Prior to the MTA, an irrevocable trust agreement may be set aside on grounds that contracts may be set aside: fraud, duress, undue influence, breach of a confidential relationship, or mistake. There is no presumption of mistake. Mistake must be shown by affirmative evidence that the grantor believed that he or she had the power to revoke. The mere fact that the grantor believed that he or she could revoke the trust is not a sufficient ground for reforming the instrument. Liberty Trust Company v. Weber, 200 Md. 491 (1952). See also footnote 11 in Shriners Hospitals v. Md. Natl Bk., 270 Md. 564 (1973).
Some cases may warrant the cancellation of inter vivos trusts on the ground of mistake or misunderstanding, see Atkinson v. Atkinson, 157 Md. 648, 147 A. 662 (129) (settlor, aged and infirm, misunderstood meaning of trust of deed); Raffel v. Safe Deposit & Trust Co., 100 Md. 141, 59 A. 702 (1905) (inexperienced settlor under mistaken belief regarding her power to revoke trust deed). Compare other cases where such relief was denied, e.g., Lambdin v. Datzebecker, 169 Md. 240, 181 A. 353 (1935); Peter v. Peter, 136 Md. 157, 110 A. 211 (1920) (settlor was an attorney); Kensett v. Safe Deposit & Trust Co., 116 Md. 526, 82 A. 981 (1911); Davton v. Stewart, 99 Md. 643, 59 A. 281 (1904); Brown v. Mercantile Trust & Deposit Co., 87 Md. 377, 40 A. 256 (1898).
Apparently, if a trust that is “irrevocable” by its terms is later reformed by a court to become revocable, the federal tax law may permit an amended gift tax return to reflect that there was no completed gift in the first instance. In Berger v. U.S., 487 F. Supp. 49 (W.D. Pa., 1980), C. William Berger anticipated a high level job with the Nixon administration at the FAA. He mistakenly believed that he had to place all of his assets into an irrevocable trust in order to comply with the Nixon administration’s policy on conflict of interest. Apparently a revocable trust would have been sufficient. After his prospects of government service evaporated, he successfully argued in the state court that the “irrevocable” aspect of the trust was a mistake and the trust was reformed.
