Conservatorship Litigation: What to do in Los Angeles?

When you are involved in Conservatorship Litigation, you may forget that a Los Angeles Conservatorship is unlike any other Conservatorship when parties litigate.

First, the more parties petition, the more complex the conservatorship litigation gets. For example, if you have three petitioners and the court needs to determine suitability, it is a competition by three people at trial with the goal of showing one as being more suitable than others.

Testimony from outsiders may be obtained to justify the points made by each litigant in the conservatorship. Any evidence of elder abuse by someone who seeks a conservatorship for another can knock out that petitioner who has committed elder abuse out of the conservatorship case.

Next comes the determination of how the fees of all three litigants get paid. In most cases, in conservatorship litigation, the fees get paid by the conservatorship estate. There are times where you may want to privately pay the fees so that your attorney’s bills are not the subject matter of the review by the court and others.

When it comes to conservatorships and litigation, you must look at the following:

  1. Can co-conservators work together?
  2. Who is bondable and who is not bondable?
  3. How will the conservatorship fees be paid?

To talk to us about a Los Angeles Conservatorship and litigation in Los Angeles, call Mina Sirkin, Conservatorship attorney at 818.340.4479 or email: MSirkin@SirkinLaw.com.

Who can be a trustee in California?

Who can be a trustee is one of the most common questions a trust lawyer hears. The answer to that question depends on a number of factors.

  1. First, you have to look at the trust document to see who is named in the trust as a trustee or successor trustee.
  2. Next, you have to determine, if a successor trustee is willing and able to act.
  3. If there is a vacancy in the office of the trustee, the trust document usually determines how a new trustee can be appointed. If the trust document is silent as to a method of picking a successor trustee, then the interested adult beneficiaries can nominate someone to act.
  4. If a person is to act as a trustee but has not been named as a trustee in the trust, he/she must post a bond to become a trustee.
  5. There are many times where we fill the office of the successor trustee for our clients.
  6. You may want to consider hiring a Los Angeles Private Trustee or Professional Fiduciary since sometimes that allows litigants to resolve matters faster. Talk to us about getting a new trustee and replacing a trustee.

Ask us how to pick a new trustee for a trust, or fill a vacancy in the office of the trustee. Call Mina Sirkin, a specialist trust attorney assisting clients with the selection of private trustees in Los Angeles. call 818.340.4479

Do you need help as a conservator or guardian in Los Angeles?

The most important function that a conservator or guardian has, is to protect the person and assets of the individual for whose benefit the guardian or conservator has been appointed. For the same reason, a conservator’s attorney is there to advise the conservator of legal aspects of working as a conservator.

Here is a short-list of what a conservatorship attorney can do to help a guardian or conservator carry out the duties of the guardian:

  1. Advise regarding setting up books and records per the court rules.
  2. Helping with compliance with the bond and inventory issues.
  3. Getting you ready for your accounting.
  4. Advise the guardian re what NOT to do in an estate.
  5. Connect you to competent professionals, caregivers etc to help you with your duties.
  6. Connect you with a CPA who handles conservatorship and guardianship matters.
  7. We help you figure out how to pay the conservatorship fees with a court order after you are appointed.

Our conservators’ attorney can get you the help you need if you are a guardian or a conservator and get you through the court system faster. Call Mina Sirkin at 818.340.4479 or email us Info@SirkinLaw.com for more help.

What is the Public Administrator?

The Public Administrator is an arm of the County in Los Angeles which handles estate administration of individuals whose families have not been located, or whose families do not want to administer the probate estate.

When is the Public Administrator appointed? When there are no suitable family members or next of kin available to close an estate, the probate court can appoint the Public Administrator to do the job of an executor or administrator.

Does the Public Administrator have any powers? Yes, they have the right to enter the property of the decedent, collect the assets, store them, inventory them, sell and distribute the assets. All of their actions come under the supervision of the probate court. The PA is represented by attorneys called County Counsel. In Los Angeles County, the Public Administrator is represented by attorneys at the County Counsel’s office.

What can the Public Administrator do?

The P.A., as called for short, collects or marshals all of the assets of the deceased person, located potentials heirs, pays the creditors, inventories the assets, and then distributes the assets to the heirs of the deceased person. They do not take sides between the beneficiaries or heirs. They merely focus on collection and distribution. Yes, it takes longer to close an estate with the Public Administrator because it is not a private entity. A private administrator called a professional fiduciary also handles estates the same way, but at a much faster speed.

How do you talk to the Public Administrator?

Each case is assigned to a particular case worker at the Public Administrator’ office. You must locate the person assigned to your case by knowing the case number of the probate case, and the name of the deceased person.

Can an attorney help handle things with the Public Administrator?

Yes, an experienced probate attorney knows most of the County Counsel, and the persons in charge of Public Administration of Estate and can help ease your way in getting things done in estates which you may or may not be able to do on your own.

Connecting to us: Attorney Mina Sirkin handles all matters where a probate administrator is needed. Call on us to get you through the maze of public administrator matters. Call 818.340.4479

List of Important Items for Conservators as described by Mina Sirkin Attorney

There are critical items that a conservator must discuss with an attorney when acting as a conservator or when having been appointed as a co-conservator of a person or estate.

