1.2.3 Revocable by the Grantor
Revocable trusts of course, are revocable by the grantor.
The revocation (or amendment) of a trust is not governed by statute but governed by the terms of the trust document. Estates and Trusts Article § 4-105 provides that wills are revoked by (i) a subsequent will, (ii) destruction by “burning, canceling, tearing, or obliterating” same, (iii) by the subsequent marriage of the testator followed by the birth, adoption or legitimation of a children, or (iv) divorce or annulment which revokes those provisions related to the ex-spouse. No state statute exists to cover the revocation of revocable trusts. See Estates and Trusts Article § 14-102 which bootstraps various definitional terms pertaining to wills to cover revocable trusts. Although one such definition is “spouse,” the revocation provisions of Estates and Trusts § 4-105 is not bootstrapped. Although no Maryland case has been reported on point, see Paine Webber v. East, 363 Md. 408 (2001) (pre-divorce IRA designation to ex-spouse survives divorce despite an incorporated separation agreement that, apparently imperfectly, addressed interests in retirement funds) and see Cassiday v. Cassiday, 256 Md. 5 (1969) (pre-divorce insurance beneficiary designation to ex-spouse survives divorce decree).
The Uniform Trust Code (2003) provides that a settlor may revoke a revocable trust by “substantial compliance” with the method provided by the trust, or “if the terms of the trust do not provide a method or the method provided in the terms is not expressly made exclusive” by (i) a later will or codicil that expressly refers to the trust or “specifically devises property that would otherwise have passed accordingly to the terms of the trust, or (ii) by “any other method manifesting clear and convincing evidence of the settlor’s intent to revoke the trust. While revocation of a trust will ordinarily continue to be accomplished by signing and delivering a written document to the trustee, other methods, such as a physical act or oral statement coupled with a withdrawal of property, might also demonstrate the necessary intent. These less formal methods, because they provide less reliable indicia of intent, will often be insufficient, however. The method specified in the terms of the trust is a reliable safe harbor and should be followed whenever possible.” UTC Comment at § 602.
Under the Maryland guardianship provisions, “a guardian may exercise any inter vivos power which the … disabled person could have exercised under an instrument.” Estates and Trusts § 13-213 and § 15-102(x). Presumably, therefore, a guardian could revoke a revocable trust. Prudence would suggest that the guardian seek court authority.
The Uniform Trust Code (2003) permits the settlor’s guardian to revoke or amend the trust only with court approval. UTC Comment at 602: “Because a settlor often creates a revocable trust for the very purpose of avoiding conservatorship, this power should be exercised by the court reluctantly. Settlors concerned about revocation by a conservator may wish to deny a conservator a power to revoke. However, while such a provision in the terms of the trust is entitled to considerable weight, the court may override the restriction if it concludes that the action is necessary in the interest of justice.”
In Ullman v. Garcia, 645 So. 2d 168 (Fla. 1994), a guardian could not contest the terms of a revocable trust on the basis of undue influence until the death of the grantor: “Undue influence is not an available remedy because the unique nature of a revocable trust is that it reserves to the settlor the power to end the trust at any time, and postpones the devisee’s enjoyment of the trust until the settlor’s death.” In other words, the testamentary provisions come into being, and can be challenged, upon the death of the grantor but not before.