Planning to Plan Is Not a Plan

Planning to Plan Is Not a Plan

I recently represented a client who was appointed as successor trustee of his father’s trust. The father, just prior to his death, held a “family meeting” to announce his intentions to change certain distribution of asset provisions in the trust that would apply after his death. The family meeting was held, the changes were announced but nothing was done to actually amend the father’s trust.

Upon the father’s death, my client’s brother, whose share was decreased by the father in the family meeting, sued my client to obtain his original share of the trust assets.

Michigan law (and the laws of most states) is very clear in that in order to amend a trust, where the trust is in writing and a statement is in the trust that allows the trust to be amended but does not specify how the trust is to be amended, a trust amendment must then also be in writing in order to be enforceable.

As a result, in my client’s situation, the family meeting where the father was very adamant and clear about his intentions concerning the distribution of trust assets, in and of itself, was not sufficient legal basis upon which to change the distribution terms of the trust document. In order for the father’s changes as announced in the family meeting to be enforceable, the actual trust document required an amendment in writing to express the father’s desires.

This incident is the most recent of many examples I have encountered in my practice over the years in which unintended consequences occur after a loved one’s death due to an ineffectual change to an estate planning document such as a will or a trust. The lesson to be learned in this situation is to make sure that any changes to a planning document such as a trust should be performed with the advice and assistance of legal counsel to make sure that no unintended consequences occur.