The following is a list of some of the important matter, but not a comprehensive one:

  1. Set up the books and records of the conservatorship on day one.
  2. Keep receipts of everything in a paper file with a description of the item.
  3. Do not pay yourself a fee without a prior court order.
  4. Do not reimburse yourself for costs without a prior court order.
  5. Immediately get help from a CPA or accountant to know what you will need to provide at tax time, as you will be responsible to file the conservatee’s tax return, if you are acting as conservator of the estate.
  6. Hire caregivers from reputable agencies.
  7. If you are hiring caregivers privately, you must have an agreement with them, comply with tax withholding laws, and should not work any caregiver more than an 8 hour shift in a day. You must provide state mandated breaks and lunch periods. Payroll tax is one of the areas of mistakes among conservators.
  8. Carry Workers’ Comp insurance as a rider to the homeowner’s insurance or set it up separately through a company such as Paychex. Let professionals handle all of the payroll requirements.
  9. Be sure you have adequate homeowner’s insurance, liability, fire and worker’s compensation insurance for the conservatorship estate.
  10. Keep your assets separate from the assets of the conservatee. Do not mix your money with the money of the conservatee.
  11. If you have a co-conservator, set up regular meetings in person or by phone to avoid misunderstandings and problems in communication.
  12. If you have a co-conservator, you should each consider having separate counsel.
  13. Conservatorship Fees in Los Angeles can be paid either individually by the client (from the client’s funds) without a court order, or from the assets of the conservatorship estate with a court order. Conservatorship fees cannot be paid from the conservatee’s assets without a prior court order.
  14. One of the most important items to do for a conservator is to check the court’s notations by reviewing all matters pertaining to the conservatorship probate notes in Los Angeles.

Talk to a Conservator’s attorney, by calling Mina Sirkin at 818.340.4479 or meet us at our La County Glendale Pasadena office for attorney help for conservators in Los Angeles.

#losangeles #los #angeles #los #angeles

Inheriting Separate Property Where there is No Will in California

Where there is no will under California Inheritance Law, there are default rules for who will inherit the estate. Here is a list of what you have to look at:

  1. You must ask if the Property is Community Property or Separate Property.
  2. Is there a prenuptial agreement or a post-nuptial agreement that changes the default inheritance rules?
  3. Is there a surviving spouse?
  4. Are there any children?

Assuming there is no agreement that changes the inheritance potential, If the assets are community property and there is a spouse, under the rules of inheritance in California, the spouse gets to inherit all of it. This means all of decedent’s 1/2 and all of the surviving spouse’s own 1/2.

California Probate Code 6401 (a)

If the assets are separate property, and there is a spouse and one child, the spouse gets one half (1/2) and the child gets one half (1/2).

But what if there are more children? Then the spouse gets 1/3 one-third, and 2/3 two-thirds is distributed among the children equally.

Here is what the California Probate Code has to say about inheriting separate property:

(c) As to separate property, the intestate share of the surviving spouse is as follows:

(1) The entire intestate estate if the decedent did not leave any surviving issue, parent, brother, sister, or issue of a deceased brother or sister.

(2) One-half of the intestate estate in the following cases:

(A) Where the decedent leaves only one child or the issue of one deceased child.

(B) Where the decedent leaves no issue, but leaves a parent or parents or their issue or the issue of either of them.

(3) One-third of the intestate estate in the following cases:

(A) Where the decedent leaves more than one child.

(B) Where the decedent leaves one child and the issue of one or more deceased children.

(C) Where the decedent leaves issue of two or more deceased children.

Most estates may have a combination of community property and separate property so the assets actually get distributed according to their character.

Do you wonder if your father’s wife will get the estate? Need to talk to an expert in inheritance laws in California, in Glendale and Los Angeles County? Call Mina Sirkin at 818.340.4479 or email Info@SirkinLaw.com

Han v. Hallberg

Filed 5/21/19

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT

DIVISION EIGHT

SUNNIE H. HAN, as Special Administrator, etc., et al.,   Plaintiffs and Appellants, v. RICHARD HALLBERG, Jr., as Trustee, etc.,   Defendant and Appellant. B268380     (Los Angeles County Super. Ct. No. SC114026)

APPEALS from a judgment and an order of the Superior Court of Los Angeles County. Norman P. Tarle, Judge.

Judgment and order reversed.

Prince & Heuer and Henry T. Heuer for Plaintiffs and Appellants.

Horvitz & Levy, Jeremy B. Rosen, Shane H. McKenzie;  Law Office of Richard D. Teitel, Richard D. Teitel; Law Office of Peter A. Gelles and Peter A. Gelles for Defendant and Appellant.

SUMMARY

In 1975, four dentists formed a partnership to acquire and maintain a dental office building. In 1994, the then-partners amended their agreement to allow one of the partners,

Dr. Richard Hallberg, to assign his partnership interest to his living trust, and to substitute the trustee (then Dr. Hallberg) as a general partner in place of Dr. Hallberg individually. When

Dr. Hallberg died 15 years later, litigation ensued over whether, despite the substitution, Dr. Hallberg was still a partner at the time of his death, triggering certain buyout provisions that applied in the event of a partner’s death.

The trial court concluded the trust was not a separate legal entity, and that Dr. Hallberg was a partner at the time of his death. The court stated it was required to follow Presta v. Tepper (2009) 179 Cal.App.4th 909, 918 (Presta) (“when a trustee of an ordinary express trust enters into a partnership relationship in

his capacity as trustee, it is he, and not ‘the trust’ which is the party to that agreement”).

We conclude Dr. Hallberg was not a partner when he died.

His trust, or the trustee of his trust, was the partner. While a trust cannot act in its own name and must always act through its trustee, a trust is a “person” that may associate in a partnership under the Uniform Partnership Act of 1994 (UPA; Corp. Code,

§ 16100 et seq.), based on the plain language of the UPA’s definition of “person.” The clear statutory language is reinforced by other provisions of the statute, as well as by its legislative history. We see no contradiction between the terms of the UPA and California trust law, and to the extent Presta suggests otherwise, we disagree. Accordingly, we reverse the trial court’s judgment.

