FEBRUARY 2, 1998 VOLUME 5, NUMBER 31
Herschel West and his wife Hazel lived in Provo, Utah. Their estate plan was straightforward–they established a living trust and transferred their home into the trust’s name. The trust provided that Mr. and Mrs. West could live in and use the home as long as either of them lived, and that their children would receive the home on the second death. Both Mr. and Mrs. West were named as trustees, and the survivor was named as sole trustee after the death of either one of them.
Hazel West died in 1988. Herschel West remarried a year and a half later. A little more than a year after the second marriage, Herschel West signed a deed transferring the home from the trust into his and his second wife’s names. Within a year of the deed, Herschel West died.
After Mr. West’s death, his second wife Marilyn initiated a probate proceeding in the Utah court. She did not list the home as part of the probate estate, since she and Mr. West had held it as joint tenants. The three children of Herschel and Hazel West filed suit, insisting that the home should be theirs because of the trust. According to the children, Mr. West as trustee owed a duty to them as ultimate beneficiaries of the trust, and therefore could not deed the home out to himself and his new wife.
Mr. West’s children pointed to language of the trust which seemed to require both Herschel and Hazel West to act in order to revoke the trust. Once Hazel West had died, they argued, the trust became irrevocable and Mr. West did not have the authority to remove the home from the trust.
Mr. West’s second wife argued that the power to revoke the trust belonged to Herschel and Hazel West together, but that upon the death of Hazel, Mr. West had the inherent power to revoke the trust by himself. In addition, she pointed to language of the trust that permitted the trustee to sell or dispose of individual trust assets. That, she said, caused the trust to be revoked when Mr. West signed a deed transferring the home out of the trust.
Utah’s Supreme Court ultimately had to decide the question. The Court considered the language of the trust, including its declaration that the property of the trust was held for the benefit of Herschel and Hazel’s three adult children. Nonetheless, the Court ruled, the primary beneficiaries were Herschel and Hazel West themselves. Since their children were not to receive any property until the death of both Herschel and Hazel West, they were not yet beneficiaries of the trust at the time the deed was signed.
Since Herschel was the sole beneficiary at the time he signed the deed, he had no duty to protect his children’s possible interest in the home. Since the trust provided that it was automatically revoked as to property taken out of the trust’s name, the children had no right to object to the transfer of the home into joint tenancy with Marilyn West. In other words, they could not make any claim to the house after their father’s death. Estate of West, Utah Supreme Ct., Nov. 28, 1997.
It is reasonable to assume that Herschel and Hazel West did not mean to prevent the transfer of the home to a new spouse after the death of one of them. Occasionally, however, married couples do want to guarantee that property will go to children even if the surviving spouse should remarry. Could the Wests have prevented the transfer to Marilyn Ball if they had wanted?
Easily, as it turns out. The trust could have provided that it could not be amended after the first death, and that no assets could be transferred without the approval of the children or other persons. If the Wests intended to protect the home from second spouses, they failed to include the provisions necessary to accomplish the desired result. If that was their intention, poor draftsmanship cost the children the family home.