To determine whether an undated, handwritten note can alter a trust agreement, two sources provide the answer: (1) the express terms of the trust document and (2) Michigan statute. While a trust document should provide the explicit manner in which the settlor may amend the trust, Michigan’s Estates and Protected Individuals Code (EPIC), MCL 700.7602(3)(a), provides that the settlor must only “substantially” comply with the method provided by the terms of the trust. The Michigan Court of Appeals recently held that a settlor’s handwritten letter to his wife did not amend his trust. In re Bisbikis Trust, (Mich App Nov 20, 2014). This, however, is not always the case. In the Bisbikis opinion, the Court discussed a previous case in which a settlor’s series of handwritten, unsigned notes amended her trust. See In re Stillwell Trust, 299 Mich App 289 (2012). The difference? The letter considered in Bisbikis did not indicate the settlor’s intent to amend his trust.
Peter Bisbikis established his revocable living trust in 1994 and amended it in 1998, providing that four-fifths of the trust’s assets would be held for the benefit of his four children, with the remaining one-fifth going to his wife. After his death, Peter’s wife filed a request to have a handwritten letter construed as an amendment to the trust. The Wayne County Probate Court found that the letter did not amend the trust, and the Michigan Court of Appeals agreed.
The Bisbikis trust provided that the settlor, Peter Bisbikis, could amend his trust by signing “a writing specifically referring to this Trust Agreement and indicating the intent to alter or amend, whether or not such writing be witnessed or notarized.” Prior to his death, Peter penned a letter to his wife that contained a two-columned list outlining the distribution of some assets. He did not specify if any of the assets contained in the list were assets held by the trust. Furthermore, Peter’s letter never even referenced his trust. Finding that the letter did not indicate Peter’s intent to alter his trust, the trial court held that the handwritten letter was not an amendment.
In Stillwell, the trust agreement provided that the settlor could amend the trust by “a writing delivered to the Trustee.” In contrast to the letter penned by Peter Bisbikis, the notes considered in Stillwell contained clear directives, delivered in an envelope addressed to the successor trustee, regarding the settlor’s assets. The settlor in Stillwell used the phrase, “My latest directives are as follows,” and referred to a “summary of [her] estate and instructions.” Despite the absence of the settlor’s signature and the appearance of the word, “amendment,” anywhere throughout the notes, the settlor in Stillwell left no doubt in the mind of the court that her notes indicated her intent to alter the terms of her trust.
When having a trust agreement drafted, a settlor should carefully consider the language affecting any future amendments to the trust. Making the agreement too easily amendable could make the settlor susceptible to impropriety or even fraud. Conversely, carefully drafted language could help protect the settlor from dishonest individuals attempting to exert undue influence over the settlor.
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