NY: Guardian Cannot Amend Revocable Trust When Capacity Is Required for Amendment

In estate planning, the ability to amend a revocable trust can be crucial. However, the terms of the trust can significantly constrain a grantor’s ability to amend or revoke it.

Matter of Chiaro, 903 N.Y.S.2d 673 (Sur. Ct. Suffolk Co. 2010), held that a property guardian for an incapacitated, surviving grantor of joint revocable trust cannot amend the trust where the trust terms stated that the grantor had not power to amend the trust once she became incapacitated.

The trust stated:

All rights granted to any person by any provision of this trust, may be exercised by such person at any time during his or her lifetime and capacity, unless otherwise specifically provided herein; and for all purposes of this trust, incapacity shall be deemed to include not only persons who have been so declared by a Court of competent jurisdiction but also persons for whom a Guardian or conservator or other fiduciary of the person or estate shall have been appointed by a Court of competent jurisdiction or whom two licensed mental health professionals, shall certify in writing, to be unable to handle to [sic] make informed decisions regarding management of his or her financial affairs." (Emphasis added in the Chiaro decision.)

The court stated:

"The scope of the authority to revoke or amend a trust is ... defined by the terms of the trust indenture and New York law ... Compliance with the method set forth in the trust instrument for amendment is required for an amendment to be effective" (Matter of Goetz, 8 Misc 3d 200, 203-205 [Sur Ct, Westchester County 2005]). Accordingly, the execution of an amendment of the trust by David Chiaro as property management guardian for Edythe Chiaro does not effectively amend the trust (see generally Gaigal v Laub, 236 AD2d 362 [2d Dept 1997], lv denied 90 NY2d 802 [1997] [trust that was revocable and amendable by husband and wife creators became irrevocable upon death of one spouse and the purported revocation of the trust by the surviving spouse was of no effect]).

The Matter of Chiaro decision underscores the importance of clearly defining the terms and conditions under which a trust can be amended. For estate planners and guardians, it is crucial to understand that once a grantor is deemed incapacitated, the ability to amend the trust may be severely restricted or entirely prohibited, depending on the trust’s terms. This case serves as a reminder to carefully draft and review trust documents to ensure they align with the grantor’s intentions and legal requirements.