240 Cal. App. 4th 1101
Cal. Ct. App.2015Background
- Lester Moore, an 82‑year‑old with diagnosed dementia, created the Moore Family Trust; his daughter Poppy Helgren was a remainder beneficiary and held durable power of attorney before events below.
- Attorney William Salzwedel was retained by Moore, had Moore execute documents naming Salzwedel temporary successor trustee and giving him power of attorney, and then paid himself large trustee/attorney fees from trust funds while litigation over Moore’s capacity and a conservatorship petition were pending.
- Helgren petitioned for conservatorship and later to determine Moore’s capacity to execute the estate planning documents; the petitions were consolidated and a receiver and professional conservator were appointed; Salzwedel was removed as trustee.
- Salzwedel’s accounting showed he had paid himself $148,015.11 in trustee’s fees and incurred substantial expert and litigation expenses; the probate court disapproved the fees and required him to show the fees benefited the trust and that Moore had capacity to approve them.
- After a three‑day evidentiary hearing the probate court found the fees and expert expenses excessive, that Salzwedel acted primarily in his own economic interest, and surcharged him $96,077.14; the appellate court affirmed.
Issues
| Issue | Plaintiff's Argument (Helgren/Respondents) | Defendant's Argument (Salzwedel/Appellant) | Held |
|---|---|---|---|
| Whether trustee/attorney fees and expert costs charged to the trust were reviewable and must be reasonable and for trust benefit | Fees charged by a trustee who is also attorney must be reasonable and benefit the trust; court must inquire under §17200 petition | Salzwedel: fees approved by Moore pre‑adjudication; trustee should follow conservatee's instructions and fees not subject to second‑guessing | Court: Fees paid from trust funds are subject to probate review for reasonableness and benefit to the trust; burden on trustee to prove necessity and reasonableness. |
| Proper standard for reviewing fees when capacity contested | Fees must be reasonable in amount and necessary for trust purposes; trustee must show subjective belief and objective reasonableness | Salzwedel: he was retained before formal adjudication; Moore’s approval controls so court lacked authority to review fees | Court: Trustee cannot ignore known cognitive impairment; applied abuse of discretion standard and double‑barreled reasonableness test (amount and trust benefit). |
| Admissibility/relevance of testimony from Moore’s girlfriend (Kruger) that Moore received/inspected bills | Testimony would show Moore’s state of mind and implied approval of bills | Salzwedel: Kruger could show Moore saw the bills and didn’t object, evidencing approval | Court: Excluded as irrelevant to legal issue (reasonableness/benefit); no offer of proof showing trustworthy contemporaneous approval or capacity. |
| Multiple/block billing and double recovery (trustee as attorney) | Objectors: Salzwedel billed indiscriminately, failed to segregate trustee vs. attorney tasks, and block‑billed; court should surcharge | Salzwedel: lack of surprise/due process claim; defense to surcharge | Court: Trustee/attorney may not recover both trustee and attorney compensation without advance court approval; block billing justified a surcharge and Salzwedel waived any due process objection by failing to timely object. |
Key Cases Cited
- Donahue v. Donahue, 182 Cal.App.4th 259 (Cal. Ct. App. 2010) (trustee fee awards subject to double‑barreled reasonableness—amount and trust benefit)
- Estate of Gilkison, 65 Cal.App.4th 1443 (Cal. Ct. App. 1998) (appellate preservation principles and review standards in probate matters)
- Conservatorship of Lefkowitz, 50 Cal.App.4th 1310 (Cal. Ct. App. 1996) (trustee must show subjective belief fees were necessary and that belief was objectively reasonable)
- Estate of Giraldin, 55 Cal.4th 1058 (Cal. 2012) (remainder beneficiaries have standing to challenge trustee accountings)
- Schwartz v. Labow, 164 Cal.App.4th 417 (Cal. Ct. App. 2008) (probate court duty to inquire into prudence of trustee’s administration)