A Strong Offense
A Stronger Defense
Courts repeatedly remind us of the necessity to be very explicit with the language in our trust instruments. With some very narrow exceptions, the clear, unambiguous language of the instrument controls. This is sometimes referred to as being bound by the four corners of the instrument.
Our latest reminder of the need to remove all assumptions, ambiguity, or inconsistencies from estate planning documents comes to us from Ohio in WesBanco, Inc. v. Blair. Here, we had the son of the decedent claiming that the decedent’s will revoked or amended his trust thereby eliminating the decedent’s allegedly estranged girlfriend as a beneficiary under the trust. The son claimed that the decedent had reserved the right to amend or revoke the trust and he did so when he executed his will.
Seems that if the decedent and girlfriend had a falling out and they were no longer living together, the decedent probably wouldn’t have wanted her to take under the trust. The Ohio appellate court, however, determined that the trust was unaffected by the decedent’s will all because of a lack of express language in the estate planning documents. So, what could have been stated more expressly?
First, let’s start with the lay of the land in Ohio on this topic. A settlor has the right to reserve power to revoke or amend a trust. If the settlor retains a restricted power to amend or revoke during his life, then the revocation or amendment is valid only if it takes effect before the death of the settlor.
We know that the general rule is that a will is ambulatory and does not take effect until the testator’s death. Under Ohio law, however, there is an exception to this rule: a will can operate as an in praesenti instrument capable of revoking or amending a revocable trust during the life of the settlor where the settlor uses language which appropriately manifests an intention to do so.
And, this was the problem for the decedent’s son. According to the court, by its express language, the will did not purport to amend or revoke the trust and the amendment and revocation provision of the trust did not expressly allow for amendment or revocation of the trust by will or codicil. Without this express language in the two instruments, the will did not and could not alter the terms of the trust.