The Court in Placencia found, that a Will can be a clear and convincing evidence of the intent of the decedent to change the survivorship of an account. Read the Court’s opinion below:
STEPHANIE A.
PLACENCIA,
as Cotrustee, etc.,
Plaintiff, Defendant and Respondent, v. LISA M. STRAZICICH, as Cotrustee, etc.,
Filed 11/26/19
CERTIFIED FOR
PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH
APPELLATE DISTRICT
DIVISION THREE
G055631
(Super. Ct. No.
30-2010-00356226) O P I N I O N
Appeal from a judgment of the Superior Court of Orange County, David L.
Belz, Judge. Affirmed in part, reversed in part and remanded with directions.
Bradley R. Kirk & Associates and Bradley R. Kirk for
Plaintiff, Defendant and Appellant.
Bidna & Keys, Richard D. Keys and Howard M. Bidna for Plaintiff,
Defendant and Respondent.
* * *
Ralph Placencia died, leaving behind, among other things, a will, a
trust, and a joint bank account with an express right of survivorship in favor
of one of his daughters, appellant Lisa Strazicich. Prior to his death in 2009,
Ralph left clear statements in his will that he did not want Lisa to have the
right of survivorship; he wanted the proceeds of the account to go to his trust
so it could benefit all three of his daughters.1 After his death,
Lisa refused to relinquish the funds, and both she and respondent Stephanie
Placencia, another of Ralph’s daughters, both of whom were cotrustees of
Ralph’s trust, filed petitions in the probate court in their capacity as trustees
to determine the parties’ respective rights. The court determined that Ralph’s
intent should prevail and ordered Lisa to account for the funds to the trust.
Lisa appealed.
This appeal turns on a close reading of Probate Code sections 5302 and
5303, part of the California Multiple-Party Accounts Law (Prob. Code, § 5100 et
seq.; CAMPAL), which governs rights of survivorship in joint accounts.2
Section 5302, subdivision
(a), provides that a joint account entails a right of survivorship “unless
there is clear and convincing evidence of a different intent.” The
commentary to that section makes clear that “the intention to negate survivorship may be shown to have
existed after the time of creation of
the account.” (Cal. Law Revision Com. com., 53 West’s Ann.
Prob. Code
(2009 ed.) foll. § 5302, p. 61, italics added.) On the other hand, section 5303
provides that “rights of survivorship are determined by the form of the account at the death of a
party.” (Id., subd. (a), italics
added.) “Once established, the terms of a multi- party account” including joint
tenancies, “can be changed only by
one of the following methods” (id.,
subd. (b), italics added), which generally require a party to file paperwork
with the financial institution. (id.,
subd. (b)(2).) This case presents a difficult question:
1 For
purposes of clarity, we use first names because some of the individuals
involved share the same last name. No disrespect is intended.
2 All
statutory references are to the Probate Code.
Ralph clearly
expressed the intent to negate survivorship, but the form of the account
included a right of survivorship, and Ralph did not employ one of the methods
listed in section 5303 to change the terms of the account.
We harmonize the two
statutes by recognizing the explicit distinction drawn in CAMPAL between the
actual ownership of the beneficial interests in the account, and the express
terms of the account. The
distinction allows the court to honor the clear intent of the person who
established the account while at the same time offering protection to the
financial institution which holds the depository account.
The express terms of the
account bear particular importance for the financial institution that holds the
account: CAMPAL contains a safe harbor that immunizes a financial institution
for payments it makes in compliance with the express terms of the account.
Nonetheless, CAMPAL
recognizes that the beneficial interests in the funds may differ from its
express terms. Section 5302 concerns the rules to determine the
beneficial interests in the account; section 5303 concerns the express terms of
the account. Thus, we hold
that the financial institution was correct to pay the funds to Lisa pursuant to
the express terms of the account, but the beneficial owner of those funds is
Ralph’s estate.
