It may seem obvious, but if you want to amend  your trust, you have to do it in precisely the right way, which in many cases, is spelled out exactly in the trust. Otherwise the courts may have no choice but to ignore your wishes.

That’s the lesson of a case just decided by the California Court of Appeal (Pena v Dey.)

James Robert Anderson, a successful artist and art teacher, set up his trust in 2004, naming himself as both settlor and trustee. The trust provided that any amendment to the trust during his lifetime “shall be made by written instrument signed by the settlor and delivered to the trustee.”

Anderson amended the trust in 2008, designating 15 beneficiaries.

Anderson was diagnosed with abdominal cancer in 2010, and with brain cancer the following year. Grey Dey, a close friend and art student of Anderson, moved in with Anderson and cared for him until his death in May of 2014.

Three months before his death, Anderson spoke to his attorney about making further amendments to his trust. The attorney, who had not drafted the original 2004 trust, asked Anderson to send him a copy of the original trust, the trust's first amendment, and to “put in writing the proposed changes he was considering.”

In March of 2014, Anderson sent the attorney a copy of the trust with handwritten interlineations indicating the changes he wanted. These included removing 11 of the beneficiaries, changing the amounts to be received by the other four, and adding Dey and two others as beneficiaries.

Anderson attached a Post-It note identifying the requested trust amendments, adding, “Enjoy! Best, Bob.”

The attorney reviewed the document, and in April of 2014 asked Anderson for clarification about some of the requested changes. Anderson phoned the attorney and said he was out of town, but would get back to him in a week.

However, Anderson was admitted to the hospital that same day as the phone call. He died a few weeks later, without finalizing or signing a the second amendment to his trust.

Margaret Pena, the successor trustee for Anderson’s trust, asked the Sacramento County Superior Court for instructions on how to treat the interlineations.

The court ruled that, as a matter of law, the handwritten changes were not valid amendments to the trust document as Anderson had not signed the second amendment. Dey appealed.

The Court of Appeals agreed with the lower court. The interlineations did not constitute valid amendments, they said, because the trust document specifically required that any amendment “be made by written instrument signed by the settlor and delivered to the trustee.”

The appellate court acknowledged that legally the interlineations were a separate written instrument, and that by creating them Anderson delivered them to himself as trustee.

But, they pointed out, he never actually signed them, as required by his trust agreement for the amendment to be valid. Instead, he sent them to his attorney to be formalized and prepared for his signature, clearly intending to sign them at a later date.

Dey argued that Anderson effectively signed the interlineations by attaching the Post-It note signed “Best, Bob.”

The Court disagreed.  “We cannot conclude these lines on the note were part of the written instrument comprised of the interlineations."  According to the Court, the note simply identified the documents to which it was attached.

“While there is no dispute in this case that Anderson intended Dey to receive a portion of his trust estate, there is also no genuine dispute that Anderson intended to sign this and other changes to his trust when formalized by his attorney,” the justices noted. “Unfortunately, he died before that could be accomplished.”

Without the required signature, there was no valid amendment to the trust, they concluded. They upheld the lower court’s ruling, and awarded costs of appeal to Pena.

If you wish to amend your trust, look to the language of the trust first to see how to accomplish that.  Your intent is only going to get you halfway there.

By Stefan O’Grady