Joint Inter Vivos Trust Issues Clarified by PA Supreme Court - Was the Problem Really a Form-book Document?
Our Supreme Court reminded us recently of the pitfalls of joint inter vivos trusts, particularly where revocation is concerned. Scalfaro v. Rudloff, 934 A.2d 1254 (Pa. 2007) slip op (http://www.aopc.org/OpPosting/Supreme/out/J-31-2007mo.pdf). Consider the case of parents who place their home in a revocable inter vivos trust, naming their 3 adult children as beneficiaries. Mom dies; Dad revokes the trust and then deeds the property to 2 of the 3 children.
In a 5-2 decision reversing the Superior Court 884 A.2d 904, slip opinion available (http://www.aopc.org/OpPosting/superior/out/a10018_05.pdf ), the Supreme Court (per retiring Justice Cappy) dissected the terms of the joint inter vivos trust document and upheld the trial court’s decision that Dad had no power to revoke the trust. While the opinion focused on the exact language of the “form-book” deed of trust, are the implications more far reaching?
The dissent slip op available (http://www.aopc.org/OpPosting/Supreme/out/J-31-2007do.pdf ) was penned by Justice Saylor and joined by Justice Eakin. Justice Saylor found the form-book deed of trust (that was executed without the benefit of counsel) to be “poorly drafted and materially ambiguous.” Justice Saylor would have focused on Mom and Dad’s intent.
Both the majority and dissent engage in an interesting discussion of document interpretation that will be of benefit to (or haunt) many of us who practice in this area. Pennsylvania’s new Uniform Trust Act doesn’t completely resolve the issue. 20 Pa. C.S.A. §7752(b) which addresses revocation of joint trusts doesn’t address the situation where one settlor/spouse dies and hence cannot notify the other spouse.
Practitioners should note that, like the Weidner case, Scalfaro is another instance where the Supreme Court differed sharply from the Superior Court in the area of trusts and estates. Both cases involved a pre-printed, “form book” document.
A burning question remains - will the two siblings who lost the property sue the form-book company??