We also conclude the
court properly relied on Ralph’s will as evidence of his intent,
notwithstanding section 5302, subdivision (e), which provides that a right of
survivorship “cannot be changed by will.” That provision merely preserves the
nonprobate quality of survivorship rights. The court may still look to the will
as an expression of intent to negate survivorship.
However, we reverse on two
issues. First, the funds in the bank account belong to Ralph’s estate, which
has not been subject to a probate proceeding. It was error for the court to
award those funds directly to the trust in the absence of a probate proceeding.
Second, in light of that reversal, we remand for the trial court to reassess
Stephanie’s attorney fees.
FACTS
In 1985, Ralph opened what the parties refer to as the Franklin Fund
account with an initial deposit of $140,000. Lisa was listed as a
co-owner. Lisa’s counsel states the
paperwork submitted to open the account specifies that it is a joint account
with right of survivorship, though the copy in the record is almost entirely
illegible. Regardless, Stephanie stipulated that the account was opened as a
joint tenancy with right of survivorship. Moreover, an account statement from
2009 addressed to Ralph and Lisa bore the acronym “JT WROS,” which appears to
stand for joint tenants with right of survivorship.
Lisa, who was 23 years old at the time, had no involvement in opening the
fund. Ralph told Lisa that he put her on the Franklin Fund, but never had any
other discussion with her about it. Lisa never deposited money into the
account, all of which, to Lisa’s knowledge, came from Ralph. Lisa never
withdrew money from the account during Ralph’s lifetime. The account paid
dividends, which Ralph took during his lifetime.
Ralph passed away in December 2009. In the months leading up to his
death, Ralph had
a number of conversations with Henry Rivera, his brother-in-law, which resulted
in Henry assisting Ralph to prepare a will and trust, which Ralph executed
approximately 11 days before his death.
His will left specific directions as to the Franklin Fund account:
“Remove Lisa Strazicich as sole beneficiary of my Franklin Fund. I want the
beneficiaries to be Lisa Strazicich, Stephanie A. Placencia and Tina R.
Placencia, my three daughters. [¶] I want the Franklin Fund to be placed into
my trust fund and then be used to pay off the mortgage of my home in Huntington
Beach, CA.” Henry confirmed that Ralph specifically made these requests in
their conversations.
The trust specified that the res would be distributed evenly between
Ralph’s three daughters, Lisa, Stephanie, and Tina. It specifically
disinherited his two sons (one of whom passed away). The trust named Lisa and
Stephanie as successor cotrustees after Ralph’s death but specified that most
important decisions would need Tina’s consent as well. At the time of Ralph’s
death, the trust contained three properties located in California: a residence
in Huntington Beach, raw land in Brea, and a residence in Long Beach.
Collectively they were valued at approximately
$2,215,000.
In January 2010, about a month after Ralph passed away, Lisa transferred
the assets of the Franklin Fund account to an account in her name.
In March 2010, Mark Zavala, one of Ralph’s sons, filed a petition seeking
to invalidate the trust. Ultimately that petition was denied and the validity
of the trust confirmed.
Meanwhile, the sisters’ relationship grew contentious; they could not
reach a consensus on the proper disposition of the trust assets. Lisa was
performing most of the work administering the trust. Stephanie testified that
she had not performed any role as trustee for the first four years after her
father passed away. However, she was consulting with Lisa and Tina on major
decisions related to the trust.
In September 2014, Stephanie filed the first of the underlying petitions
in her capacity as cotrustee of the trust. She sought an accounting, damages
for breach of fiduciary duty, and to remove Lisa as trustee. In December 2014,
Lisa filed a petition in her capacity as cotrustee, seeking, among other
things, to remove Stephanie as cotrustee, to recover various costs and fees
associated with her work administering the trust, and declaratory relief as to
the status of the Franklin Fund account. By the time the petitions were filed,
most of the property in the trust had been sold and the funds distributed. Only
the Long Beach residence and a small bank account were still held in trust.
