Sharon Baker v. Kevin Baker, Nina Cranford, Doug Baker, and David Baker , 2022 Ark. App. 260 ( 2022 )

Cite as 2022 Ark. App. 260ARKANSAS COURT OF APPEALS
DIVISION III
No. CV-21-410
Opinion Delivered May 25, 2022
SHARON BAKER
APPELLANT
APPEAL FROM THE HOT SPRING
COUNTY CIRCUIT COURT
V. [NO. 30CV-20-64]
KEVIN BAKER, NINA CRANFORD, HONORABLE CHRIS E WILLIAMS,
DOUG BAKER, AND DAVID BAKER JUDGE
APPELLEES
AFFIRMED
PHILLIP T. WHITEAKER, Judge
This case involves the interpretation of a provision in a trust directing how that trust
may be amended. Sharon Baker appeals from a decision of the Hot Spring County Circuit
Court finding that the trust was not properly amended and granting a motion for summary
judgment filed by the appellees, Kevin Baker, Nina Cranford, Doug Baker, and David Baker.
I. Factual and Procedural Background
Sharon was married to the late Charles F. Baker. Charles was the father of the
appellees, and Sharon is their stepmother. On July 30, 2018, Charles created the Charles F.
Baker Living Trust (“the July 2018 trust”), a revocable trust in which he named himself settlor
and trustee; he also named Sharon and the appellees as beneficiaries on his death. Article
III of the trust articulated the process by which the trust could be revoked or amended. It
provides as follows:
As Settlor, I may, acting by a written instrument, signed, acknowledged, and
delivered to the Trustee during my lifetime, revoke this Trust in whole or in part and
amend it from time to time in any respect. Any amendment made by Settlor shall be
executed by preparation of a signed, dated, written document titled “The Charles F. Baker
Living Trust Amendment.” The amendment document must be kept with the original
trust documents. In case of revocation, the Trust property shall be conveyed to the
Settlor who originally transferred the property into the Trust, including assets and
income which may be traced to the original property. Upon my death, this Trust shall
thenceforth be irrevocable and shall not be revoked, modified, or amended in any
respect.
(Emphasis added.) On the same day that he executed the trust, Charles funded it; he and
Sharon executed a quitclaim deed conveying three parcels of real estate to the trust.
On April 10, 2019, Charles executed a document titled “First Amendment of the
Charles F. Baker Living Trust” (“the April 2019 trust” or “the April 2019 amendment”). The
April 2019 trust began: “Pursuant to the provisions of Article III of The Richard Harper
Living Trust established by CHARLES F. BAKER, Settlor, with CHARLES F. BAKER, as
Trustee, the Trust is hereby amended in the following respects.” 1 Primarily, the April 2019
trust amended portions of Article V, deleting any reference to Sharon as a beneficiary, and
it also removed her as a potential successor trustee.
Just over one month later, on May 20, 2019, Charles executed another document
titled “The Charles F. Baker Living Trust” (“the May 2019 trust”). The May 2019 trust
reinstated Sharon as a beneficiary of real and personal property and appointed her as
1
The reference to “The Richard Harper Living Trust” is apparently a scrivener’s error.
None of the parties assign any weight or import to the one-time use of an incorrect name,
and the circuit court referred to it as a “typographical error” at the summary-judgment
hearing.
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successor trustee. In nearly all respects, the May 2019 trust was identical to the July 2018
trust, except it left all of the named real property to Sharon instead of dividing it between
Sharon and the appellees. On May 24, Charles and Sharon executed a quitclaim deed to the
Charles F. Baker Living Trust conveying the same property as they had deeded to the July
2018 trust.
Charles died on January 31, 2020. On February 21, Sharon filed a “Complaint for
Confirmation of Trust and Title Trust Property.” In it, she asked the court to enter an order
quashing the July 2018 and April 2019 trusts, confirming the May 2019 trust and quitclaim
deed, and quieting title to the property in her name. The appellees responded and filed a
counterpetition in which they argued that the May 2019 trust was “void to the extent it is
treated as an amendment as it fails to substantially comply with the amendment
requirements” of the July 2018 trust. The appellees further alleged that the May 2019 trust
was void in that it was not properly funded because Charles had attempted to fund the May
2019 trust with real and personal property that had already been placed in a different trust.
As such, the appellees asked the court to declare that the May 2019 trust was void and that
the terms of the July 2018 trust were controlling.2
2
The appellees also asserted that Sharon was in possession of certain property that
belonged to the July 2018 trust and asked that she be restrained from disposing of any of it
until the court ruled on the matter. This claim was not addressed in the circuit court’s initial
order granting summary judgment; however, at Sharon’s request, the circuit court entered
an order containing an appropriate and sufficient Rule 54(b) certificate such that we have a
final order for purposes of our appellate jurisdiction.