FACTS

  1. The Background

In 1975, four dentists formed a general partnership called SM-Ensley Dental Group, for the purpose of “acquiring, operating and maintaining a dental office building.” The 1975 partnership agreement required partners to be practicing dentists.

In 1989, the partners amended the agreement’s provisions on withdrawal, retirement or death of a partner. These amendments allowed the estate of a deceased partner to retain the interest of the deceased partner and to continue operation of the partnership. This could be done by notifying the surviving partners in writing, by first-class mail, “within not more than   90 days from the date of death . . . .”1 If the estate failed to exercise this option within 90 days, the surviving partners could opt to purchase the interest of the deceased partner by notifying the estate, “within 60 additional days,” by a writing sent “by first- class mail, to the representative of the deceased partner………………………………………………………………………….. ”2

1               The 1989 amendments stated: “In the event of the death of any partner during the term of this partnership, the operation of the partnership shall continue if the estate of the deceased partner, either by his personal representative or successor trustee, within not more than 90 days from the date of death, notifies the surviving partners in writing, by first-class mail, of the election of the estate to retain the interest of the deceased and to continue operation of the partnership on behalf of the estate or its distributees, which shall be subject to all of the obligations to the partnership of the deceased partner.”

Footnote 2               The 1989 amendments stated: “In the event the personal representative or the successor trustee of the deceased partner fails to exercise such option by giving notice to the surviving partners within 90 days, as specified hereinabove, the surviving

The 1989 amendments also provided for the valuation of the deceased partner’s interest “by the appointed California Probate Referee in any probate proceedings . . . .”3 If the remaining partners elected not to purchase the interest of the deceased partner, the partnership assets were to be “distributed in kind to each of the partners or to their respective personal representatives or trustees according to their respective interests,” and governed by the law relating to tenants in common.

In 1990, Eric L. Loberg became a partner. In 1994, the general partners were John Schrillo (26 percent), Richard W.

partners shall thereafter, within 60 additional days, have the option to continue the partnership business and purchase the interest of the deceased partner, which option may be exercised by said remaining partners by giving notice of the exercise of such option to the deceased partner’s estate by a writing sent, by first-class mail, to the representative of the deceased partner, at a price and on the terms and conditions hereinafter set forth.”

3               The 1989 amendments stated: “In the event of the death of a partner during the term of this partnership agreement, the valuation of his interest for the purchase by the remaining partners shall be equal to the value fixed by the appointed California Probate Referee in any probate proceedings or trust termination in said deceased partner’s estate as reduced by an amount equal to 7% of the gross valuation, the deceased partner’s debts to the partnership and said deceased partner’s share of the partnership debts. If no appointment is made within 90 days of the date of death, the remaining partners shall request the appointment of such referee as a non-probate matter, which value shall be binding upon both the heirs of the deceased partner and the remaining partners as hereinabove set forth.”

Hallberg (26 percent), John F. Griffee (24 percent), and Eric L. Loberg (24 percent).

On September 12, 1994, the four partners again amended the partnership agreement, this time to allow a substitution for one of the general partners, Dr. Hallberg.  The amendment recited that the partnership agreement “contain[ed] no provisions dealing with the assignment of partnership interests or the effect upon the Partnership in the event of a substitution of a general partner.” The parties then agreed to the assignment of Dr. Hallberg’s partnership interest to Dr. Hallberg as trustee of The Richard W. Hallberg Trust (the Hallberg Trust), as follows:

“The assignment of RICHARD W. HALLBERG’s partnership interest to RICHARD W. HALLBERG, as Trustee of THE RICHARD W. HALLBERG TRUST, shall not cause a dissolution of the partnership.  Upon the consent of all general partners, RICHARD W. HALLBERG, as Trustee of THE RICHARD W. HALLBERG TRUST, shall be substituted as a general partner in place of RICHARD W. HALLBERG, individually, provided that such Trustee agrees in writing to be bound by the terms and conditions of the Partnership Agreement and that such Trustee accepts and assumes the rights, benefits, responsibilities, and liabilities of the assignor general partner.”

All four general partners consented to “the substitution of

RICHARD W. HALLBERG as Trustee of THE RICHARD W.HALLBERT TRUST, under Declaration of Trust dated August 4, 1994, as general partner in place of RICHARD W. HALLBERG, individually.” And Dr. Hallberg, “as trustee of THE RICHARD W. HALLBERG TRUST,” agreed “to be bound by the terms and conditions” of the partnership agreement, and “accept[ed] and assume[d] the rights, benefits, responsibilities, and liabilities of RICHARD W. HALLBERG, individually, as a general partner in said partnership.”

In 2002, Dr. Loberg acquired Dr. Griffee’s 24 percent partnership interest.

In 2003, Dr. Hallberg appointed his son, Richard Hallberg Jr. (Hallberg Jr.) to serve as a cotrustee of the Hallberg Trust.

In 2009, Hallberg Jr. became the sole trustee of the Hallberg Trust. (Hallberg Jr. apparently did not realize he was the sole trustee until after the first phase of the court trial in this case.)

On March 16, 2010, Dr. Hallberg died.

If Dr. Hallberg were still a partner when he died, then the partnership agreement would give his estate  90  days  (until June 14, 2010) to notify the surviving partners “of the election of the estate to retain” the deceased partner’s interest and to continue operation of the partnership “on behalf of the estate or its distributees.” No such notification was made, by June 14 or any later time.

On June 16, 2010, Dr. Schrillo sent Hallberg Jr. various partnership documents and information he had requested, including the partnership agreement and amendments and information on rentals, bank accounts, the mortgage, and so on, also stating that copies of the documents “should be among your father’s papers.”