The court ultimately trifurcated the trial into three phases. The first
phase concerned most of the issues on the merits, including the Franklin Fund
issue. The second phase dealt with requests for trustee fees, attorney fees,
and other litigation costs. The third phase concerned an accounting of the
Franklin Fund account.
In the first phase the court concluded Ralph’s will, as confirmed by Henry’s conversations with
Ralph, amounted to clear and convincing evidence that Ralph intended to revoke Lisa’s right of survivorship in the Franklin
Fund account at the time of
his death. Consequently, the
court ordered Lisa to account for the proceeds of the Franklin Fund account,
with Lisa’s share in the trust to be reduced by the amount she owes the trust
from the Franklin Fund account.
Also in the first phase, the court rejected several of Stephanie’s claims
for relief, including: her request to remove Lisa as trustee, her claim that
Lisa breached her fiduciary duty by failing to rent the Long Beach residence,
her claim for double damages under section 859 for Lisa’s refusal to turn over
the Franklin Fund account, and her claim that Lisa violated other fiduciary
duties.
As to
Lisa’s other claims, the court granted her request to sell the Long Beach
property and distribute the proceeds, granted her request to remove Stephanie as trustee, and
rejected her claim of malfeasance against Stephanie.
In the second phase, the court first concluded that Stephanie was entitled to
attorney fees. In reaching that conclusion, the court found that
Stephanie was acting on behalf of the trust as a trustee, that she prevailed on
the Franklin Fund issue, and that the fees she incurred were expended for the
benefit of the trust. After reducing what the court found to be excessive hours
spent, the court awarded Stephanie $138,580 in fees, and $19,236.46 in costs.
Lisa also sought attorney fees, which the court granted in part and
denied in part. The court denied Lisa fees to the extent they were incurred in
connection with the Franklin Fund issue, but granted her fees in connection
with her successful efforts to remove Stephanie as trustee and to sell the Long
Beach property. This resulted in a fee award of $95,284 to Lisa, which she does
not challenge on appeal.
However, Lisa does challenge the amount of trustee
fees the court awarded her. The court awarded her $38,850 for the period of
2009-2017. We discuss the court’s ruling in more detail below.
In the third phase, the accounting of the Franklin Fund
account, the court found Lisa held a total of $221,006.44 traceable to the
Franklin Fund. Lisa appealed from the final judgment that incorporated the
court’s rulings from all three phases.
DISCUSSION
The Franklin Fund Account
Does Not Belong to Lisa
Lisa first contends the court erred by denying her right of survivorship
to the Franklin Fund account. We disagree. In reaching the conclusion that Lisa
is not entitled to the funds, we address two aspects of the statutory scheme
that, at first blush, seem to support Lisa’s position: section 5303’s
restrictions on the methods of altering the terms of a multi-party account, and
section 5302, subdivision (e)’s restriction on the use of a will to change a
right of survivorship.
Sections 5302 and 5303
CAMPAL provides a roadmap for joint accounts, and rights of survivorship
in particular. Section 5302,
subdivision (a) provides, “Sums remaining on deposit at the death of a party to
a joint account belong to the surviving party or parties as against the estate
of the decedent unless there is clear and
convincing evidence of a different intent.”
(Italics added.)
“This section is the same in substance as Section 6-104 of the Uniform Probate
Code (1987), except that section 5302 omits the UPC requirement that the intent
that there be no rights of survivorship exist at the time the account is created.” (Cal. Law Revision Com. com.,
53 Wests Ann. Prob. Code, supra,
foll. § 5302, p. 61, italics added.) Section 5302 omits the italicized
language. The commentary to section 5302 draws the logical conclusion that, “under Section 5302, the
intention to negate survivorship may be shown to have existed after the time of
the creation of the account.” (Cal. Law Revision Com. com., 53 Wests
Ann. Prob. Code, supra, foll. § 5302,
p. 61.)
Section 5303, on the other hand, contains the following restrictions:
“The provisions of Section 5302
as to rights of survivorship are determined by the form of the account at the
death of a party.” (Id., subd. (a).)
