Justia Trusts & Estates Opinion Summaries

A dispute arose over whether a transfer of property from a family corporation to a trust constituted a "change in ownership" under California's Proposition 13, which would trigger a reassessment of the property's value for tax purposes. The Los Angeles County Assessor determined that the transfer did constitute a change in ownership because the transfer eliminated the interests of individual shareholders who held nonvoting stock in the corporation. The Los Angeles County Assessment Appeals Board reversed this decision, asserting that the beneficial interest in the corporation's real property was held by the persons who controlled the corporation through its voting stock. The Superior Court granted a petition by the assessor to vacate the Appeals Board's decision, and the Court of Appeal affirmed the Superior Court's decision.The Supreme Court of California affirmed the Court of Appeal's decision. The court held that the term "ownership interests" in the relevant statute, Revenue and Taxation Code section 62, subdivision (a)(2), refers to beneficial ownership interests in real property, not interests in a legal entity. For a corporation, these beneficial ownership interests are measured by all corporate stock, not just voting stock. The court rejected the argument that the term "stock" in section 62, subdivision (a)(2) must be interpreted to mean voting stock. The court concluded that the transfer of the properties from the corporation to the trust resulted in a change in ownership because the proportional beneficial ownership interests in the properties did not remain the same before and after the transfer. View "Prang v. Los Angeles County Assessment Appeals Board" on Justia Law

In this case before the Supreme Court of California, the court interprets the provisions regarding the modification of a revocable trust under California Probate Code sections 15401 and 15402. The dispute revolves around a trust created by Jeane M. Bertsch, which was amended multiple times, with the final amendment excluding her niece, Brianna McKee Haggerty, from distribution. Haggerty challenged the validity of the final amendment, arguing that it was not properly notarized as required by the modification method specified in the trust agreement.The court held that under section 15402 of the Probate Code, a trust may be modified using the procedures set out under section 15401 for revocation, including the statutory method, unless the trust instrument specifies a method of modification and makes it exclusive, or it expressly precludes the use of revocation procedures for modification. The court clarified that merely distinguishing between revocation and modification in the trust instrument does not preclude the use of revocation procedures for modification.The court affirmed the judgment of the Court of Appeal, which held that Bertsch’s final amendment was a valid modification, since the trust agreement did not explicitly state that the specified method of modification was exclusive or expressly preclude the use of revocation procedures for modification.The court disapproved previous appellate decisions that were inconsistent with this holding, including King v. Lynch, Balistreri v. Balistreri, Diaz v. Zuniga, Pena v. Dey, Conservatorship of Irvine, and Haggerty v. Thornton. View "Haggerty v. Thornton" on Justia Law

The Supreme Court held that the Probate Code grants standing in probate court to individuals who claim that trust amendments eliminating their beneficiary status arose from incompetence, undue influence, or fraud, thus reversing the decision of the court of appeal concluding that only a currently named beneficiary can petition the court concerning the internal affairs of a trust or to determine the existence of the trust under Cal. Prob. Code 17200, subdivision (a).Plaintiff, one of the daughters of Joan Lee Maynord, was a beneficiary under the Maynord Family Trust. Maynord subsequently executed a series of amendments to the trust. In these amendments Plaintiff's share of the trust was eliminated and Plaintiff was expressly disinherited. Plaintiff then filed a petition alleging the amendments disinheriting her were invalid on three grounds. The trial court dismissed the petition, concluding that Plaintiff lacked standing because she was neither a beneficiary nor a trustee under the trust. The court of appeals affirmed. The Supreme Court reversed, holding that claims that trust provisions or amendments are the product of incompetence, undue influence, or fraud should be decided by the probate court if the invalidity of those provisions or amendments would render the challenger a beneficiary of the trust. View "Barefoot v. Jennings" on Justia Law

Under the terms of a spendthrift trust established by his parents, Defendant was entitled to receive over one million dollars, all to be paid out of trust principal. Before the trust’s first payment, Defendant filed for bankruptcy. The bankruptcy trustee sought a declaratory judgment on the extent of the bankruptcy trustee’s interest in the trust. The bankruptcy court concluded that the bankruptcy trustee, standing as a hypothetical lien creditor, could reach twenty-five percent of Defendant’s interest in the trust. The bankruptcy appellate panel affirmed. On appeal, the Court of Appeals for the Ninth Circuit asked the Supreme Court to clarify the relevant provisions of the California Probate Code. The Supreme Court held (1) where a spendthrift trust pays the beneficiary entirely out of principal, the California Probate Code does not limit a bankruptcy estate’s access to the trust to twenty-five percent of the beneficiary’s interest; and (2) with limited exceptions, a general creditor may reach a sum up to the full amount of any distributions that are currently due and payable to the beneficiary even though they are still in the trustee’s hands and separately may reach a sum up to twenty-five percent of any payments that are anticipated to be made to the beneficiary. View "Carmack v. Reynolds" on Justia Law