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The appellees subsequently filed a motion for summary judgment, arguing again that
the May 2019 trust failed as an amendment to, or revocation of, the July 2018 trust because
it failed to substantially comply with the manner of amendment established in the original
trust. Sharon responded that since the July 2018 trust was revocable, Charles clearly
evidenced an intent to revoke it by executing the May 2019 trust and quitclaim deed.
The circuit court held a hearing on the appellee’s summary-judgment motion and
heard arguments of counsel. At the conclusion of the hearing, the court stated that there was
no genuine issue of material fact that had been presented that would warrant setting aside
the July 2018 trust or the April 2019 amendment. The court entered a written order finding
as follows:
In this case, the [July] 2018 Trust, within Article III, specifically sets forth its
requirements for revocation or amendment: (1) It states in part, “the Settlor may by
written instrument signed, acknowledged, and delivered to the Trustee during the
Settlor’s lifetime revoke the Trust in whole or in part and amend it from time to
time.” (2) Any amendment should be titled “The Charles F. Baker Living Trust
Amendment.” (3) With regard to revocation, the “trust property shall be conveyed to
the Settlor who originally transferred the property into the Trust, including assets and
income which may be traced to the original property.” 2018 Trust Article III
The terms of the trust are clear and specific as it relates to the authority of the
Settlor to amend and/or revoke the 2018 Trust. Therefore, A.C.A. § 28-73-602
requires that for an amendment or revocation, substantial compliance with the
method in the trust is necessary.
....
Other than the First Amendment to the Charles F. Baker Living Trust,
executed on April 10, 2019, there are no other documents, which have been executed
and submitted as evidence herein, that comply with the provisions regarding
amendments to the Trust.
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Accordingly, the court concluded that (1) the July 2018 trust and April 2019 amendment
were valid; (2) the May 2019 trust failed as an amendment to the July 2018 trust “because
the Settlor and initial Trustee, Charles F. Baker, failed to substantially comply with the terms
of the 2018 Trust with regard to revocation and amendment”; and (3) the May 2019 trust
failed because it was not properly funded with the decedent’s property. Sharon timely
appealed the circuit court’s order.3
II. Standard of Review and Applicable Law
In this case, the circuit court granted summary judgment in favor of the appellees.
Summary judgment should be granted only when it is clear that there are no genuine issues
of material fact to be litigated and the moving party is entitled to judgment as a matter of
law. Wilcox v. Wooley, 2015 Ark. App. 56, at 4, 454 S.W.3d 792, 795. When the parties agree
on the facts, we simply determine whether appellees were entitled to judgment as a matter
of law; our review is de novo for questions of law. White v. Harper, 2021 Ark. App. 435, at 5,
638 S.W.3d 304, 307.
Specifically, the circuit court granted summary judgment, concluding that there was
no issue of fact regarding the validity of the July 2018 trust and the April 2018 amendment.
On appeal, Sharon argues that the circuit court erred in granting summary judgment in favor
of the appellees because reasonable minds could differ on the inferences to be drawn from
3
On appeal, Sharon does not challenge the third finding of the circuit court––i.e.,
that the May 2019 trust failed because it was not properly funded. As such, we do not delve
into the matter or consider it further.
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the facts presented in this case. See, e.g., Jackson v. Harps Food Stores, Inc., 2020 Ark. App. 475,
at 13, 610 S.W.3d 173, 181 (“After reviewing the evidence, the circuit court should deny
summary judgment if, under the evidence, reasonable minds could reach different
conclusions from the same undisputed facts.”). More specifically, Sharon argues that
reasonable minds can differ on whether the May 2019 trust substantially complied with the
amendment method set forth in the July 2018 trust.
In construing a trust, we apply the same rules applicable to the construction of wills.
Garrett v. Neece, 2019 Ark. App. 178, 574 S.W.3d 686. The cardinal rule in construing a
trust, however, is that the intention of the settlor must be ascertained. Dawson v. Stoner-Sellers,
2019 Ark. 410, 591 S.W.3d 299. We determine this intention by viewing the four corners
of the instrument, considering the language used, and giving meaning to all of its provisions,
whenever possible. Garrett, supra. When the terms of a trust are unambiguous, it is the court’s
duty to construe the written instrument according to the plain meaning of the language
employed. Dawson, supra.
