Justia Trusts & Estates Opinion Summaries

A party receiving notice who fails to participate in court-ordered mediation is bound by the result. Plaintiff, the trustee of decedent's trust, petitioned the probate court to determine the trust beneficiaries. After the probate court ordered the matter to mediation, the potential beneficiaries received notice of the mediation, but some did not participate. The participating parties subsequently reached a settlement that excluded the nonparticipating parties as beneficiaries, and the probate court approved the settlement. In this appeal, the nonparticipating parties challenged the probate court's approval of the settlement.The Court of Appeal held that, by failing to participate in the mediation, the Pacific parties waived their right to an evidentiary hearing. Furthermore, the Pacific parties were not entitled to a determination of factual issues, such as the decedent's intent, and cannot raise such issues for the first time on appeal. The court rejected the Pacific parties' contention that the trustee failed in his duty to deal impartially with all beneficiaries where the Pacific parties' failure to participate was not the fault of the trustee. The court also rejected the Pacific parties' contention that the trustee breached fiduciary duties and failed to keep them reasonably informed. Finally, the court concluded that there was no extrinsic fraud, and that the probate court should decide the issue of attorney fees. Accordingly, the court affirmed the judgment order. View "Breslin v. Breslin" on Justia Law

Bernard and Sheila created the Family Trust and transferred their home to themselves as trustees. The trust became irrevocable upon the death of the surviving spouse, when the estate would be distributed to Sheila’s 13 children, including Bohnett. Sheila died in 2003. Bernard died in 2008. The property was rented out. The rent was deposited into the trust’s bank account. In 2012, the trustee filed a successful Claim for Reassessment Exclusion for Transfer Between Parent and Child (Proposition 58 claim), listing Sheila and Bernard as transferors, her children as transferees, and the date of Bernard’s death as the date of transfer.In 2013, the property was transferred by the trustee to Bohnett. A Preliminary Change of Ownership Report listed the trust as the seller/transferor, stated that the purchase was a transfer between parent(s) and child(ren), and listed the sale price as $1,030,000. The trustee distributed the money in equal shares to the 13 siblings. A second Proposition 58 claim listed Sheila and Bernard as transferors and Bohnett as transferee, leaving blank the date of transfer.The county found that there was a 12/13 change in ownership and reassessed the property from $157,731 to $962,873 for 2012/2013, and $963,114 for 2013/2014. Bohnett filed unsuccessful Applications for Changed Assessment. The court of appeal affirmed in favor of the County. The purchase by one beneficiary from his siblings and co-beneficiaries was not a parent-child transfer exempt from reassessment for property tax purposes. View "Bohnett v. County of Santa Barbara" on Justia Law

Plaintiffs, trustees and beneficiaries of a trust established in 1982 by their now deceased parents, filed suit against Alice, Shahen, and Arthur Minassian, asserting four causes of action arising out of alleged fraudulent transfers. The trial court sustained defendants' demurrers to two causes of action and plaintiffs voluntarily dismissed the remaining causes of action.The Court of Appeal reversed, holding that plaintiffs pleaded facts sufficient to constitute a fraudulent transfer cause of action under Civil Code section 3439.04, subdivision (a)(1). In this case, plaintiffs alleged that Shahen made the subject transfers with an actual intent to hinder, delay or defraud any creditor of the debtor within the meaning of the Uniform Voidable Transactions Act, and alleged with particularity the existence of several badges of fraud. Furthermore, the litigation privilege does not bar plaintiffs' cause of action. In regard to plaintiffs' third cause of action against Arthur for aiding and abetting Shahen's fraudulent transfer, the court held that Arthur was not entitled to immunity for his involvement in the sham divorce and fraudulent scheme, and rejected Arthur's argument that he is protected by the litigation privilege; even if plaintiffs had alleged an attorney-client conspiracy, the allegations are sufficient to satisfy the exception to the pre-filing requirement under section 1714.10, subdivision (c); and the disclosed agent is inapplicable in this case. View "Aghaian v. Minassian" on Justia Law

Maryam Soheili and Morteza Sohyly (appellants) appeal from a judgment quieting title to a house owned by respondents Joseph and Dinah Trenk. After Sohyly filed suit against Joseph Trenk for malpractice, the parties settled and Joseph agreed to pay $100,000 and executed a promissory note and a trust deed on the property to secure the obligation. Sohyly’s sister, Maryam Soheili, was designated as the beneficiary of the trust deed. After Joseph stopped regular payments on the note after 2003, Sohyly began nonjudicial foreclosure proceedings in 2018.The Trenks then filed this action to clear title to their house, alleging that the trust deed was no longer enforceable. The trial court quieted title in the property in favor of the Trenks, ruling that both the statute of limitations and the Marketable Record Title Act barred enforcement of the trust deed.The Court of Appeal held that a power of sale in a trust deed is enforceable even if the statute of limitations has run on the underlying obligation. In this case, because the trust deed did not state the last date for payment under the promissory note, under Civil Code section 882.020, subdivision (a)(2), appellants would have 60 years to exercise the power of sale in the trust deed. However, the court held that the power of sale is not enforceable for another reason. The court explained that the property presumptively is community property, appellants did not rebut that presumption at trial, and because Dinah did not execute the trust deed, she has the power to void it. Accordingly, the court affirmed the judgment. View "Trenk v. Soheili" on Justia Law