“Once established, the terms of a multiple-party account can be changed only by any of the following methods:
[¶] (1) Closing the account and reopening it under different terms. [¶] (2)
Presenting to the financial institution a modification agreement that is signed
by all parties with a present right of withdrawal. If the financial
institution has a form for this purpose, it may require use of the form.
[¶] (3)
If the provisions of the terms of the account or deposit agreement
provide a method of modification of the terms of the account, complying with
those provisions. [¶] (4) As
provided in subdivision (c) of Section 5405 [payment by the financial
institution in accordance with written instructions from a party].” (Id., subd.
(b) (1)-(4),
italics added.) Section 5303, subdivision (c) further provides that withdrawal
of funds from the account eliminates rights of survivorship as to the funds
withdrawn.
The question we confront is: What happens when the form of the account includes a right of
survivorship, which was not altered by any of the methods listed in section
5303, but the decedent expressed an intent to negate survivorship before
passing? The key to
harmonizing these statutes lies in the distinction between the express terms of the account and the beneficial interests in the account.
This distinction is explicitly set forth in section 5201, which
provides, “(a) The provisions of Chapter 3 (commencing with Section 5301)
concerning beneficial ownership as between parties .
. . are relevant only to controversies between these persons and their
creditors and other successors, and have no bearing on the power of withdrawal
of these persons as determined by the terms
of account contracts. [¶] (b) The provisions of Chapter 4
(commencing with Section 5401) govern the liability of financial institutions
who make payments pursuant to that chapter.” (Id., italics added.) Sections 5405 and 5402, in turn, provide a
safe harbor for financial institutions that pay according to the terms of the
account, irrespective of any beneficial ownership interests: “Payment made
pursuant to Section . . . 5402 . . . discharges the financial institution from
all claims for amounts so paid whether or
not the payment is consistent with the beneficial ownership of the account as
between parties.” (§ 5405, subd. (a), italics added.) Section 5402
provides, “Any sums in a joint account may be paid, on request and according to its terms, to any party ”
The distinction
between the terms of an account and the ownership of
beneficial interests is
key to interpreting section 5303 because the principal restriction in section
5303 is that “the terms of a
multiple-party account can be changed only by” utilizing one of the listed
methods. (Id., subd. (b), italics
added.) Section 5302,
by contrast, concerns the
beneficial interests as between the parties to the account: “Sums remaining on
deposit at the death of a party to a joint account belong to the surviving
party or parties as against the estate of
the decedent unless there is clear and convincing evidence of a different
intent.” (Id., subd. (a),
italics added.) Further evidence that section 5302, subdivision (a), concerns
beneficial interests appears a few lines down in subdivision (d). Subdivision
(a) concerns joint accounts, subdivision (b) concerns pay on death accounts,
subdivision (c) concerns Totten trusts,3 and subdivision (d)
contains the
3 “The
term Totten trust describes a bank account opened by a depositor in his own name as trustee for another
person where the depositor reserves the power
to
following
catchall: “In other cases,
the death of any party to a multiparty account has no effect on beneficial ownership of the account
other than to transfer the rights of the
decedent as part of the
decedent’s estate.” (Italics added.) The fact that the catchall is
explicitly framed in terms of the ownership of beneficial interests strongly
suggests that subdivisions (a) through (c) also concern the ownership of
beneficial interests.
The answer to the question we posed above, therefore, is this: The financial institution may pay the surviving party according to the
terms of the account, but the decedent’s estate has a claim for the funds
against the surviving party. This result achieves the dual aims of (1)
honoring the actual intent of the decedent as to the disposition of his assets,
and (2) ensuring the financial institution has an ascertainable, objective
basis upon which to pay out the funds in a manner that does not subject it to
liability. Here, it was proper for the financial institution to pay out the
funds to Lisa, as the terms of the account listed her as having a right of
survivorship, but Ralph’s estate had a valid claim for the funds against Lisa.
