Court Opinion

ID: 4213455
Source: CourtListenerOpinion
Date Created: 2017-10-20 15:15:02.073767+00
Date Added: 2024-06-11T14:41:43.010280
License: Public Domain

10/19/2017
                IN THE COURT OF APPEALS OF TENNESSEE
                             AT JACKSON
                               September 18, 2017 Session

          IN RE ELIZABETH BECK HOISINGTON LIVING TRUST

                   Appeal from the Probate Court for Shelby County
                     No. PR-004617     Karen D. Webster, Judge
                      ___________________________________

                            No. W2016-02527-COA-R3-CV
                        ___________________________________

Appellant appeals the trial court’s determination that settlor’s holographic notations on
her trust agreement did not operate to modify the original trust. Specifically, the trial
court held that settlor neither satisfied the requirements for modification of the trust as set
out in the trust agreement, nor manifested a clear intent to amend the trust under
Tennessee Code Annotated Section 35-15-602(c)(2)(B). Discerning no error, we affirm.

       Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Probate Court
                             Affirmed and Remanded

KENNY ARMSTRONG, J., delivered the opinion of the court, in which ARNOLD B. GOLDIN
and BRANDON O. GIBSON, JJ., joined.

Edward Thomas Autry, Memphis, Tennessee, for the appellant, Elizabeth Bozeman
Atchley.

John Kevin Walsh and Tricia M.Y. Tweel, Memphis, Tennessee, for the appellee, Carol
Gish.

                                         OPINION

                                       I. Background

       On November 6, 2001, Elizabeth Hoisington (“Settlor”) executed her Last Will
and Testament and the original version of the Elizabeth Beck Hoisington Living Trust
(the “Trust”), which is the subject of this appeal. Under the Trust, Settlor was named and
served as the initial Trustee, and Appellee Carol Gish was named as Successor Trustee of
Settlor’s Trust. At some unknown date, Settlor made handwritten notations on Articles V
and VI of the Trust document, to-wit:

                                                     ARTICLE V
                             SPF.CIFIC AFfiliFSTS A RTFRIW6TH OF CIBANTOR

                 A.      The Trustee shall distribute the Grantor's diamond ring that was the Grantor's
           grandmother to the Grantor's daughter, Elizabeth Bozeman Atchley.

                  B.      The Trustee shall distribute the balance of the Grantor's tangible personal
           property, including all household furniture and equipment; carpets, rugs, silverware. linens, china
           and kitchen utensils used in the Grantor's home, and all jewelry, personal clothing. personal.
           automobiles, and articles of personal use, diversion or adornment (excluding any money, stock,
           bonds or other property of a commercial or investment nature) owned by the Grantor at the

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           Grantor's death, outright and in fee.terfrh4eisy-R.-14eitingten-M
           tvtntirliirtey-arlielaiagtal predecease the Grantor, then such property shall be
           distributed in the same manner as the Grantor's Residuary Estate.

                 C. Twenty-Five Thousand Dollars ($25,000.00) to the Grantor's grandson; James
           Beck &man;Jr.

                 D.    Twenty-Five Thousand Dollars (525,000.00) to the'Grantor's granddaughter,
           Ashley Bozeman.

                  E.      The Grantor's dogs shall be distributed according to the wishes of Jim St.
           Hillaire and Susan Anderson.

                                                   ARTICLE VI
                 DISTRIBUTION OF RFSIMIARY,FSTATF AFTFR 11FAIH OF GRANTPR

                   Upon the death ofthe Grantor, Elizabeth Beck Hoisington. and after the administration of
           such Interim Trust and the distributions set forth in Amuck IV and Article V, the Trustee shall
           distribute the remainder of the Tcttstirropertylotmightt-and,in-lee-toz_Sl.-4toisiggton
          -41pO'dy, In the event Shirley B. Hoisington Moody shall predecease the Grantor, then such
           property shall be distributed in equal shares to Shirley B. Hoisington Moody's descendants per
           stirpes and the Grantor's deceased son's, James Beck Bozeman's, descendants per slimes. It is
           the Grantor's intent to exclude Robert G. Bozeman and Elizabeth Bozeman Atchley from this
           trust except for the specific bequest of the ring to Elizabeth Bozeman Atchley.

