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.) "Thus, if the trust instrument is silent on modification, the trust may be modified in the same manner in which it could be revoked," either via the statutory method or via the revocation method provided in the trust instrument. (King v. Lynch (2012) 204 Cal.App.4th 1186, 1192, 139 Cal.Rptr.3d 553 (King); accord, Diaz v. Zuniga (2023) 91 Cal. App.5th 916, 922, 308 Cal.Rptr.3d 762 (Diaz); Balistreri v. Balistreri (2022) 75 Cal.App.5th 511, 516, 290 Cal.Rptr.3d 630 (Balistreri); Pena v. Dey (2019) 39 Cal. App.5th 546, 252 Cal.Rptr.3d 265 (Pena).) But a revocable trust may not be modified "by the procedure for revocation" where the trust instrument "provides otherwise." (§ 15402.) This case turns on the meaning of "provides otherwise."

The Courts of Appeal have put forward three interpretations. One interpretation, advanced by King, is that " ‘[u]nless the trust instrument provides otherwise’ indicates that if any modification method is specified in the trust, that method must be used to amend the trust." (King, supra, 204 Cal.App.4th at p. 1193, 139 Cal.Rptr.3d 553; accord, Diaz, supra, 91 Cal.App.5th at p. 924, 308 Cal.Rptr.3d 762 [following King]; Balistreri, supra, 75 Cal.App.5th at p. 518, 290 Cal.Rptr.3d 630 [same]; Pena, supra, 39 Cal.App.5th at p. 552, 252 Cal. Rptr.3d 265 [same]; see also Conservatorship of Irvine (1995) 40 Cal.App.4th 1334, 1334, 47 Cal.Rptr.2d 587 (Irvine).) A second interpretation, put forward by Huscher and adopted by the King dissent and by the Court of Appeal in this case, is that "unless the trust instrument provides otherwise" means "unless the trust provides a modification procedure and explicitly makes that method exclusive." (Huscher, supra, 121 Cal.App.4th at p. 967, 18 Cal. Rptr.3d 27; see Haggerty, supra, 68 Cal. App.5th at p. 1012, 284 Cal.Rptr.3d 32; King, at p. 1197, 139 Cal.Rptr.3d 553 (dis. opn. of Detjen, J.).) The Court of Appeal here also advanced a third interpretation: that " ‘[u]nless the trust instrument provides otherwise’" also means "unless the trust instrument distinguishes between revocation and modification." (Haggerty, at p. 1011, 284 Cal.Rptr.3d 32.)

A.

[3] To resolve this issue, we begin with the text of section 15402. As noted, the phrase "[u]nless the trust instrument provides otherwise" qualifies the provision that follows it, i.e., that the settlor of a revocable trust "may modify the trust by the procedure for revocation." (§ 15402.) The most natural reading of this sentence is that the...