The court in Araiza v. Younkin (2010)
188 Cal.App.4th 1120 (Araiza) reached
the same result. There, the decedent had established a checking and savings
account naming her stepdaughter as the beneficiary of the account (though
without any
right of
withdrawal during the decedent’s lifetime). (Id. at p. 1123.) Four years later, the decedent established a
living trust, expressly transferred the savings account into the trust, and
provided that the savings account was to go to someone else upon decedent’s
death. (Ibid.) Upon decedent’s death,
the trial court awarded the account to the trust beneficiary. (Id. at pp. 1123-1124.) The stepdaughter
appealed, contending that the
withdraw the funds during his
lifetime. If the depositor has not revoked the trust then, upon his death, any
balance left in the account is payable to the beneficiary.” (Estate of Fisher (1988) 198 Cal.App.3d
418, 424.) A Totten trust is a type of multi-party account governed by CAMPAL.
(§ 5132.)
account was hers
because the decedent had not changed the terms of the account pursuant to
section 5303. (Araiza, at p. 1124.)
The Court of Appeal treated the account as a Totten Trust, which is
governed by essentially the same rules as a joint account. (Araiza, supra, 188 Cal.App.4th at pp. 1124-1125; § 5302, subd. (c).) The
court rejected the stepdaughter’s argument concerning section 5303, stating,
“This narrow reading of the statute, however, fails to harmonize it with
section 5302. Section 5302, subdivision (c)(2) provides that sums remaining on
deposit in a Totten trust after the death of the sole trustee belong to the
person named as beneficiary, ‘unless there is clear and convincing evidence of
a different intent . . . .’ Here, although the signature card for the savings
account named [the stepdaughter] as the beneficiary, there is clear and
convincing evidence that [the decedent] had a ‘different intent’ at the time of
her death. She established a living trust that expressly stated her intention
to give the savings account to [the trust beneficiary].
The trial
court properly relied on the living trust to find that [the decedent] intended
to change the beneficiary of her Totten trust from [the stepdaughter] to [the
trust beneficiary].” (Araiza, at pp.
1125-1126.)
The result in Araiza is consistent with our analysis
here. As between the parties to the account, the decedent’s intent prevails.4
4 In allowing rights of
survivorship to be negated after the creation of the account, our
Legislature chose to treat rights of survivorship in much the same way Totten
trusts traditionally operated, which could “‘be revoked by the depositor at any time during his lifetime, by a manifestation of his intention
to revoke the trust. No particular formalities are necessary to manifest
such an intention.’” (Brucks v. Home
Federal S. & L. Assn. (1951) 36 Cal.2d 845, 851.)
A Will May Furnish Evidence of Intent
But can a will supply evidence of the intent to negate
survivorship?
Section 5302, subdivision (e),
states, “A right of survivorship . . . cannot be changed by will.” According to
Lisa, if a will could furnish evidence of intent, then a will could effectively
change a right of survivorship, nullifying this provision. We disagree.
The purpose of section 5302, subdivision (e), is to preserve the
nonprobate quality of rights of survivorship, not to create a firewall between
a will and a right of survivorship. Section 5304 makes this policy explicit:
“Any transfers resulting from the application of Section 5302 are effective by
reason of the account contracts involved and this part and are not to be considered as testamentary.” (Italics added.) The
California Law Revision Commission commentary to that section explains the
thinking behind this policy: It “avoids the need for a probate proceeding to
accomplish a transfer.” (Cal. Law Revision Com. com., 53 West’s Ann. Prob.
Code, supra, foll. § 5304, p. 67.)
The declaration that a right of survivorship cannot be changed by a will in
section 5302, subdivision (e), simply reflects the policy of section 5304. Survivorship rights represent a nonprobate
transfer and thus, by definition, are not determined by a will.