If Dr. Hallberg were still a partner when he died, and his estate failed to exercise its option to continue the partnership, then the partnership agreement would give the surviving partners the option, within 60 additional days (until August 13, 2010), to continue the partnership business and purchase.

Dr. Hallberg’s interest, by giving notice “to the deceased partner’s estate by a writing sent, by first-class mail, to the representative of the deceased partner.”

On August 3, 2010, counsel for Drs. Loberg and Schrillo wrote to Hallberg Jr., giving “formal notice that the surviving partners hereby exercise their option to purchase the interest of Dr. Richard Hallberg, deceased,” in the partnership.

On August 17, 2010, Hallberg Jr.’s lawyer responded to the August 3, 2010 letter, referring, in pertinent part, to the 1994 amendment to the partnership agreement “relating to transfer of Dr. Hallberg’s partnership interest to the Richard W. Hallberg Trust.”

On August 31, 2010, Dr. Loberg and Dr. Schrillo themselves sent a “second notice” of their exercise of “[their] option to purchase the interest of Dr. Richard Hallberg, deceased,” in the partnership.

On October 12, 2010, Hallberg Jr. wrote to Drs. Loberg and Schrillo, responding to their August 31, 2010 letter. Among other things, he stated the partnership interest was owned by the Hallberg Trust; and for that and other reasons, the letter was not a valid exercise “of any option you might or might not otherwise have had to purchase the Trust’s Partnership Interest.”

Hallberg Jr. stated the Hallberg Trust was not obligated to sell its partnership interest, “and that instead, pursuant to [the] Partnership Agreement, the Partnership property is required to be distributed to the remaining valid Partners, as tenants in common.”

2.             The Complaint

On September 6, 2011, Drs. Loberg and Schrillo (plaintiffs) filed a complaint against Hallberg Jr. as successor trustee of the Hallberg Trust (defendant).4 The complaint recited that, after exhaustive discussions, the parties were unable to agree on  terms, including the price, “to buy-out the interest of the Hallberg Trust.”  The complaint sought appointment of a probate referee for evaluation of the interest of the Hallberg Trust in the partnership; a mandatory injunction requiring defendant to comply with the buyout terms of the partnership agreement; and declaratory relief. A fourth cause of action sought damages for defendant’s alleged breach of the partnership agreement.

3.             The Trial

On July 9 and 10, 2012, the court held a bench trial on the three bifurcated equitable claims, and issued a tentative decision in October 2012. We briefly summarize the proceedings pertinent to our resolution of this appeal.

The court held that the Hallberg Trust was not “a separate legal entity that continues to own a partnership interest,” and “[t]he partner in this case was Dr. Hallberg.” The court observed that defendant’s effort to distinguish the Presta case was “valiant but unavailing,” and that the court was required to follow Presta.

The court ordered the matter to proceed to the appointment of a referee for valuation of the deceased partner’s interest.

In November 2012, defendant sought reconsideration or a new trial, principally because he had discovered that the

4                During this litigation both plaintiffs died, and Sunnie H. Han, as special administrator of the estate of Dr. Loberg, and Dr. Schrillo’s wife, Kathryn Schrillo, as special administrator of his estate, were substituted as plaintiffs.

Hallberg Trust had been restated in 2009 and that he was, at the time of his father’s death, the sole trustee. He contended his father therefore was not the holder of the partnership interest, either as an individual or as trustee, on the date of his death.

The court permitted defendant to provide additional trial testimony and evidence, and allowed further briefing by the parties. These proceedings occurred in June and July 2013.

In a supplemental tentative decision in July 2013, the court adhered to its previous ruling for the plaintiffs. The court viewed the 1994 amendment “against [the] background” that all the partners had been dentists and close friends, not legal professionals, and “the only reference to a trustee in any of the partnership documents . . . is the 1994 amendment.”5 The court stated it “appears clear that based upon their familiarity and mutual trust,” and “[w]hen read in the context of the full agreement and the relationship of the partners, it would appear that the individual partners expected to have some control over which person they would be dealing with in managing the partnership.”

The court also found that Dr. Loberg’s testimony “which the defense brushes aside as self-serving,” also corroborated the court’s interpretation. (Dr. Loberg testified “ ‘that this was a court found this testimony “conforms to this general sense of the 1994 amendment, but also is in line with the Presta holding.”)6

method for Dr. Hallberg to avoid probate and some taxes.’ ” The

5                The court observed there were two references to trustees in the 1989 amendment, but these “presumably refer[red] to testamentary trustees.”

Litigation then continued over the appointment of a referee and the appraisal of “the ‘Hallberg 26% Interest’ ” in the partnership. In February 2014, the court appointed a referee and required the referee to value the real property “as a Dental Office Building in accord with the purpose of the partnership . . . and  the historical use of the building, rather  than its  ‘highest and best use.’ ”

Five months later (during which there was further litigation over communication with the referee and the information he could consider), the referee valued the fee simple interest in the real estate, as of July 27, 2014, at $3.7 million.

More litigation followed, with defendant objecting to the referee’s report. In February 2015, the trial court stated its agreement with the referee’s recommended valuation, and its intention to permit the parties to raise issues still to be resolved that were not part of the referee’s valuation.

