Know What You Have:  Codicil Cannot Amend an Earlier Trust
Know What You Have:  Codicil Cannot Amend an Earlier Trust

Most everyone owns property, but we find in our probate dispute practice that very few people have a detailed grasp of exactly what they own and how they own it. Many people forget or are simply unaware of what instruments and documents can be used to convey, transfer, gift, or bequeath their property to another. For instance, you could go to a lawyer, write a will and leave everything to your two children equally. The next day, you could into a bank and put your account in joint form with one of your children.  While your intent may be to add a child as a helper to manage your bank account, the effect of that titling would potentially eliminate your other child from the proceeds of the account on your death. Other common examples are when a spouse passes away and his name stays on a deed, or a business partner stops contributing to the business, but still is named as an owner of the business building. A recent case out of northwest Ohio highlights the importance of knowing what property you own and how you own it – and the perils if you are mistaken.

In Zoltanski v. Zoltanski, et al., 2020-Ohio-3908, a case out of Wood County, Ohio, the patriarch of the Zoltanski family was a successful engineer and lawyer. He acquired several properties over his lifetime. In March, 2010, he updated his last will and testament. In August 2010, his wife passed away, which prompted him to complete his estate plan and bring everything current. At the same time, he transferred his ownership interest in one of his properties, an apartment building, to an LLC. Then he transferred his ownership of the LLC to a trust, which was also created in 2010. Under the terms of the trust, the patriarch could amend the trust in writing during his lifetime, but not by will or codicil. When the patriarch died, the trust directed the LLC and the property to be given to one of his daughters.

Later, in 2015, the patriarch executed a codicil to his 2010 will. In the codicil, he gave the same apartment building to one of his sons. The attorney who assisted the patriarch in preparing the codicil signed an affidavit stating that the patriarch intended to transfer the apartment building to the son and that the patriarch must have been mistaken about the title.

The son argued that because his father intended to give him the apartment building via the codicil, and because his father was mistaken about how he owned the apartment building at the time of the codicil, the trust should be reformed or the apartment should be given to him based on principles of fairness and equity.

The probate court, and later the court of appeals, disagreed with the son. In interpreting a trust instrument, a court looks at the settlor’s intent at the time he creates the trust. The intent is generally found within the language used in the trust instrument itself. Unless there is an ambiguity, a court will not consider other evidence other than the language in the trust.

The trust was clear that the LLC and apartment were to pass to the daughter. The trust was also clear that the patriarch could amend the trust if he wanted to. However, there was no evidence that the father was mistaken about his original intent in 2010 to leave the LLC and the property to his daughter. Nor was there evidence that the patriarch was mistaken about how he owned the apartment building back in 2010.

For these reasons, the courts found that even if the father changed his mind in 2015 about to whom he wanted to leave the apartment building, he could only make that change through the trust. Because the son said the father was competent in 2015, the courts presumed he was competent to make the change the proper way – through the trust. Put another way, the patriarch gave his rights in the apartment building to the trust in 2010. He did not have the right to give the apartment building through his will in 2015. Even if he intended something different in 2015, and even if he was mistaken about the ownership of the apartment building in 2015, this was not enough to change the trust. 

There were other issues in the case, including allegations of wrongdoing against the son. This case is an example as to why it is very important for you and your legal and financial professionals to fully understand what you own and how you own it. If you are mistaken, your intent – no matter how clearly it is expressed – may not be carried out. Reminger attorneys are happy to explore these issues with you and help you understand your property and your rights to and for your property.

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