The trustees of the Amen Family 1990 Revocable Trust challenge the Assessor's reassessment of property the Trust received from a corporation that the Trust had partially owned. Although there were at least five owners of the stock of the transferor corporation (including the Trust) and the transferee was solely the Trust, the Trust contends that the proportional ownership interest exception applied because it had owned all the voting stock in the corporation.The Court of Appeal affirmed the trial court's judgment in favor of the Assessor and upholding the reassessment. The Assessor argues that "stock" in Revenue & Taxation Code section 62(a)(2) means exactly what it says—stock—and applies to all classes of stock, including for present purposes both voting and non-voting stock. Under this interpretation, the Assessor was right to reassess the property after the transfer because the proportional ownership interests, as measured by all the stock of the transferor corporation, had changed. Finally, the "Primary Economic Value" test in section 60 also supports that all stock is considered in applying section 62(a)(2). View "Prang v. Amen" on Justia Law

Frank Gomez and plaintiff Louise Gomez rekindled their love over 60 years after Frank broke off their first engagement because he was leaving to serve in the Korean War. Frank’s children from a prior marriage, defendants Tammy Smith and Richard Gomez, did not approve of their marriage. After Frank fell ill, he attempted to establish a new living trust with the intent to provide for Louise during her life. Frank’s illness unfortunately progressed quickly. Frank’s attorney, Erik Aanestad, attempted to have Frank sign the new living trust documents the day after Frank was sent home under hospice care. Aanestad unfortunately never got the chance to speak with Frank because Tammy and Richard intervened and precluded Aanestad from entering Frank’s home. Frank, who was bedridden, died early the following morning. Louise sued Tammy and Richard for intentional interference with expected inheritance, intentional infliction of emotional distress, and elder abuse. Tammy filed a cross-complaint against Louise for recovery of trust property. A trial court issued a statement of decision finding in favor of Louise as to her intentional interference with expected inheritance cause of action and in favor of Tammy and Richard as to the remaining causes of action. The trial court also ruled against Tammy on her cross-complaint. Tammy appealed the judgment in favor of Louise; she did not appeal the trial court’s ruling with regard to her cross-complaint. Tammy argued the judgment should have been reversed because: (1) Louise admitted she did not expect to receive an inheritance; (2) Tammy’s conduct was not tortious independent of her interference; (3) the trial court applied an erroneous legal standard in its capacity analysis; (4) there is no substantial evidence to support the finding that Frank had the capacity to execute the trust documents; (5) the trial court’s finding that Tammy knew Louise expected an inheritance is contradicted by the evidence; and (6) alternatively, the constructive trust remedy is fatally ambiguous. Finding no reversible error, the Court of Appeal affirmed. View "Gomez v. Smith" on Justia Law

In this family dispute over a trust, the Court of Appeal reversed the trial court's dismissal based on lack of personal jurisdiction. The court held that the trial court erred because the trust had ample connections to California, as do all family members who live elsewhere and who protest jurisdiction in California. In this case, the trust originated and was administered in California, the trust is governed by California law, and the trust holds interests in California real estate. Furthermore, respondents have purposefully availed themselves of the California forum; there is a substantial connection between respondents' forum activities and appellant's claims; and California is a fair place to resolve this family dispute about their trust. Finally, respondents' argument regarding Probate Code sections 17002 and 17005 are unavailing. View "Buskirk v. Buskirk" on Justia Law

This appeal arose from judgments entered after the trial court sustained demurrers without leave to amend to two probate petitions filed by the adult children of actor Hugh O'Brian. The adult children each claim a right to the decedent's assets under Probate Code section 21622 as children he omitted from his trust solely because he was unaware of their births.In the published portion of the opinion, the Court of Appeal held that the trial court did not err in considering the trust's disinheritance provisions to assess whether plaintiffs could state facts showing they were entitled to relief under section 21622. The court also held that the trial court correctly found that, to obtain a distribution of the trust assets contrary to its express terms under section 21622, plaintiffs must plead and prove facts demonstrating "the sole reason" O'Brian did not provide for them in his trust was his unawareness of their births. View "Rallo v. O'Brian" on Justia Law

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