Justia Trusts & Estates Opinion Summaries

Plaintiff, the beneficiary of a living trust established by John W. Martin on February 11, 2009, appealed from an order finding that the trust was properly revoked and is therefore invalid. In this case, Martin revoked the February Trust just a few months after he signed it after he had a falling out with plaintiff and then established a new trust in May 2009.The Court of Appeal applied the holding in Masry v. Masry (2008) 166 Cal.App.4th 738, and held that a trust revocation procedure is not exclusive unless the trust document explicitly says that it is. The court held that the February Trust did not state that its revocation procedure was exclusive, and the alternative revocation procedure under Probate Code section 15401 was therefore available to Martin. The court rejected plaintiff's argument that section 15401 applies only to the method of revoking a trust and not the persons who may do so. The court explained that the distinction between method and authority is artificial; a "method" can include the persons with authority to accomplish a task. The court held that section 15401 in fact addresses who may revoke a trust. View "Cundall v. Mitchell-Clyde" on Justia Law

The Paula Trust, established for the sole benefit of Medeiros, a California resident, has two cotrustees—a California resident and a Maryland resident. Paula Trust held a limited partnership interest in Syufy, which in 2007 sold stock. Some of the capital gain income from the stock sale was allocated to Paula Trust. Paula Trust’s 2007 tax return reported $2,831,336 of capital gain including the stock sale. The trust paid California income tax of $223,425 and later filed an amended 2007 California fiduciary income tax return, requesting a refund, arguing that the capital gain was incorrectly reported as California-source income. The trustees declared they were “required to apportion the stock gain as California source and non-California-source income . . . according to the number of trustees resident in California” based on Rev. & Tax. Code 17743, which provides: “Where the taxability of income under this chapter depends on the residence of the fiduciary and there are two or more fiduciaries for the trust, the income taxable . . . shall be apportioned according to the number of fiduciaries resident in this state.”The court of appeal reversed a judgment ordering a refund in the amount of $150,655 of tax, plus interest of $68,955.70. The Revenue and Taxation Code imposes taxes on the entire amount of trust income derived from California sources, regardless of the residency of the trust’s fiduciaries. View "Steuer v. Franchise Tax Board" on Justia Law

Where a trust beneficiary creates a will that gives away his trust shares without also specifically referring to the power of appointment as required by the trust, the court may not amend or reform that will to include a "specific reference" phrase so as to preserve the validity of the gift.The Court of Appeal held that reforming a will to conform to the testator's true intent is permissible if extrinsic evidence establishes that true intent. However, the court cannot do so in this case because reformation would achieve a work-around of the requirements of Probate Code sections 630, 631, and 632, effectively nullifying them. The court explained that these sections, taken together, do not excuse noncompliance. Therefore, the court affirmed the order sustaining the demurrer without leave to amend. View "Estate of Eimers" on Justia Law

Janice Tubbs challenged certain assets her father, Harry William Berkowitz transferred to himself after his wife passed away. Berkowitz and his wife, Janice's parents, created The Berkowitz Family Trust (the Trust). The Trust provided for the allocation of assets to a surviving spouse’s trust and a marital appointment trust (the Marital Trust) upon the death of either Berkowitz or his wife. The surviving spouse’s trust and the Marital Trust included a general power of appointment allowing the surviving spouse to designate a person who would receive the Trust assets. Under that power of appointment, the surviving spouse could designate himself or herself as the person who would receive the assets. Berkowitz exercised this power of appointment after his wife passed away and transferred all the Trust assets to himself, effectively divesting Tubbs and her children who were contingent beneficiaries. According to Tubbs, Berkowitz’s fiduciary duties as the successor trustee limited his exercise of the power of appointment. Berkowitz moved for summary judgment contending he had the right to transfer all assets to himself pursuant to the general power of appointment provisions, which allowed him to act in a nonfiduciary capacity. The court granted Berkowitz’s motion for summary judgment and found the general power of appointment provisions gave him unfettered discretion. Because the power of appointment was given to the surviving spouse, and not the trustee, the court rejected Tubbs’s contention that Berkowitz’s discretion was limited by his role as the successor trustee. On appeal, Tubbs contended the court erred because Berkowitz was bound by his fiduciary duties as trustee when he exercised the general power of appointment. Finding no error in the trial court's judgment, the Court of Appeal affirmed summary judgment. View "Tubbs v. Berkowitz" on Justia Law

The Court of Appeal affirmed the trial court's judgment and held that the trial court correctly interpreted the trust document and correctly rejected trustees' statute of limitations argument. In this case, the trial court correctly concluded that the contested amendment had no effect on Trusts B and C; the trial court correctly determined beneficiaries' claims in the 2010 petition are not a "contest" and thus are not time-barred; and the trust document required distribution of Trusts B and C as soon as is practicable after trustor's death. The court also held that trustees may represent themselves in this dispute without engaging in the unauthorized practice of law. View "Donkin v. Donkin" on Justia Law