In a second phase of the trial that took place in May 2015, the court found no breach of contract, observing that defendant was not a partner or signatory to the partnership agreement, which did not require defendant’s agreement for the appointment

6                Dr. Loberg also testified that he never contemplated “at any time up until today [June 19, 2013] that [he] would under some circumstance be partners with somebody that’s a nondentist with respect to the building.” (This cannot be so, because as of 1989, the partnership agreement itself contemplated that the estate of a deceased partner could retain the partnership interest of a deceased partner.) of a probate referee. The court found the buyout amount owed to defendant was $723,366.7 Judgment was entered on October 7, 2015. Defendant filed an appeal and plaintiffs filed a cross-appeal.

In postjudgment proceedings, the court awarded certain attorney fees and costs in favor of plaintiffs. Defendant filed an appeal from the trial court’s order, and plaintiffs filed a cross- appeal.

We ordered the appeals from the judgment and the postjudgment order consolidated into a single appeal.

DISCUSSION

  1. Appellate Motions

Defendant filed a motion for judicial notice along with his opening brief. He requested judicial notice of legislative history materials relating to the UPA, and of complaints in two lawsuits relating to the partnership filed in 2001 and 2012. We grant the motion as to the legislative history materials,8 and deny it as to the complaints; the latter are irrelevant to our decision.

7                The buyout amount consisted of 26 percent of the referee’s property valuation of $3.7 million, reduced by 7 percent as required by the partnership agreement, and further reduced by $171,294 in debts (for the mortgage, loans from partners, and certain disputed expenses for improvements to the building).

8               Plaintiffs opposed defendant’s request for judicial notice, contending the materials are irrelevant to the issues on appeal; the request did not state whether judicial notice was taken by the trial court; courts generally do not take judicial notice of evidence not presented to the trial court; and the materials “would require an undue expenditure of time for review.” A reviewing court has…

Plaintiffs filed a motion to strike portions of defendant’s appendix, contending the appendix includes five documents that were not filed, admitted, marked for identification, or lodged with the trial court.  These include four inconsequential documents that plaintiffs themselves state were contained in the exhibit books defendant and plaintiffs brought to trial (two in  defendant’s exhibit book and two in plaintiffs’ exhibit book). The fifth document plaintiffs want to strike is referee Keith Settle’s 2014 appraisal – over which the parties litigated for months, and which is the basis for the buyout amount ordered in the judgment on appeal. We find plaintiffs’ motion baffling and pointless, and no legal authority requires us to grant it. We accordingly deny it, and turn to the merits of the appeals.

2.             Defendant’s Appeal

Defendant raises four claims of error on appeal. Because our conclusion on the first claim is dispositive, we do not consider defendant’s other challenges to the judgment and postjudgment order.

As indicated at the outset, we cannot agree with the trial court’s ruling, stated in the judgment, that “[a]t the time of his death, Richard Hallberg, Sr., was one of three partners in the

SM-Ensley Dental Group partnership, and he held a 26% interest in the partnership.” On the contrary, we find it incontrovertible that Dr. Hallberg individually was not a partner when he died.

That much is clear from the express terms of the 1994 amendment to the partnership agreement. The four then-partners expressly consented to “the substitution of [Dr. Hallberg] as Trustee of [the Hallberg Trust] as general partner in place of [Dr. Hallberg] individually.” (Italics added.) And Dr. Hallberg, “as trustee of [the Hallberg Trust],” agreed to be bound by the terms of the partnership agreement and assumed “the rights, benefits, responsibilities, and liabilities” of Dr. Hallberg individually “as a general partner.”

The authority to take judicial notice of matters not before the trial court (Brosterhous v. State Bar (1995) 12 Cal.4th 315, 325), and plaintiffs’ proffered reasons for not doing so are not persuasive.

We cannot ignore the express substitution of Dr. Hallberg as trustee “in place of [Dr. Hallberg] individually.” The holder of the partnership interest, for the 15 years before and at the time of Dr. Hallberg’s death, was the trustee of the Hallberg Trust – not Dr. Hallberg individually. That did not change when Dr. Hallberg died. The whole point of the assignment of Dr. Hallberg’s partnership interest to the trust was to avoid having the partnership interest pass to Dr. Hallberg’s estate when he died. Accordingly, we will not pretend the substitution of general partners in 1994 did not happen.

That brings us to the legal point at issue: the claim that, because an express trust under California law is not “an entity separate from its trustee[],” a trust like the Hallberg Trust is not a “person” that can participate in a partnership.  We do not  agree. California’s UPA plainly contemplates the opposite result, and we do not find Presta’s contrary assessment persuasive.

Our analysis begins with the UPA and general trust principles, followed by an explanation of our differences with Presta and the arguments raised by plaintiffs.

a.             Trust principles and the UPA

Case precedents have long stated that under California law, “a trust is not a person but rather ‘a fiduciary relationship with respect to property,’ ” and “ ‘ “ ‘an ordinary express trust is not an entity separate from its trustees.’ ” ’ ” (Moeller v. Superior Court (1997) 16 Cal.4th 1124, 1132, fn. 3 (Moeller).) Thus, for example, a trust cannot sue or be sued or otherwise act in its own name; instead the trustee acts  on  behalf  of  the  trust.  (E.g., Powers v. Ashton (1975) 45 Cal.App.3d 783, 787.) Similarly, an estate is not considered a traditional legal entity. (See Estate of Bright v. Western Air Lines, Inc. (1951) 104 Cal.App.2d 827, 828

[“An ‘estate’ is not a legal entity and is neither a natural nor artificial person.”].)

But the fact that a trust is a “relationship” and not an entity separate from its trustees does not mean that a trust cannot act – as always, through its trustee – as a partner under general partnership law. California’s UPA expressly provides that a trust may associate in a partnership.

