While most wills and trusts are clearly worded and straightforward in expressing their intentions, it is not uncommon for some to contain phrases that are confusing or ambiguous, requiring a court to determine how the terms should be interpreted.
But what if a beneficiary questions the meaning and intention of handwritten changes a decedent made to his trust – and the trust contains language that automatically disinherits anyone who “contests” or challenges any of its provisions? Does this inquiry to clarify an ambiguity by a beneficiary waive his or her right to their inheritance?
That was the issue presented in a case recently decided by the California Court of Appeal (Packard v Packard).
In 2010, Newton Roy Packard created a trust which provided that, upon his death, his estate would be distributed “in equal shares” to his two adult sons, Gregory Roy Packard and Scott Erick Packard.
The document said Newton could amend the trust “by a writing signed by the trustor and delivered to the trustee.”
It also contained an “Attack on the Trust” clause which stated, “If any beneficiary under this trust, directly or indirectly, contests this trust or any of its provisions in any manner, any share or interest in the trustor’s estate given to that contesting beneficiary under this trust is revoked.”
Two years later, Newton executed and notarized an amendment to the trust which provided that Gregory would receive Newton’s residence, and Scott would receive a sum equal to the value of the residence. The remaining property would be divided equally between the two sons.
In 2014, Newton appears to have handwritten the word “one-half” into the first amendment to the trust, followed by his initials and the date (“N.R.P. 5-16-2014”).
Including the handwritten words, the trust now stated that Gregory would receive the residence and “from the remaining trust estate” Scott would “receive a sum equal to one-half the value of trustor’s residence.”
Unlike the first version of the trust, in which each son received assets of the same value, the handwritten language appeared to give one son the home – valued after Newton’s death at $970,000 – and the other son $485,000 in cash, with any additional assets to be divided equally.
Newton died in 2020, with Gregory and Scott both surviving him. Gregory was named and appointed the first successor trustee of the trust. Scott was named the second successor trustee of the trust.
As required by California law, Gregory’s attorney sent Scott a “Notification by Trustee” in August of 2020. It stated, “You may not bring an action to contest the Trust more than 120 days from the date this notification by the Trustee is served upon you or 60 days from the date on which a copy of the terms of the Trust is delivered to you during that 120-day period, whichever is later.”
In May of 2022, Scott filed a petition with probate court, asking it to “construe and reform” Newton’s handwritten amendment to the trust to reflect what he alleged was Newton’s intent.
Specifically, Scott asserted that Newton intended the words “one-half” to ensure that Gregor and Scott received equal distributions from the trust, and that the interlineation did not accurately reflect Newton’s intent for his assets be distributed equally between his sons.
He also argued that the Probate Code permits the court to consider extrinsic evidence – that is, information not found within a document but derived from external sources – to determine the true intent of the trustor.
Gregory objected to Scott’s petition, contending that although the filing was labeled a request for reformation (correction) of the trust’s language, Scott was actually contesting the trust because he sought to invalidate Newton’s handwritten changes. Scott’s petition was barred, Gregory said, because it was filed long beyond the 120-day period allowed for trust contests under California law.
Scott responded that his “petition for reformation and construction” did not constitute a trust contest under state law and therefore was not subject to the 120-day deadline. He argued that he was not asking the court to decide the validity of Newton’s handwritten interlineation, but rather Newton’s true intent in adding the words to the trust. Scott argued that he was attempting to further his father’s wishes in reforming the interlineation to match how his father wished to distribute his estate.
Gregory argued that the meaning of the interlineation was clear, so there was no ambiguity for the court to resolve. By attempting to invalidate Newton’s changes, he said, Scott was contesting the trust – long after the allowed time.
The probate court ruled in Gregory’s favor, finding the interlineation did not create an ambiguity and that Scott’s actions amounted to a contest to the trust that was barred by the statute of limitations.
Scott then appealed.
The appellate justices noted that courts are given the power to “reform” a trust with the goal not of creating a new agreement, but in order to determine and implement the trustor’s actual intent.
Scott, they said, “does not question the validity” of his father’s hand-written amendment to his trust. Instead, they said, Scott was arguing that Newton “always intended his assets to be divided equally between his two children, and the handwritten ‘one-half’ interlineation reflects his mistaken belief that he was accomplishing that goal.”
Scott’s request that the court correct what he believes is a wording error by his father, that did accurately represent his intent as trustor, “does not constitute a trust contest,” the justices said. Scott’s petition did not seek to invalidate the amendment, rather, the petition was to clarify the interlineation to enforce the document and the distribution his father intended.
The justices expressed no opinion on the merits of Scott’s claims. They only ruled that he should be given the opportunity to prove that his father’s intent was for each son to receive an equal share of the trust assets. They ordered the lower court to reverse its ruling and allow Scott to argue his case.
By Katharine B. Lau