In January 2017, plaintiffs Lori Dougherty and Julie Lee's 89-year-old father passed away while living in Somerford Place, an elder residential care facility owned and operated by defendants Roseville Heritage Partners, Somerford Place, LLC, Five Star Quality Care, Inc., and Five Star Quality Care-Somerford, LLC. In July 2017, plaintiffs sued defendants, alleging elder abuse and wrongful death based upon the reckless and negligent care their father received while residing in defendants’ facility. Defendants appealed the trial court’s denial of their motion to compel arbitration and stay the action, contending the arbitration agreement did not contain any unconscionable or unlawful provisions. Alternatively, defendants argued the court abused its discretion by invalidating the agreement as a whole, rather than severing the offending provisions. The Court of Appeal found the arbitration agreement at issue here was "buried within the packet at pages 43 through 45," and "[b]ased on the adhesiveness of the agreement, and the oppression and surprise present," the Court concluded the trial court properly found the Agreement was imposed on a “take it or leave it” basis and evinced a high degree of procedural unconscionability. Under the sliding scale approach, only a low level of substantive unconscionability was required to render the arbitration agreement unenforceable. Likewise, the Court concurred that the arbitration agreement was substantively unconscionable, "particularly given the accompanying evidence of procedural unconscionability." The Court found no abuse of discretion in the trial court's declination to sever the offending provisions of the agreement, rather than invalidate the entire agreement. View "Dougherty v. Roseville Heritage Partners" on Justia Law

The Attorney General sought an accounting relating to the Trust, alleging that Shine, a trustee, failed to fulfill his duties and failed to create a charitable organization, the “Livewire Lindskog Foundation.” The court removed without prejudice Shine and the other trustees. The other trustees were later dismissed from the case. During his trial, Shine agreed to permanently step down. Addressing whether Shine should be disgorged of fees he was paid as trustee, the court found “that Shine violated most, if not all of his fiduciary responsibilities and duties.” The court nonetheless entered judgment in favor of Shine on many of the examples of his alleged breaches because the Attorney General either failed to prove that Shine was grossly negligent or failed to prove specific damages. Based on instances in which the Attorney General met its burden of proof, the court ordered Shine to reimburse the Trust for $1,421,598. The Attorney General sought (Government Code section 12598) reasonable attorney fees and costs of $1,929,757.50. The court of appeal affirmed an award of $1,654,083.65, finding that Shine is precluded from seeking indemnification from the Trust. The trial court did not abuse its discretion by declining to reduce the award based on the difference between the Attorney General’s goals and its results. View "Becerra v. Shine" on Justia Law

Probate Code section 856 clearly and unambiguously grants the probate court the power not only to order a conveyance or transfer to the person entitled to the property in question, but also to grant other appropriate relief.In this consolidated probate matter involving Stacey Carlson and Gabriel Ashlock, Stacey challenged a judgment entered in a bifurcated proceeding on issues of damages and remedies. In the published portion of the opinion, the Court of Appeal applied de novo review and held that the proper interpretation of section 859 is reflected in Estate of Kraus, supra, 184 Cal.App.4th 103, and not Conservatorship of Ribal, (2019) 31 Cal.App.5th 519. The court affirmed in part, reversed in part, and remanded for further proceedings. View "Estate of Ashlock" on Justia Law

After the probate court found that clear and convincing evidence supported equitable reformation of the decedent's will to provide for testamentary control and disposition of her separate property only, the probate court denied requests by the decedent's son, under Family Code section 1101, for a community property award against the decedent's husband and ordered the son to reimburse the husband for attorney fees incurred to expunge the lis pendens on one of the husband's properties.The Court of Appeal dismissed the son's appeal from the attorney fees award, holding that the order granting those fees was nonappealable. The court affirmed in all other respects, holding that substantial evidence supported the probate court's findings of the decedent's intent and the mistake in drafting the pour-over will; the probate court did not abuse its discretion in reforming the pour-over will; the son lacked standing to pursue his section 1101 claims because he is not the executor/personal representative named in the pour-over will and he has waived any challenge to the probate court's ruling on standing; and, in any event, substantial evidence supported the probate court's finding that the withdrawal of one-half of the monies on deposit in the joint accounts did not cause a detrimental impact. View "Wilkin v. Nelson" on Justia Law

Mark’s grandfather, McKie, created a trust in his will for the benefit of his wife, Yvonne. during her life and granted her a testamentary power of appointment over the remainder. If Yvonne did not exercise her appointment power, McKie’s children from a prior marriage and Yvonne’s son from a prior marriage would each take a one-quarter share of the remainder; if a child did not survive Yvonne, that child’s surviving issue would take that child’s share. The issue of each of the children had a contingent remainder interest in the trust, subject to divestment by Yvonne’s exercise of her appointment power. McKie died in 1988. His adult children settled claims against the estate unrelated to the trust, disclaiming any interest in the trust. In 1991, the probate court issued a distribution decree, specifying that the trust's remainder was to be distributed solely to Yvonne’s son or his issue. McKie’s grandchildren were not given notice; the Decree eliminated their contingent interests. Yvonne died without having exercised her power of appointment. Mark’s father predeceased Yvonne. Mark unsuccessfully petitioned to be recognized as a trust beneficiary under the will's default distribution provision.The court of appeal reversed. Mark had a property interest in the trust in 1991 and the Decree adversely affected his interest. Mark’s existence and address were reasonably ascertainable; due process required that Mark be given notice of the proceeding that resulted in the Decree and an opportunity to object. View "Roth v. Jelley" on Justia Law