Under the UPA, a partnership is “an association of two or more persons,” and the term “person” is defined to include a “trust.” (Corp. Code, § 16101, subds. (9) & (13).) Specifically, the UPA defines a person as “an individual, corporation, business trust, estate, trust, partnership, limited partnership, limited liability partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.” (Id., subd. (13).)  Thus, the statute on its face includes both a “business trust” and a “trust” among the “person[s]” that may associate in a partnership.9

9               In practice, family trusts do form partnerships. While no legal challenge was at issue, there are references in California cases to living trusts acting as partners in California partnerships. (See, e.g., Stoltenberg v. Newman (2009)179 Cal.App.4th 287, 290, 293 [referring to a family trust that

The plain definitional language of the UPA is, in our view controlling. And other provisions of the UPA – specifically the provisions identifying the events that dissociate a partner from the partnership (Corp. Code, § 16601) – further show that the statute contemplates no termination of partnership status when the trustee of a trust is replaced or dies.

Section 16601 of the UPA states that a partner is dissociated from a partnership “upon the occurrence of any of the following events.” (Corp. Code, § 16601.) Those include, “[i]n the case of a partner who is an individual,” the partner’s death. (Id., subd. (7)(A).) And, “[i]n the case of a partner that is a trust or is acting as a partner by virtue of being a trustee of a trust,” a partner is dissociated by “distribution of the trust’s entire transferable interest in the partnership, but not merely by reason of the substitution of a successor trustee.” (Id., subd. (8), italics added.) (The same is true of a partner that is “an estate or is acting as a partner by virtue of being a personal representative of an estate.” An estate is dissociated from a partnership by “distribution of the estate’s entire transferable interest in the partnership, but not merely by reason of the substitution of a successor personal representative.” (Id., subd. (9).))

b.            Legislative history of the UPA

As we have said, we view the plain language of California’s UPA as controlling. And we find nothing in the legislative history materials defendant has presented that suggests any contrary interpretation of that language.

The basis of California’s statute was a revised uniform partnership act (RUPA or the model act), first approved and was a general partner in two entities, and to “the partnerships owned by” an inter vivos family trust].)

recommended for adoption in all states by the National Conference of Commissioners on Uniform State Laws (the Conference) in 1992, and again, with revisions, in 1994. The Conference’s comments on the definition of “ ‘person,’ ” in 1992 and again in 1994, stated that the definition was “the usual definition used by the . . . Conference.”10 As for the 1994 model act’s provisions on events that dissociate a partner from the partnership (substantively identical to those later adopted in California), the Conference simply described the provision11 and stated that it was “new” and was “inspired by” a provision of the Revised Uniform Limited Partnership Act.

In 1996, the California Legislature enacted the Conference’s 1994 model act, with modifications not pertinent here. (9 Witkin, Summary of Cal. Law (11th ed. 2017) Partnership, § 18, pp. 606-607.) The California legislative history contains little relevant discussion of the definition of “person.” The Legislature merely added other entities – limited companies.”

10             The definition of “person” was “an individual, corporation, business trust, estate, trust, partnership, association, joint venture, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.” The Conference also stated in its 1992 comments that “[a] limited liability company is another legal entity within the definition of ‘person,’ ” and in its 1994 comments that the definition “includes other legal or commercial entities such as limited liability

11            The Conference stated the statute “provides for the dissociation of a partner that is a trust, or is acting as a partner by virtue of being a trustee of a trust, upon the distribution by the trust of its entire transferable interest in the partnership, but not merely upon the substitution of a successor trustee.”

partnerships, limited liability partnerships, and limited liability companies – to the 1994 model act’s definition of “person.” Similarly, the Legislature adopted without substantive  change the 1994 model act’s provision on the event that dissociates a trust, or a trustee “acting as a partner by virtue of being a trustee of a trust,” from the partnership. (Corp. Code, § 16601, subd. (8).) That provision was in the bill as introduced (Assem. Bill No. 583 (1995-1996 Reg. Sess.) Feb. 17, 1995, § 2, p. 23) and remained unchanged.

In short, there appears to have been no controversy over  the inclusion of a trust among persons who may form a partnership – either when the Conference approved the model act or during the passage of the UPA by the California Legislature.

  • Presta

Despite the plain language of the 1994 amendment to the partnership agreement in this case, and the language and legislative history of the UPA (which plaintiffs do not address), plaintiffs rely on the Presta case to conclude that Dr. Hallberg was a partner when he died. We are not persuaded.

In Presta, two men entered into a real estate investment partnership, each acting in his capacity as trustee of a family trust. The court held that the partners were “the men,” not “the trusts,” and the death of one of the two men triggered the provision of the partnership agreement requiring the partnership to purchase the interest of a deceased partner.  (Presta, supra, 179 Cal.App.4th at pp. 911, 919.)

Presta’s rationale was that under California law, a trust is not “an entity, like a corporation, which is capable of entering into a business relationship such as a partnership.” (Presta, supra, 179 Cal.App.4th at p. 913.) An express trust “is merely a relationship by which one person or entity holds property for the benefit of some other person or entity.” (Ibid.) The court found it “most important[]” that an express trust is not an entity separate from its trustees (id. at p. 914), citing Moeller, supra, 16 Cal.4th at page 1132, footnote 3 (“a trust is not a person but rather ‘a fiduciary relationship with respect to property,’ ” and “ ‘ “ ‘is not an entity separate from its trustees’ ” ’ ”)

Of course, we do not disagree with the principles expressed in Moeller.  But we do not see how the fact that a trust is not “ ‘an entity separate from its trustees’ ” precludes the trustee from “entering into a business relationship such as a partnership” (Presta, supra, 179 Cal.App.4th at pp. 914, 913) on behalf of the trust. As Moeller itself states, “the trustee has all the powers needed for effective transaction of business on behalf of the trust.” (Moeller, supra, 16 Cal.4th at p. 1132.)