       Settlor died on May 11, 2015, leaving the following beneficiaries under her will:
(1) Appellant Elizabeth Bozeman Atchley, daughter; (2) Robert G. Bozeman, son; (3)
Shirley B. Hoisington Moody, daughter; (4) James Beck Bozeman, Jr., grandson; and (4)
Ashley Beck Bozeman, granddaughter. On August 10, 2015, Appellant filed a petition to
open Settlor’s estate. In September 2015, Shirley Moody provided Carol Gish, the
Successor Trustee, with the Trust document that contained Settlor’s handwritten
notations. On October 7, 2015, Appellant withdrew her petition to open the estate, and
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the Successor Trustee filed a petition for declaratory judgment, requesting a
determination regarding whether the Settlor’s handwritten notations constituted a valid
modification of the Trust document. On the same day, Appellant filed a petition for
declaratory judgment requesting the trial court to hold that Settlor’s handwritten notations
constituted a valid modification of the Trust. On April 15, 2016, Ms. Moody filed a
Tennessee Rule of Civil Procedure 12.02 motion to dismiss Appellant’s petition for
declaratory judgment. Prior to the hearing on the petitions and the motion to dismiss, the
parties stipulated that: (1) the holographic notations on the Trust document were entirely
in Settlor’s handwriting; and (2) any challenge to the Settlor’s competency, at the time
the notations were made, was reserved.

        Following a hearing on May 17, 2016, the trial court held that Settlor’s
holographic notations did not comply with the mandates of the Tennessee Uniform Trust
Code (“TUTC”), which was enacted in 2004 to govern trusts in Tennessee. As such, the
trial court held that the trust res would be distributed in compliance with the original
unannotated Trust document. The trial court denied Ms. Moody’s motion to dismiss,
although it noted that the motion was rendered moot by its ruling on the holographic
notations. Ms. Atchley appeals.

                                          II. Issues

       Appellant raises three issues as stated in her brief:

       1.      Whether the Probate Court answered the legal question of whether a
       handwritten modification to the Trust is an effective amendment to same.
       2.     Whether the issue of substantial compliance was ripe for
       determination by the Probate Court.
       3.     Whether the issue of the Grantor’s intent was ripe for determination
       by the Probate Court.

                                 III. Standard of Review

       The trial court’s legal conclusions are subject to de novo review, while its findings
of fact are afforded a presumption of correctness. Tenn. R. App. P 13(d); Campbell v.
Florida Steel Corp, 919 S.W.2d 26, 28-29 (Tenn. 1996).

                                        IV. Analysis

       As an initial matter, Appellant contends that the trial court’s ultimate ruling that
Settlor’s handwritten notation did not effectively modify the Trust was premature. In her
brief, Appellant specifically argues that she “expected the Probate Court to determine a
singular legal question: whether Tennessee law allows a trust to be amended by a
holographic modification.” As such, Appellant contends that the trial court’s ultimate
                                            -3-
ruling was premature as it exceeded the scope of the relief sought in Appellee’s petition
for declaratory judgment. We disagree. Turning to the petition for declaratory judgment,
it specifically requests the trial court to “determine that the handwritten modifications to
the Trust are binding . . .” and to distribute the Trust res in accordance with the Settlor’s
handwritten notations. In our view, this prayer for relief was sufficient to put Appellant
on notice that the trial court would determine the ultimate issue of how the Trust property
should be distributed. As such, the trial court was not limited to the question of whether
Tennessee law allows holographic modifications to trusts. Rather, the trial court was
asked to determine whether this Trust was modified by the Settlor and how the res of this
Trust should be distributed based on the determination of whether this Trust was
modified. We now turn to review whether the trial court erred in making its
determination.

     Section 35-15-602(c) of the TUTC specifically addresses revocation and
amendment of revocable trusts. This section provides:

       (c) The settlor may revoke or amend a revocable trust:
       (1) By substantial compliance with a method provided in the terms of the
       trust; or
       (2) If the terms of the trust do not provide a method or the method provided
       in the terms is not expressly made exclusive, by:
       (A) A later will or codicil that expressly refers to the trust or specifically
       devises property that would otherwise have passed according to the terms
       of the trust; or
       (B) Any other method manifesting clear and convincing evidence of the
       settlor’s intent.

Tenn. Code Ann. § 35-15-602(c).

       The Trust in this case contains a provision regarding revocation and modification
of the Trust. Specifically, Article II of the Trust states: “The Grantor may, from time to
time, amend this Trust Agreement in any respect or revoke it in whole or in part by an
instrument in writing signed by the Grantor and delivered to the Trustee during the
Grantor’s life.” By the plain language of Article II of the Trust, the Settlor could modify
the Trust: (1) by an instrument in writing; (2) signed by the Grantor; and (3) delivered to
the Trustee during the Grantor’s life.

        Concerning criterion one, i.e., “by an instrument in writing,” the trial court’s order
states, in relevant part, that “the Settlor made notes on the Trust without preparing a
subsequent instrument.” On appeal, Appellant contends that Article II of the Trust did
not specify that the “instrument in writing” had to be a separate instrument. Rather,
Appellant argues that the Settlor’s handwritten notations on the original instrument
satisfy this criterion. Citing the Black’s Law Dictionary definition of “instrument,” the
                                             -4-
trial court concluded that “[b]ecause an instrument by its legal definition entails a writing,
it would logically follow that in order for Settlor to amend her Trust pursuant to Article
II, she would necessarily do so by a subsequently prepared written instrument, as
opposed to writing on the existing instrument.” Concerning criterion two, i.e., “signed by
the Grantor,” the trial court found that “not one of the parties claimed this element was
satisfied, as clearly Settlor’s signature does not appear within any portions of the
handwritten notations on the Trust. Therefore, with this finding, the Court concludes that
this element is not satisfied.” On appeal, Appellant argues that the Settlor’s signature on
the original Trust document satisfies this criterion.

