Estate of Irving Duke, California Court of Appeal, Second District, Case No. B227954, December 4, 2011.

Decedent Irving Duke’s holographic will provided that on his death all of his property shall pass to his wife Beatrice, and that if Beatrice died at the same time that Decedent died all of his property was go pass to two charities.  The will did not address the situation where Beatrice might predecease Irving.  Beatrice did in fact die five years before Irving.  The two charities petitioned for probate of the will.  Two of Decedent’s nephews, who were not named in the will, argued that the condition under which the charities would have been entitled to distribution had not occurred, and that as a result Decedent’s estate should pass pursuant to the intestacy statutes.

The court agreed with the Decedent’s nephews, holding that as the will was unambiguous, extrinsic evidence could not be admitted in an effort to establish the Decedent’s intent, nor could an argument be made as to the construction or reformation of the will.  As the will was unambiguous, the clear result was that the Decedent’s assets should pass in accord with the intestacy statutes—it would be improper conjecture or speculation for the court to engage in an effort to correct the dispositive clause.

Although I don’t necessarily disagree that the will was unambiguous as far as its terms provided, it seems clear the will failed to address the situation where Beatrice predeceased Irving.  Thus, it can be argued that the will was ambiguous as to the events that did actually occur, i.e., that Beatrice predeceased Irving. It is also a maxim in California probate law that a Decedent’s estate should pass as the Decedent intended.  Based on the wording of the will, it is also no more certain that Decedent intended his estate to pass by intestacy.  Accordingly, it is arguable that extrinsic evidence should have been admitted as to Irving’s intent.  The court’s ultimate bright-line rule doesn’t necessarily do justice to the Decedent’s intent.

Dave Tate, Esq. (California)
Trust, estate, conservatorship and elder litigation and difficult administrations; hourly, referral/fee, contract, co-counsel, split hourly/contingency, and contingency arrangements considered.

In Conservatorship of Cornelius (California Court of Appeal, First Appellate District, November 15, 2011, A131495), the court held that a temporary conservator was entitled to recover her attorneys’ fees and costs for the temporary conservatorship although she dismissed the permanent conservatorship.

A daughter was appointed temporary conservator of her father for six months, but then dismissed her petition for permanent conservatorship.  The evidence established a clear need for the temporary conservatorship as the father was susceptible to undue influence, fraud and financial abuse; however, the father’s condition and situation improved during the temporary conservatorship and the father objected to the permanent conservatorship.  The daughter petitioned for attorneys’ fees and costs after dismissing the petition for permanent conservatorship.  The father objected to his daughter’s recovery of the attorneys’ fees and costs.

The court affirmed the daughter’s recovery of attorneys’ fees and costs, holding that §§2641(a) and 2642(a) make no distinction between temporary and permanent conservators, and that a temporary conservator is entitled to reimbursement of attorneys’ fees and other expenses properly incurred for the conservatee’s benefit during the term of that temporary appointment regardless of whether a permanent conservator is ever appointed.  Section 2641(c) also provides that a conservator may be compensated for her good-faith, but unsuccessful, opposition to a petition or other request or action by the conservatee.

“The petition to appoint a permanent conservator, and appointment of a temporary conservator pending resolution of that petition, may well benefit the conservatee even if a permanent conservatorship is never established. It is benefit to the conservatee, not establishment of a permanent conservatorship, that a court must look to in deciding whether a temporary conservator is entitled to reimbursement.”

“The relevant question is whether [the] temporary conservator . . . acted in good faith, based on the best interest of her father . . . in petitioning for conservatorship and in opposing his request to dissolve it.”  Similarly, expenses incurred in seeking disqualification of the private attorney who was retained by the father were also properly awarded as there was a legitimate dispute regarding the capacity of the father to contract for legal services.

The general rule in California is that you are presumed to have read, understood and intended the wording and terms of a document that you sign, including a will or trust.  It is difficult to prove that someone was unduly influenced, coerced or tricked into signing a will or trust that contains terms that do not reflect that person’s natural intent.  This is especially true if the person committing the undue influence, coercion, fraud or trickery has a close and/or long-term relationship with the person who is signing the will or trust.  So . . . why wouldn’t a bad or greedy person try to inherit by undue influence, coercion, fraud or trickery?  What do they have to lose?  Not much really, assuming that they were not inheriting much anyway if it wasn’t for their wrongful acts.

New California estate and trust case: for the purpose of the related by blood or marriage exception to section 21350 disinheritance, an heir is anyone who could inherit by intestate succession even if they don’t so inherit under the circumstances of the case.

Hernandez v. Kieferle (California Court of Appeal, October 31, 2011, Case No. B229653).

