Changes to the Beneficiaries in a Living Trust in California After One Parent Dies

by John Stevens J.D.

One advantage of creating a living trust is the ability to amend it to accommodate a change in circumstances. In California, a trust can be amended unless it provides otherwise or the person who has the power to amend the trust is rendered legally incompetent. When parents create a living trust, the power to amend the trust may be limited by the terms of the trust document after one parent dies. If the trust can be amended, it is important to follow the amendment instructions found within the trust, or a beneficiary could later challenge that amendment.

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Who Can Amend?

A person who creates a living trust is often referred to as a “settlor” or “trustor.” Generally, only a settlor can amend a trust. The rationale for this rule is that because the trust holds the settlor’s property, only the settlor may change the terms of the trust that direct who will receive the property within the trust. Amending a trust to add a beneficiary is common where the settlor wants to leave property to a new grandchild, for example. Trusts often provide that property will be distributed to the settlor’s child and that child’s spouse. If the child divorces, a settlor may wish to amend the trust to remove the child’s former spouse as a beneficiary.

The Power to Amend

When two parents create a single trust that holds the property of both parents, the trust most likely calls for a division of the trust property into two separate trusts upon the first parent’s death. The first trust, called the decedent’s trust, holds the property that belonged to the parent that died and was not otherwise transferred to beneficiaries. The second trust, called the survivor’s trust, holds the property of the living parent. Trusts in California often provide that the living parent may amend only her own trust. Some trusts, however, provide that the surviving parent can amend both the decedent’s and survivor’s trusts. Look to the language in the trust document that addresses amending the trust to determine whether the surviving spouse can amend either trust or only her own.

How to Amend

The means by which a living trust can be amended in California depends on the terms of the trust agreement rather than state law. In other words, there is no uniform method of amending a living trust in California. At a minimum, the person holding the power to amend a trust must put the amendment in writing and sign it. Sometimes living trusts require the person amending the trust to sign the amendment document before a notary public. Language may also require the person amending the trust to provide the beneficiaries of the trust with a copy of the amendment, although this type of requirement is rare. A person amending a living trust must follow the method described in the trust document for the amendment to take effect.

Challenging an Amendment

The legality of a living trust amendment can be challenged by an interested party, meaning a beneficiary who stands to suffer some loss if the amendment is followed. Assume, for example, that a husband and wife create a living trust in California that leaves all of their property to their three sons equally. After the husband dies, the wife decides to amend the trust and leave all of the trust property to only two of the sons, reasoning that the third son is financially secure and doesn’t need the money as much as her other two sons. Upon his mother’s death, the son who was removed from the trust could seek to invalidate the amendment if the instructions for amending the trust were not followed or if the disinherited son suspects his mother did not have the mental capacity to amend the trust at the time of the amendment. Such a challenge is made in a California probate court.