Utah Supreme Court Rules Uniform Trust Code Overruled Banks v. Means

Darlene Patterson created a revocable trust, reserving the right to revoke or amend the trust. The trust stated that, “the interests of beneficiaries are presently vested interests subject to divestment which shall continue until this Trust is revoked or terminated other than by death.” Eleven months before her death in 2006, Patterson removed her son, Ron, as a beneficiary because she had provided for him previously.

Ron sued to void the amendment under the Utah Supreme Court’s decision in Banks v. Means (the court, there held that a complete revocation is required to divest a beneficiary’s interest  when a settlor expressly reserves the right to revoke a trust and creates a vested interest that only divest by revocation). Even though Utah had enacted the Uniform Trust Code in 2004, the trustee failed to mention the Code when he defended the amendment and asked the court to distinguish Banks.

In Patterson v. Patterson, 2011 Utah LEXIS 148 ( 2011) the Utah Supreme Court reversed the lower court and upheld the amendment after exercising its discretion to review an issue not properly before the court on the ground that significant new controlling authority existed (the “preservation rule”). The court held that the Uniform Code statutorily overruled Banks, that the Code applied to the case at hand, and that the Code provides settlors a wide latitude to revoke, amend, or modify a revocable trust.

See Dana G. Fitzsimons and Jr. and Meghan L. Gehr, Recent Cases of Interest to Fiduciaries, McGuire Woods (2011).

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.