        Although the usual and best method for modification of a trust is to do so by
separate instrument, we concede that this Trust agreement does not specifically include a
qualifying term, e.g.., “subsequent” or “separate,” to mandate that the “written
instrument” be a separate instrument from the original Trust document. Furthermore,
although the better practice is for a Settlor to sign his or her changes to the trust, e.g. by
initialing the holographic changes or signing a separate instrument, we acknowledge
Appellant’s point that the Settlor signed the original Trust agreement. However, even if
we concede that there is some question as to whether criteria one and two were met by
Settlor’s handwritten notations on the original signed Trust agreement, to find that
Settlor’s notations are valid, Settlor would also have had to comply with criterion three,
i.e. “delivered to the Trustee during the Grantor’s life.” As to this criterion, the trial court
found that:

              In the case before this Court, Successor Trustee claims that
       sometime prior to May 11, 2015 (the Settlor’s date of death), she began
       serving under the Trust. Atchley, on the other hand, alleged that Settlor
       served as Trustee of the Trust until her death on May 11, 2015. Thus, as
       argued, the exact date on which Successor Trustee started serving under the
       Trust is in dispute. This disputed fact, coupled with the fact that the
       notations are not dated, prevents this Court from determining whether a
       delivery was made to the appropriate Trustee during Settlor’s life.
       Additionally, both parties agree that Successor Trustee never received the
       Modified Trust until after Settlor’s death, which would present an
       impossibility in proving delivery in some circumstances. Therefore, this
       Court finds that because of conflicting arguments about the fact and the
       lack of evidence, this Court concludes that . . . the element of delivery [to
       the] Trustee during Settlor’s life is not satisfied.

From the record, there is no evidence that Settlor told anyone about the purported
modification to the Trust, much less delivered the annotated document to her Successor
Trustee.

                                             -5-
       In Tennessee, a settlor’s intent is the gravamen of whether the trust was modified
or revoked. Tenn. Code Ann. § 35-6-102(12) (“‘Terms of a trust’ means the
manifestation of the intent of a settlor or decedent with respect to the trust, expressed in a
manner that admits of its proof in a judicial proceeding, whether by written or spoken
words or by conduct.”); Marks v. Southern Trust Co., 310 S.W.2d 435, 438 (Tenn.
1958) (internal citations omitted) (“Of course the important thing in the construction of
the trust instrument is to determine the intention of the settlor . . . .”). As the proponent
of the modified Trust, Appellant had the burden to show that Settlor intended to modify
the Trust either by compliance with the means of modification outlined in the Trust
document, or by some other action showing a clear intent to change the original terms of
the Trust document. For the reasons discussed above, the question of whether Settlor
complied with the method for modification of her Trust, as set out in Article II, is
unsettled. As such, Appellant has not met her burden to show that Settlor modified her
Trust by complying with the criteria for modification set out in the Trust document.

        However, because the Trust does not specify that the method for modification
provided in Article II is exclusive, the trial court was correct to consider whether the
Settlor’s handwritten notations “manifest[ed] clear and convincing evidence of the
[S]ettlor’s intent” to modify the Trust. Tenn. Code Ann. § 35-15-60(c)(2)(B).
Concerning this question, the trial court held that

       the only fact(s) from which to determine the Settlor’s intent is from the
       handwritten notations on the Trust. Given the stipulations, the handwriting
       on the Trust evidences Settlor’s intentions; however, that evidence alone is
       not clear and convincing to this Court that Settlor intended to amend her
       Trust.

As discussed in detail above, Settlor did not make her changes in a separate instrument.
She did not sign or initial her handwritten changes, and she did not communicate her
changes to anyone or deliver a copy of the annotated Trust document to another person.
Furthermore, there is no evidence that Settlor performed any other action to evince an
intent to change the terms of the original Trust. From the totality of the circumstances,
we conclude that the trial court correctly determined that Settlor’s holographic notations
were not sufficient to manifest a clear intent to modify her Trust. As such, the trial court
correctly ordered the Trust res to be distributed in accordance with the original
unannotated document.

                                            -6-
                                     V. Conclusion

       For the foregoing reasons, we affirm the trial court’s order. The case is remanded
for such further proceedings as may be necessary and are consistent with this opinion.
Costs of the appeal are assessed against the Appellant, Elizabeth Bozeman Atchley and
her surety, for all of which execution may issue if necessary.

                                                _________________________________
                                                KENNY ARMSTRONG, JUDGE

                                          -7-