NOVEMBER 4, 2002 VOLUME 10, NUMBER 18
When Robert J. Furst wrote a new will at age 87, he probably thought he was taking the steps necessary to ensure that his two nieces would receive all his assets. The lawyer who prepared the new will, however, did not know that most of Mr. Furst’s assets had been placed in a revocable living trust more than a year before. The end result: Mr. Furst’s new will did not change the dispositive provisions of his living trust.
With the growing popularity of revocable living trusts, the problem facing Mr. Furst is becoming more widespread. Usually property is titled in the name of a trust, and the trust’s terms dictate who will receive what property at the death of the settlor—the maker of the trust. Although non-lawyers are perfectly capable of understanding this concept they often continue to refer to their wills as disposing of their property.
With the help of a lawyer, Mr. Furst (then age 86) had set up a living trust, apparently primarily for the purpose of naming someone to manage his affairs in the event that he became incapacitated. As is the usual custom with living trusts, virtually all his assets were transferred into the trust’s name.
Fifteen months later he visited another lawyer, but failed to tell him that he had already signed a trust. The new lawyer understood only that Mr. Furst wanted to change his will so that his two nieces received his entire estate, and that was what the lawyer prepared. Because the lawyer did not know about the prior trust it was not mentioned in the will or any documents he prepared for Mr. Furst.
After Mr. Furst died a probate proceeding was initiated, and the personal representative of the estate sued for a declaration that the new will implicitly revoked Mr. Furst’s trust as well. There was no dispute that Mr. Furst had the authority to revoke the trust, and the lawyer who prepared his final will made it clear that Mr. Furst wanted everything to be distributed in accordance with the new will he prepared. The probate court believed that Mr. Furst intended to revoke the trust and ordered that his nieces should receive the entire estate.
The Washington State Court of Appeals reversed, finding that the plain language of the documents mandated that Mr. Furst’s trust be distributed as it specified. Although it might be true that he intended a different result, said the appellate judges, he failed to take the necessary steps to make a change. One judge dissented, unsuccessfully arguing that the court should have followed Mr. Furst’s plain wishes. Estate of Furst, October 14, 2002.
Mr. Furst’s case would have been decided the same way in Arizona, based on a 1992 case with similar facts. The lesson is clear: revoking (or changing) a will does not necessarily revoke (or change) one’s living trust.