But in assessing the
decedent’s intent, the court should consider all evidence, including evidence
of intent expressed in connection with executing a will. To ignore the
will would generate artificial results contrary to the decedent’s actual intent. This result would be
inconsistent with the modern trend toward favoring the decedent’s intent over
formalities. In Estate of Duke (2015)
61 Cal.4th 871, for example, our high court abolished the longstanding rule
that extrinsic evidence is inadmissible to reform an
unambiguous
will. (Id. at p. 875.) In reaching
that result, the court relied on the principle that “the paramount concern in
construing a will is to determine the subjective intent of the testator
[citations]
.” (Id. at p. 890.) Courts
have expressed similar sentiments in the context of trusts. (See Morgan v. Superior Court (2018) 23
Cal.App.5th 1026, 1039 [describing the testator’s intent as “the all
controlling factor”].) Here, too, our ultimate
aim is to
ascertain the Ralph’s subjective intent as to the disposition of his assets. To
that end, it would be counterproductive to blindfold the trial court to
expressions of intent found in a will.
Although case law on this issue is sparse, we find support
for our conclusion in Gardenhire v.
Superior Court (2005) 127 Cal.App.4th 882 (Gardenhire), which addressed an analogous situation. There, the
issue was whether a will could revoke a trust notwithstanding section 15401,
subdivision (a)(2), which provides that a revocable trust may be revoked “[b]y
a writing (other than a will) signed
by the settlor and delivered to the trustee . . . .” (Gardenhire, at p. 887, italics added.) The trust permitted
revocation “by written notice signed by the Trustor and delivered to the
Trustee.”
(Id. at p. 886.)
The Gardenhire court held that,
although a will could not revoke the trust as a testamentary act, it could,
nevertheless, fulfill the more mundane role of providing written notice. The
court’s colorful analysis is worth quoting in full: “[A]lthough the
dispositional provisions of a will remain inoperative until the trustor’s
death, it does not necessarily follow that the will cannot separately and
effectively have a present and immediate effect upon delivery, such as notice
of intent to revoke. For example, suppose a person writes a will and in it
states that he loathes his brother and bequeaths to him a bag of garbage. He
then gives the will to his brother. Although the bequest is legally
inoperative, the will nevertheless immediately and effectively communicates the
person’s feelings to his brother. We perceive no logical reason
why a will similarly cannot provide immediate and present notice of a trustor’s
intent to revoke a trust. Indeed, where
a trustor unambiguously manifests an intent to revoke, amend, or alter a trust
in a will, and where the trustor delivers it to the trustee, who reads it, we
believe the trustor’s intent must control and be given effect.” (Id. at p. 891.)
Likewise here, while a will cannot change a
right of survivorship as a
testamentary act, it may,
nonetheless, provide evidence of the account holder’s intent during his
lifetime.
Given the evidence of Ralph’s will, it is beyond dispute that, during his
life, he intended to negate Lisa’s right of survivorship. And it does not matter
that Ralph intended to set up a joint account with right of survivorship when
the account was created. As we discussed above, section 5302 was specifically crafted to allow a party’s
intent after account creation to
negate a right of survivorship. Ralph’s intent, expressed through his
will, did so here.
The Franklin
Fund Account is Subject to a Probate Proceeding
Having negated Lisa’s right of survivorship, the question then becomes:
What happens to Ralph’s interest in the account? The court essentially ordered
Lisa to transfer funds directly to the trust. That disposition of the account
funds, however, is principally found in Ralph’s will, which was never admitted
to probate. And in a multi- party account with no right of survivorship, “the
death of any party to a multiparty account has no effect on beneficial
ownership of the account other than to transfer the
rights of the decedent as part of the decedent’s estate.” (§ 5302, subd. (d).)
As the commentary to section 5302 explains, “The rule stated in subdivision (d)
applies to an account where there is clear and convincing evidence of an intent
not to have a right of survivorship . . . .” (Cal. Law Revision Com. com., 53
West’s Ann. Prob. Code, supra, foll.