Presta acknowledges that the UPA specifies that “persons” who may form a partnership include both a “business trust” and  a “trust.” (Presta, supra, 179 Cal.App.4th at p. 915.) But Presta points out that the UPA’s definition of “person” ends by including “ ‘any other legal or commercial entity.’ ”  (Presta, at p. 915, quoting Corp. Code, § 16101, subd. (13), italics added in Presta.) According to Presta, this “implies that it covers those listed only to the extent they are, in fact, ‘legal or commercial entities.’ ” (Presta, at 915.) “Thus what the statute actually provides is that to the extent a ‘trust’ qualifies as a ‘legal or commercial entity,’ it could also qualify as a ‘person’ capable of forming a partnership.” (Ibid.)

We do not see any such implication in the terms of the statute. For one thing, it cannot be reconciled with the inclusion of “estate[s]” in the definition of persons that may associate as partners. Nor does it explain the inclusion of both “business trust[s]” and “trust[s].”  Presta identifies “ ‘trust compan[ies]’ ” and “real estate investment trusts” as “trust ‘entities’ recognized under California law,”12 that “might qualify as the type of entities capable of forming a partnership,” while family trusts are merely “fiduciary trust relationships” which do not. (Presta, supra,179 Cal.App.4th at pp. 915-916.) But again, we see nothing in trust or partnership law that supports the constraint Presta imposes.

In the end, Presta distinguishes between a partner that is “the trust itself” and a partner that is “ ‘acting as a partner by virtue of being a trustee of a trust.’ ”  (Presta, supra,179 Cal.App.4th at p. 916, quoting Corp. Code, § 16601, subd. (8).) Presta treats the former as a category available only to “entities” like trust companies and real estate investment trusts, and treats the latter (in our view, erroneously) as if they were individual partners rather than trustees. (Ibid.) Presta asserts that section 16601 of the UPA recognizes the distinction (Presta, at p. 916), because it contains the language referring to a partner “that is a trust or is acting as a partner by virtue of being a trustee of a trust.” (§ 16601, subd. (8), italics added.)

But Presta, quoting the applicable language only in part, completely ignores the whole point of Corporations Code section 16601, which is to identify events that dissociate thepartner from the partnership. Whether the partner is “a trust” or “is acting as a partner by virtue of being a trustee of a trust,” makes no discernable difference; in both cases, the partner is not 12             The definition of “trust compan[ies]” to which Presta refers was later repealed. (See Fin. Code, former § 107, repealed

Stats. 2011, ch. 243, § 1.)
dissociated from the partnership by the death of the trustee. On the contrary, that partner, whether trust or trustee, is dissociated only by “distribution of the trust’s entire transferable interest in the partnership,” and not by “the substitution of a successor trustee.” (§ 16601, subd. (8).

In other words, it does not matter whether we identify the partner as the trust or as the trustee that transacts business for the trust. The result is the same.  And Presta identifies nothing  in California trust law to suggest that, merely because a trust is not a separate entity and cannot act except through its trustee, it (or its trustee acting for it) cannot be a partner. We can think of no reason why that should be so.

We end our discussion of Presta by pointing out that the court there was faced with facts that differ to some extent from the facts in this case. The court concluded that the partners “had to be [the men] themselves” because the family trusts they created “constituted mere relationships under California law.” (Presta, supra, 179 Cal.App.4th at p. 917.) But the court found its conclusion was “further bolstered” by language in the partnership agreement that suggested that the two men, who were the sole trustees of their respective trusts, “also intended that interpretation.” (Ibid.; see id. at pp. 917-918.) Nothing of the sort exists in this case. Instead, the 1994 amendment leaves no doubt the four partners intended to substitute Dr. Hallberg as trustee of his trust in place of Dr. Hallberg in his individual capacity. They consented in writing to the substitution, and the amendment required Dr. Hallberg as trustee to accept and assume the responsibilities of Dr. Hallberg individually “as a general partner in said partnership.” There is no suggestion in the partnership agreement to the contrary.

d.            Plaintiffs’ contentions

Plaintiffs contend that, “[s]eparate and apart from the reasoning in Presta,” additional facts in this case “militate in favor of the same outcome.” They do not.

Plaintiffs first argue that the 1994 amendment was  intended “to cover the single transaction of Dr. Hallberg’s transfer to his revocable, family trust, and to no other,” and there was no agreement to “multiple transfers and to include strangers.”  Similarly, plaintiffs contend the partners “did not give consent to any other person or entity to substitute in as a partner.” We understand plaintiffs to be telling us they did not agree to “transfers” to successor trustees such as defendant.

While the argument suggests the partners did not understand trust principles when they agreed to the substitution of

Dr. Hallberg as trustee of the Hallberg Trust for Dr. Hallberg individually, that cannot change the legal effect of their agreement. (Moeller, supra, 6 Cal.4th at p. 1131 [“The powers of a trustee are not personal to  any particular trustee but, rather, are inherent in the office of trustee. It has been the law in California for over a century that a new trustee ‘succeed[s] to all the rights, duties, and responsibilities of his predecessors.’ ”].)

Plaintiffs point to the trial court’s conclusion that, “based upon their familiarity and mutual trust, the partners expected to control the membership of the partnership.” It is hard to know what to make of that, because as discussed earlier, long before the 1994 amendment, the partners had agreed that the estates of deceased partners could retain the deceased partner’s interest in the partnership. The beneficiaries of a deceased partner’s estate are no less “strangers” than a successor trustee upon the death of the original trustee. So, plaintiffs’ suggestion that the partners
did not intend to allow a successor trustee to remain in the partnership simply does not withstand scrutiny.