III. Discussion
Does the May 2019 trust amend the July 2018 trust? That is the issue for our
consideration in this appeal. This court has expressly held that a trust agreement that sets
out by its own terms the method by which it may be revoked can be revoked only in the
manner provided. Ashley v. Ashley, 2012 Ark. App. 236, at 9, 405 S.W.3d 419, 425 (citing
Gall v. Union Nat’l Bank, 203 Ark. 1000, 159 S.W.2d 757 (1942)). Arkansas Code Annotated
section 28-73-602(c)(1) (Repl. 2012) provides, however, that the settlor of a trust “may revoke
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or amend a revocable trust . . . by substantial compliance with a method provided in the terms
of the trust.” (Emphasis added.)
Here, Sharon admits that the July 2018 trust set forth four conditions for an effective
amendment; it had to be signed, dated, written, and titled “The Charles F. Baker Living
Trust Amendment.” She contends that the May 2019 trust complied with three of the four
conditions; it was signed, dated, and written. She argues that the only thing the May 2019
trust lacks is the word “Amendment.” Thus, Sharon maintains that “compliance can be
substantial even if it is not total,” that the May 2019 trust complied with the majority of
Article III’s requirements, and that it “substantially complied” with the requirements for
amending the trust.4 We are not persuaded.
We acknowledge that the May 2019 trust was signed, dated, written, and titled “The
Charles F. Baker Living Trust.” While Sharon argues that the missing required caption of
“Amendment” is not significant, we disagree. As the appellees point out, this is more than a
failure to include one word––“Amendment”––in a caption. The real problem is that
nowhere in the May 2019 trust does it reflect a reference to any prior document. One reading
4
Sharon also argues in a subsequent point on appeal that it is questionable whether
the July 2018 trust makes the amendment method “exclusive.” See Ark. Code Ann. § 28-73-
602(c)(2) (providing that if the terms of the trust do not provide a method or the method
provided in the terms is not expressly made exclusive, a settlor may amend a revocable trust
by “any other method manifesting clear and convincing evidence of the settlor’s intent.”). It
is not entirely clear that Sharon ever made this argument below; however, even if she did,
the circuit court did not rule on it. See Leavell v. Gentry, 2021 Ark. App. 412, at 11–12, 636
S.W.3d 794, 800 (declining to reach an argument regarding interpretation of a trust when
the appellant raised the issue before the circuit court, but the circuit court did not expressly
rule on it). We therefore do not address it herein.
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the May 2019 trust by itself would never know that a prior document existed, much less that
the prior document was being amended. In addition, Charles amended the July 2018 trust
once before in compliance with Article III’s provisions when he executed the April 2019
amendment, wherein he expressly captioned it the “First Amendment of the Charles F. Baker
Living Trust.” (Emphasis added.) Thus, Charles knew how he was supposed to accomplish
an amendment. As the circuit court stated, “Other than the First Amendment to the Charles
F. Baker Living Trust, executed on April 10, 2019, there are no other documents, which
have been executed and submitted as evidence herein, that comply with the provisions
regarding amendments to the Trust.” In short, the April 2019 document complies with the
amendment requirements of the July 2018 trust, but the May 2019 document does not.
Finally, we acknowledge Sharon’s argument regarding substantial compliance as set
forth in section 28-73-602(c)(1). Section 28-73-602(c)(1), however, does not define
substantial compliance. While Sharon cites several cases purporting to describe what
constitutes “substantial compliance,” we conclude that these citations are inapposite because
they do not address the specific requirement for amending a trust set forth in Ashley, supra:
if a trust agreement sets out by its own terms the method by which it may be revoked––or,
in this case, amended––then revocation (or amendment) may only be accomplished in the
manner provided in the trust.
Likewise, we conclude that the Restatement (Third) of Trusts is instructive in this matter.
The Restatement (Third) of Trusts § 63 cmt. i (Am. L. Inst. 2003), clarifies that “[i]f the terms
of the trust reserve to the settlor a power to revoke or amend the trust exclusively by a
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particular procedure, the settlor can exercise the power only by substantial compliance with
the method prescribed. Thus, if a settlor reserves the power to revoke the trust ‘only by a
notice in writing delivered to the trustee,’ revocation requires the delivery of such a notice
to the trustee.”
Here, the trust had specific requirements for amendment: “Any amendment made by
Settlor shall be executed by preparation of a signed, dated, written document titled ‘The
Charles F. Baker Living Trust Amendment.’ The amendment document must be kept with
the original trust documents.” We agree with the circuit court’s conclusion. The failure of
the May 2019 document to comply with the method for amendment set out in Article III of
the July 2018 trust is fatal. Accordingly, we affirm the circuit court’s order granting summary
judgment to the appellees.
Affirmed.
GRUBER and HIXSON, JJ., agree.
Brett D. Watson, Attorney at Law, PLLC, by: Brett D. Watson, for appellant.
Jonathan D. Jones, for appellees.
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