§ 5302, p. 62.) Arguably, therefore, upon Ralph’s death, his interest in the
Franklin Fund account became part of his personal estate, which would need to
be probated.5
5 Ralph’s
interest consisted of the entire account because all of the money in the
account came from him during his lifetime. Probate Code section 5301, subdivision
(a) provides, “An account
belongs, during the lifetime of all parties, to the parties in proportion to
the net contributions by each, unless there is clear and convincing evidence of
a different intent.” The California Law Revision Commission commentary explains
Given this possibility, we invited the parties to provide supplemental
letter briefs on the following question: “Assuming for purposes of your
analysis that the court correctly determined that the will provided clear and
convincing evidence that the decedent intended to revoke Lisa M. Strazicich’s
right of survivorship in the Franklin Fund account: Did the court err in
ordering distribution of the account directly to the trust, instead of through
a probate of the decedent’s estate, to be thereafter distributed either by will
or by intestacy? (See Prob. Code, § 5302(d), subd. (d).)” Lisa and Stephanie
both submitted letter briefs. Lisa contends that if the funds are not to go to
her by way of survivorship, then probate is the only other possibility.
Stephanie, however, contends that Ralph’s oral statements and written
intent in his will operated to transfer ownership of the Franklin Fund account
to his trust prior to his death. Her argument begins with the language of the
trust, which allows property to be added without the need for a writing:
“Additional property may be added to the trust estate at any time by the
Trustor . . . by inter vivos or testamentary transfer.
Such
additions and title to any property so added may be, but need not be, evidenced by . . . writings transferring the
property to the Trustee.” (Italics added.) Moreover, by statute, oral trusts
are permitted, provided the oral trust is corroborated and proven by
clear and
convincing evidence: “(a) The
existence and terms of an oral trust of personal property may be established
only by clear and convincing evidence. [¶] (b) The oral declaration of the settlor, standing
alone, is not sufficient evidence of the creation of a trust of personal property.”
(§ 15207, subds. (a), (b).) The California Law Revision
this is a change from the usual
joint tenancy laws: “The presumption under subdivision
(a) that an account belongs to
the parties during their lifetimes in proportion to the net contributions by
each changed the rule under former law. Under former law, if the joint account
provided for rights of survivorship, the account was presumed to be a joint
tenancy and each joint tenant was presumed to have an equal interest in the
account.” (Cal. Law Revision Com. com., 53 West’s Prob. Code, supra, foll. § 5301, p. 58.) There is
nothing in the record that evidences an intent contrary to the rule that,
during Ralph’s lifetime, ownership was determined by net contribution.
Commission
commentary to section 15207 states: “Under subdivision (b), a delivery of
personal property to another person accompanied by an oral declaration by the
transferor that the transferee holds it in trust for a beneficiary creates a
valid oral trust. Constructive delivery, such as by earmarking property or
recording it in the name of the transferee, is also sufficient to comply with
subdivision (b).” (Cal. Law Revision Com. com., 54
West’s
Ann. Prob. Code (1991 ed.) foll. § 15207, p. 542.)
The problem is, Ralph never did any of that. Indeed, there is not even a
mention of an oral trust in our record, or an oral transfer to the trustee,
much less corroborating evidence such as physical delivery or earmarking.
Instead, in a will, in a section entitled
“I hereby make the following specific bequests”
(italics added), Ralph simply bequeathed the funds to his trust.6 In the absence of any transfer
to Ralph’s trust prior to his death, the Franklin Fund became part of Ralph’s
estate (§ 5302, subd. (d)) and is, therefore, subject to probate
administration (§ 7001).
And there may
well be live issues in any probate proceeding. We note that Lisa’s petition originally contained a cause of action to
invalidate the will, which she abandoned before trial, but which raises the
specter of a will contest. Also, one of
Ralph’s
sons was disinherited, so he clearly has an incentive to invalidate the will.
Accordingly, it
would be premature for the court to distribute Ralph’s personal estate at this
time. (See Estate of Hart (1957) 151
Cal.App.2d 271, 280-281 [where
title vests subject to the administration of the estate, the right to
possession is deferred until the distribution of the estate and is contingent
upon the will not being set aside by a contest after probate].) In doing so,
the court erred.
