Sunderland v. Whitcomb

Baker, J. — Because we determine that a revocable living trust was not effectively revoked by the trustor when he executed a later last will and testament, we reverse and remand. I Robert J. Furst created and funded a living trust, the Robert J. Furst Revocable Trust. He transferred all of his assets into the trust, except for his personal effects, including a valuable diamond ring and $13,000 in United States savings bonds. He did so through the services of an attorney, who discussed the process with him in detail. The attorney testified that Mr. Furst clearly understood that his assets needed to be transferred to the trust and would remain trust property unless the trust was specifically [841] revoked in writing and he transferred the assets out of the trust. At the same time, Furst executed a pour-over will, by the terms of which he made certain specific bequests of nontrust assets to his niece, RoseMary Sunderland, and bequeathed the rest and residue of his estate to the trustee of his revocable trust created on the same date. Over a year later, Furst executed a new will which was prepared by a different attorney. He did not advise this attorney of the existence of the trust, nor did he notify the former attorney of the new will. This will revoked all former wills but did not mention or purport to revoke the trust. The will directed that all estate and inheritance taxes payable with respect to property not passing under the will should be the responsibility of the person receiving it. The will then disposed of the “rest, residue and remainder of my estate” by dividing it equally between Sunderland and Kathryn Whitcomb. After the will was executed, Furst continued to receive statements from the trust depositories which indicated that most of his assets remained in trust, but he made no attempt to transfer any trust assets out of trust prior to his death several months later. Beneficiaries under the trust and under the residuary disposition of the final will were entitled to receive significantly different distributive shares. Sunderland, in her capacity as successor trustee of the trust and personal representative of the estate, petitioned to have the trust assets declared nonprobate assets to be distributed pursuant to the terms of the trust. Whitcomb contested, seeking to have the trust declared revoked and its assets distributed according to the terms of the will. On cross motions for summary judgment, the superior court granted Whitcomb’s motion, denied Sunderland’s motion, and declared that the trust had been revoked. Sunderland appeals. The trial court reasoned that there was a latent ambiguity in the will because that document failed to mention the [842] trust, yet purported to bequeath a residuary estate that did not have any nontrust assets in it when the will was executed. So, the court looked to extrinsic evidence to determine the intent of the testator, which had not been expressed in the will, and determined based thereon that the testator had intended to revoke the trust. The court then ruled as a matter of law that Furst did revoke the trust by later executing the new will. We disagree, and reverse and remand for entry of summary judgment in favor of Sunderland. II First, we disagree with the court below that any latent ambiguity existed in the final will. Execution of a new will and testament effectively revokes a prior will, but it has no legal effect to dispose of property until the testator’s later death.1 Thus, the standard reference to “the rest, residue and remainder of my estate” does not create an ambiguity merely because at the time of executing the will there are few if any nontrust assets in the testator’s estate. A general residuary gift is ineffective to dispose of nonprobate assets passing outside of a will.2 Therefore, the provisions of the trust and those of the final will can logically coexist, with no apparent or necessary inconsistency. Article II of the Revocable Trust Agreement reserved to the trustor the right to amend or revoke the agreement, in whole or in part, by instrument in writing delivered to the trustee. Where the trust instrument specifies the method of revocation, only that method can be used.3 Robert Furst was during his lifetime both the trustor and trustee. The issue is whether by executing his later will, [843] Furst delivered to himself an instrument in writing which revoked the trust.4 [4, 5] Relying principally on Poltz v. Tyree 5 Whitcomb argues that the trust created by Furst was an “empty” or “naked” trust which, because it reserved the power to revoke the trust without a specific method of revocation, the power could be exercised orally, by will, or in any manner which sufficiently evidenced the intent of the trustor to revoke the trust. Poltz is distinguishable. The trust document in that case reserved the power of revocation to the trustor but prescribed no particular method for doing so.6 The trust created by Furst similarly reserved the power to revoke, but it specified the manner of doing so: by written instrument delivered to the trustee. A later will could accomplish that result if, by its terms, it purported to revoke the trust. But the will at issue did not purport to revoke the trust. It did not even mention the trust. Including a residuary gift in the will was a testamentary act, not a revocatory act. We note also that since 1998, RCW 11.11.020 directs the manner of changing the beneficiaries of a nonprobate asset by an express revocatory act in a later will. The procedure set forth in the statute was not followed when Furst executed his final will. The statute provides further, in part, that: A general residuary gift in an owner’s will, or a will making general disposition of all of the owner’s property, does not entitle the devisees or legatees to receive nonprobate assets of the owner.[7] The reasoning employed by the trial court improperly circumvented this section of the statute. The statute was intended to reduce or eliminate uncertainty regarding the [844] effect of a subsequent will on the transfer of property pursuant to an inter vivos trust. The effect of the decision below is to perpetuate the very uncertainties designed to be alleviated by the statute. Reversed and remanded for entry of judgment in favor of Sunderland. Becker, C.J., concurs. Footnotes [1] RCW 11.12.040(1)(a); In re Estate of Catto, 88 Wn. App. 522, 538-39, 944 P.2d 1052 (1997) (citing Allen v. Dillard, 15 Wn.2d 35, 53-54 129 P.2d 813 (1942)). [2] RCW 11.11.020(2). [3] In re Estate of Button, 79 Wn.2d 849, 852, 490 P.2d 731 (1971). [4] Button, 79 Wn.2d at 852. [5] 41 Wn. App. 695, 705 P.2d 1229 (1985). [6] Poltz, 41 Wn. App. at 696. [7] RCW 11.11.020(2).