Decedent left her estate by trust to a stepdaughter who was a care custodian for Decedent.  The stepdaughter was the daughter of Decedent’s pre-deceased husband.  In pertinent part Cal. Probate Code §21350 includes categories of people who cannot be recipients of testamentary bequests.  One of those categories includes persons who are care custodians of the Decedent.  However, §21351(a) states that §21350 does not apply when the Decedent transferor is “related by blood or marriage” to the transferee.  Section 21351(g) further states that the “related by blood or marriage” provision shall include persons within the fifth degree or heirs of the transferor.  The question was whether the stepdaughter was an heir of the Decedent.

It was clear that under the circumstances of the estate the stepdaughter would not inherit through intestacy as an heir of the Decedent.  However, if the assets of the estate had been different, it could have been possible that the stepdaughter could have inherited as an heir through intestacy.

More specifically, Probate Code §44 defines an heir to be  any person, including the surviving spouse, who is entitled to take property of the decedent by intestate succession under the Probate Code, and under §6402.5, which falls within the provisions governing intestacy (§6400 et seq.), the children of a decedent’s predeceased spouse may in some circumstances take the decedent’s property.  Subdivision 6402.5(a) states in part that for purposes of distributing real property, if the decedent had a predeceased spouse who died not more than 15 years before the decedent and there is no surviving spouse or issue of the decedent, the portion of the decedent’s estate attributable to the decedent’s predeceased spouse passes as follows: (1) If the decedent is survived by issue of the predeceased spouse, to the surviving issue of the predeceased spouse.

In this case the stepdaughter was the daughter of Decedent’s pre-deceased husband who had died approximately 11 years earlier.  The Court held that the “related by blood or marriage” exception applies because by interpreting the term “heir” broadly, in this case the stepdaughter qualified as an “heir” under §6402.5 regardless of whether the stepdaughter would have inherited property if the Decedent had died intestate.

I’ll need to give this decision more thought as it might be a circumstance of bad law to reach a particular conclusion.

Well . . . it has been a slow month for relevant or important new California trust, estate and elder appellate decisions.  Here is a call for more appellate cases.  Yes, there are many important trust, estate and elder issues that still need to be determined or clarified by appellate court determination.  For example, I would like to see more in the accounting/information and conservatorship areas.  So, let’s get those appeals going.

New trust case—remainder beneficiary of revocable trust lacks standing to bring action against trustee—Estate of Giraldin
Dave Tate, Esq. (San Francisco)
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In Estate of Giraldin (California Court of Appeal, Fourth Appellate District, Case No. G041811, September 26, 2011), the Court recently held that remainder beneficiaries of a revocable trust lack standing to compel an accounting or bring an action against the third party trustee for the alleged wrongful actions or omissions to act of the trustee that occurred prior to the time that the trust became irrevocable.  While the trust remained revocable, the trustee only owed a duty to the trustor.  The beneficiaries alleged that during the time that the trust remained revocable, and the third party trustee was serving as trustee, the trustor lacked mental capacity to make competent decisions, including decisions involving how he wanted to use and invest trust assets, and that the trustee wrongfully permitted the trustor to make those decisions and to take those actions.

Estate of Giraldin contradicts and criticizes the California Court of Appeal First District’s holding in Evangelho v. Presoto (1998) 67 Cal.App.4th 615, which held in a similar revocable trust situation that the remainder beneficiaries do have standing to bring a claim against the trustee’s actions that were taken while the trust was revocable.

The problem with the holding in Estate of Giraldin is that the Court seeks to reach a bright-line rule that could be correct in some cases, but that also ignores that in other situations trust disputes of this nature present factual situations that are not amenable to such a single simple rule.  After all, the Probate Court is a court of equity.  For example, in Estate of Giraldin itself the Appellate Court appears to not attach much if any importance to the fact that:

[t]he[trial] court “further [found] that [the trustor] Bill lacked mental capacity to understand that certain documents proffered by [the trustee] Tim were written directions to the Trustee to authorize any of these transactions by the Trust or to relieve Tim of any of the statutory trustee duties.” Moreover, the court concluded “Bill was not sufficiently mentally competent in late 2001 and thereafter to either analyze the benefits and risks of an investment in SafeTzone… or to authorize and direct Tim to make such an investment.”

Perhaps some of the difficulty in the case results because:

[s]pecifically, [the beneficiary] respondents’ petition sought to hold [trustee] Tim responsible for breaches of duties “owed to trust beneficiaries,” such as the duty to “administer the trust solely in the interest of the beneficiaries”; the duty “to diversify investments”; the duty to “deal impartially with beneficiaries”; and the duty “to make trust property productive.” Each of those alleged “duties” was actually inconsistent with Tim’s obligation, during Bill’s lifetime, to administer the trust solely for Bill’s benefit and pursuant to Bill’s direction.