6 There
is some ambiguity as to whether the funds were bequeathed directly to the
daughters or to the trust. We express no opinion on the matter. The parties are
free to litigate that issue in any future proceeding.
Fees and Costs
Lisa assigns two errors concerning fees and costs:
that she was entitled to more trustee fees than the court awarded, and that
Stephanie was not entitled to attorney fees paid by the trust.
Trustee Fees
Section 15680 provides that where, as here, the trust provides for a
trustee’s compensation, “the trustee is entitled to be compensated in
accordance with the trust instrument.” (Id.,
subd. (a).) And where, as here, “the trust instrument does not specify the
trustee’s compensation, the trustee is entitled to reasonable compensation
under the circumstances.” (§
15681.) “‘Allowance of compensation
rests in the sound discretion of the trial court, whose ruling will not be
disturbed on appeal in absence of a manifest showing of abuse.’” (Estate of Gump (1991) 1 Cal.App.4th 582, 597.)
Lisa sought trustee fees of $186,900, which was calculated as
1,068 hours spent between 2010 and 2017 at a rate of $175 per hour. The court
determined her reasonable rate was $75 per hour, that the amount of hours she
claimed was excessive, and that her time sheets were too vague to demonstrate
how the time she invested benefited the trust. In its statement of decision,
the court awarded Lisa $40,893.75 “for the period of 2009 to 2017.” For reasons
that are not clear in the record, in the final judgment the court reduced that
amount to $38,850.
Lisa contends the court abused its discretion by awarding her zero fees
from 2015 to 2017. The court never explicitly denied her fees for the period of
2015 to 2017, but she infers the court did so by noting that she claimed
exactly $40,893.75 for the time
period of December 2009 through November 2014. And since that is the exact
number the court awarded (initially), the court must have only been compensating
Lisa through November 2014.
But that is not what the court’s statement of decision says. It says the
court awarded $40,893.75 “for the period of 2009 to 2017.” We will not infer
from the amount the court chose that it was awarding fees for a period less
than what it said. We draw all presumptions in favor of the court’s ruling, not
against it. The court apparently believed that the amount Lisa claimed for a
lesser period was a reasonable amount for the entire period. Lisa has not
challenged that ruling as an abuse of discretion.
Stephanie’s Attorney Fees
In awarding Stephanie her fees, the court first rendered three predicate
findings: that Stephanie was acting in her capacity as trustee, that Stephanie
prevailed on the Franklin Fund claim (and no other), and that the fees pursuing
the Franklin Fund issue were expended for the benefit of the trust. Lisa
challenges all three predicates.
Rather than resolve this issue, we deem it prudent to remand the matter
to the trial court for another hearing on Stephanie’s attorney fees. Her
prevailing on the Franklin Fund issue was an essential predicate for awarding
her fees. At the time the court made that order, Stephanie had clearly
prevailed: the trust was being enriched by over $200,000. Our ruling here,
however, potentially undermines that conclusion. It is less clear that the
trust will ultimately get that amount. On the other hand, Stephanie was correct
in asserting that Lisa did not have a right of survivorship. In view of these
circumstances, the court should have an opportunity to exercise its discretion
in the first instance as to whether, and in what amount, Stephanie is entitled
to fees. We express no opinion on the matter.
DISPOSITION
The judgment is reversed as to the ownership of the Franklin Fund account
(item 1 of the Final Judgment and Order on Petitions), and the court is
instructed to enter a new order declaring Ralph’s personal estate to be the
beneficial owner of the proceeds of the Franklin Fund account. The judgment is
also reversed as to Stephanie’s attorney fees (item 4 of the Final Judgment and
Order on Petitions). The matter is remanded on those issues for further
proceedings consistent with this opinion. In all other respects, the judgment
is affirmed. Stephanie shall recover costs incurred on appeal.
IKOLA,
J.
WE CONCUR:
O’LEARY, P. J.
ARONSON, J.
