[Wills & Trusts] 9. IN RE ESTATE AND TRUST OF PILAFAS

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9. IN RE ESTATE AND TRUST OF PILAFAS 

1. Fact

Steve J. Pilafas (decedent) executed a trust agreement and transferred his property on Aug. 30, 1982. However, decedent revoked the trust and will and died, on Sep. 28, 1988, intestate. In the trust agreement, upon decedent death, trust estate should be distributed to eight non-profit organization and remains to his wife, brothers, sons and grandchildren. Decedent amended the trust agreement twice, but the original will and trust could not be found after his death even Irene Pappas, James S. Pilafas and Nicholas Pilafas (Plaintiffs) searched that as best he could. In addition, according to the terms of the trust agreement, revocation is valid only it is delivered in written. James Pilafas filed a petition to transfer all the trust assets to decedent’s estate, arguing that Steve had revoked the trust and will. The trial court accepted James’s petition and the appellant appealed.

2. Issue

1) Whether evidence that decedent revoked his will is sufficient when the original will cannot be found after his death.

2) Whether a trust agreement is revoked when a settler dose not revoke the trust by the terms of the trust.

3. Rules

1) Estate of Travers, 121 Ariz. 282, 283, 589 P.2d 1314, 1315 (App. 1978)

A testator destroyed his will with the intention of revoking it if the will is last seen in the testator's possession and cannot be found after his death.

2) Restatement (Second) of Trusts § 330 (1959)

(1) The settlor has power to revoke the trust if and to the extent that by the terms of the trust he reserved such a power.

(2) Except as stated in §§ 332 and 333, the settlor cannot revoke the trust if by the terms of the trust he did not reserve a power of revocation.

(Restatement § 332 allows a settlor to reform the written instrument creating a trust if he intended to reserve a power of revocation or the power to modify the trust but by mistake omitted the requisite provisions. Restatement § 333 provides that "[a] trust can be rescinded or reformed upon the same grounds as those upon which a transfer of property not in trust can be rescinded or reformed.")

3) Comment j

Where method of revocation specified. If the settlor reserves a power to revoke the trust only in a particular manner or under particular circumstances, he can revoke the trust only in that manner or under those circumstances

4. Application

1) P argued that decedent possessed the original will as affidavits submitted and under common law, e.g. Estate of Travers, the will might have been destroyed with the intent to revoke. On the other hand, the appellant contended that there was no sufficient evidence that the will actually existed. The Court held that the will could have been revoked and affirmed the trial court’s decision because the possibility of physical destroy of the will cannot be denied.

2) D argued that there was a term in the trust that The Settlor may at any time or times during the Settlor's lifetime by instrument in writing delivered to the Trustee amend or revoke this Agreement in whole or in part. Thus, the trust agreement is not valid if decedent revoked in the manner of the term of the agreement. On the other hand, P refuted that the language was not expressly specified a method for revocation. Thus, in this case, decedent was free to revoke his trust because the instrument does not specify that decedent could revoke only in writing, relying on Barnette v. McNulty, 21 Ariz. App. 127, 516 P.2d 583 (1973). The Courts concluded that Barnette case was different from this case in terms that this provision specified a method of revocation. Therefore, decedent lacked power to revoke the trust.

5. Conclusion

1) Yes. The will was revoked and decedent died intestate.

2) No. The trust agreement was not revoked and reversed the trial court’s decision and remand for proceedings.

6. Feedback

1) Why did the appellee claim revocation of both trust and will?

The trust agreement directed that the trust fund be distributed to non-profit organizations and the will gave the decedent’s residual estate to the trust. Thus, if both trust and will are revoked, non-profit organizations will be deleted from the beneficiaries, thus the appellees will have more shares of the estate.

2) Whether decedent’s children have an elective share right

No. The purpose of an elective share right to ensure a surviving spouse’s right to receive a fair share of the decedent’s estate, increase accessibility to the property, and prevent the surviving spouse from financial ruin.

3) Recent trends can be a majority opinion.

4) The difference between will and trust;