Plaintiffs then argue that the 1994 amendment was ambiguous, and that Dr. Loberg testified to his understanding that the trust was a method “ ‘for Dr. Hallberg to avoid probate and some taxes,’ ” and that he (Dr. Loberg) never contemplated that he would be partners with a non-dentist. But as we have stated earlier, there is nothing ambiguous about the 1994 amendment, and Dr. Loberg’s subjective understanding (which is also contrary to the 1989 amendment) cannot change that. (Roldan v. Callahan & Blaine (2013) 219 Cal.App.4th 87, 93[“courts must also presume parties understood the agreements they sign, and that the parties intended whatever the agreement objectively provides, whether or not they subjectively did”].)

In short, none of these “additional facts” requires or allows a different outcome.

e.             Conclusion

To summarize: It is quite clear from the language of the 1994 amendment that Dr. Hallberg individually was not a partner when he died. There is simply no way to get around this point. It is also quite clear from the language of the UPA that a trust, as well as a business trust and an estate, is a person that may associate with other persons in a partnership. There is no way to get around that either. And it is quite clear from the UPA that the appointment of a successor trustee does not dissociate a partner that is a trust (or is acting as a partner by virtue of being a trustee of a trust) from the partnership. To the extent that Presta suggests otherwise, we are compelled to disagree.

As a consequence of these points, it is necessarily the case that, because Dr. Hallberg individually was not a partner when he died, his death did not require his estate to make an election  to retain his interest, as that interest had long ago been assigned to the trustee of the Hallberg Trust, and did not pass to Dr. Hallberg’s estate. The Hallberg Trust, or its trustee acting as a partner by virtue of being the trustee, continues to be a partner in the SM-Ensley Dental Group along with the estates of

Dr. Schrillo and Dr. Loberg.

2.        Plaintiffs’ Cross-appeal

In their cross-appeal, plaintiffs contend the trial court

should have used the date of Dr. Hallberg’s death as the date of valuation of his partnership interest; that the court erred when it did not award attorney fees to plaintiffs as prevailing parties under Civil Code section 1717; and that certain distributions of net income to defendant after Dr. Hallberg’s death should have been deducted from the buyout price. These claims are all moot in light of our ruling on defendant’s appeal.

DISPOSITION

The judgment and postjudgment order are reversed, and  the trial court is directed to enter judgment in favor of defendant. Defendant is to recover his costs on appeal.

GRIMES, Acting P. J.

WE CONCUR:

STRATTON, J.

WILEY, J.

Power of Attorney Lawyer Attorney

Everything you wanted to know about a Power of Attorney is listed below for your use. Feel free to call our power of attorney lawyer to discuss your individual case.

Requirements of Setting Up the Power of Attorney

The person who wants to give the power is called the Principal. The person who receives the power is called the Agent or Attorney in Fact. In order for the Power of Attorney to work, the Principal must be competent at the time of creation of the power. The Agent must also be competent at the time he or she starts to act as the agent. The document itself also sets up the time when the power goes into effect. Some Power of Attorney documents go into effect immediately. Other Power of Attorneys will start to work only when the Principal has become incapacitated.

In summary, look to see if the following requirements for the power of attorney are met:

  1. Competency of Principal at execution or signing of the power of attorney.
  2. Competency of the Agent at the time he or she starts to act.
  3. Time set in the Power of Attorney document or form when the power starts to work.

What if the Power of Attorney delays its effectiveness until there is incapacity?

Incapacity is usually defined in the instrument itself. If it is not, it can be determined by a certification by one or two doctors. It is important to look to see if the form itself has a definition.

If there are two power of attorney documents which are competing, the later one governs, unless it can be shown that it was invalid at the time of execution or signing of the power of attorney.

How to open an account when you are named as an agent under a power of attorney?

The account should read as follows:

Agent’s name, as Agent under a Power of Attorney for Principal.

Joe Smith, Agent under a Power of Attorney for John Smith.

Banks will accept any variation of the above on the account or may shorten it.

The social security number of the principal is used at the bank.

You must keep the assets of the principal separate from the assets of the agent. The agent should not use the assets of the principal to benefit the agent unless the document so authorizes specifically.

If you doubt that the power of attorney will work, you should consult and attorney about a conservatorship.

Call us to discuss your Power of Attorney needs or a conservatorship with our lawyer and attorney. Call 818.340.4479 to talk to the friendly staff at Sirkin Law Group, P.C.

What Information Do I Need for Probate in Los Angeles?

To start a Probate in Los Angeles, you need the following information. Here is a list of Probate Information to gather before you start the probate process:

  1. Decedent’s name, including any aliases.
  2. Decedent’s last known address. The place of residence at the time of death governs where the probate petition must be filed.
  3. You will need the Decedent’s Certified Death Certificate.
  4. Please gather names and addresses of known relatives: Parents, Spouse, Children, Siblings of the decedent. If any person is deceased but leaves a child, please tell us.
  5. A list of decedent’s known property. A bond needs to be issued for all liquid assets of the decedent, plus annual interest on income of the assets.
  6. The name of the person who wants to be the personal representative, and their relationship to the decedent.
  7. If there is a will or trust, please provide us with the originals of those documents.
  8. Find out the social security number of the decedent.
  9. Any information about the Decedent’s banks and CPA is also very helpful.
  10. Gather information about the Decedent’s home and let us know if anyone lives there.

Once you have the above information, please call us for a free consultation and to obtain more information about probate in Los Angeles California. Call Mina Sirkin, Probate Attorney at 818.340.4479

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