The Court’s holding might have been different if in the alternative the beneficiaries sought to fashion a claim on behalf of an alleged wrong committed against Bill.  For example, in relevant part, the Court stated:

Of course, what the trustee cannot do is dispose of trust assets in a manner inconsistent with the settlor’s wishes. If, as respondents posited at oral argument, Tim had taken money from the family trust without Bill’s authorization just days before Bill died, so that Bill himself had no opportunity to do anything about it, there would still be a remedy. The representative of Bill’s estate would have the right to pursue an appropriate claim for recovery of those funds on behalf of the estate. (Code Civ. Proc., § 377.20, subd. (a) [“Except as otherwise provided by statute, a cause of action for or against a person is not lost by reason of the person’s death, but survives subject to the applicable limitations period.”].) And even assuming the representative of Bill’s estate was Tim himself, who might be expected to have little enthusiasm for bringing such a claim, respondents, or any other “interested person,” would have the right to petition for Tim’s removal in favor of an impartial special administrator who could then pursue whatever appropriate claims Bill might have had against Tim. (Prob. Code, § 8500.)

In this case, however, as we have already explained, respondents were not purporting to pursue Bill’s claims, or to seek redress for alleged wrongs done to him. Instead, they were seeking to vindicate their own distinct interests, by claiming Tim had breached duties allegedly owed to them during the period prior to Bill’s death. We hold merely that Tim owed them no such duties, and thus respondents lacked standing to assert those claims. We express no opinion on the merit of any theoretical claims that might have been asserted on Bill’s behalf. None were.

As factual circumstances vary widely in trust cases, whereas bright-line rules can apply in appropriate trust circumstances, care should be taken to not overstate a rule’s possible universal applicability.  In Giraldin for example, the Court also could have focused on the issue of the trustor’s original intent and whether the trustor’s actions and decisions were in keeping with that intent in light of the Trial Court’s finding that Bill was lacking in mental capacity to evaluate and make certain investment decisions.  I do agree, however, that the trustee was not required to evaluate Bill’s mental capacity or to have that mental capacity evaluated, at least in part because there was no evidence that caused the trustee to believe or suspect that Bill was incompetent to make the decisions that he was making.  The situation might have been different if the trustee was aware of red flags evidencing a lack of capacity.

The following are links to the California Elder Justice Workgroup report on Improving California’s Response to Elder Abuse, Neglect and Exploitation, Report, Click Here, Executive Summary, Click Here.  And the following is a link to the California Elder Justice Workgroup wiki site, Click Here.  If you are interested, see also the following elder abuse article from earlier this year, Click Here, and the Center of Excellence on Elder Abuse & Neglect at the UC Irvine School of Medicine, Click Here.

It is no secret, and it has been known for a long time that there is a lot of financial and physical abuse and/or neglect of seniors and dependent adults.  The resources are not made available to handle the cases, and, having represented clients in cases of both financial, physical and mental abuse, I can certainly say that elder abuse cases are usually difficult and very time-consuming to prosecute.  The best deterrent is for elders to have friends and family members who are regularly present, visible and vocal, and who take action.  As a society we have a long way to go to make stopping the abuse of elders a recognized national priority.

Dave Tate, Esq. (San Francisco)
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Here are links to two interesting articles that I came across (note, the discussions in the articles are the comments of the authors, they are not my comments, and I take no responsibility for them).

1.  A useful, basic California asset preservation discussion, Click Here.

2.  When memory lapses are not just signs of aging by Jane E. Brody, New York Times, Click Here.

Click Here for a brief introductory video by me – an overview of my practice.

The following is a link to an interesting article by Victoria J. Haneman discussing the possibility of using constructive trust equitable remedies to cure or mitigate testamentary mistakes, Click Here.  In fact, at least in California, wills and trusts are supposed to be read or interpreted to accomplish the decedent’s intent.  See, e.g., Cal. Probate Code Secs. 21101 and 21102, and related cases.  However, it is possible that a court might not always be procedurally willing to render a determination reforming the testamentary instrument to conform to that intent.  Although instrument reformation to intent is the preferable remedy, as an alternative, and although perhaps somewhat more difficult to implement and oversee, constructive trust might be argued to obtain a remedy that effectively requires that the assets are used for the purpose that the decedent intended.  See, e.g., Cal. Civ. Code Secs. 2223 and 2224, and related cases.  Of course, the unintended beneficiary of the mistake can oppose the action at reformation or constructive trust, arguing that the instrument is worded as the decedent intended, and that the decedent’s execution of the instrument creates a presumption that the provisions are as the decedent intended and that any admissible evidence to the contrary is insufficient to establish otherwise.  As in typical trust and will dispute cases, the outcome likely depends on the direct and circumstantial evidence relating to the decedent’s intent and natural testamentary dispositions, the nature of the mistake or erroneous wording, the decedent’s mental capacity to execute the testamentary instrument, the relationship between the decedent and the unintended beneficiary, possible undue influence, and other similar and related factors.

David Tate, Esq., Practice Intro Video, Click Here.

Interesting article in the NY Times, clinical trials neglect the elderly, to read article Click Here.