Higgins v. Higgins
11 Cal. App. 5th 648
| Cal. Ct. App. | 2017Background
- Maria and her husband Bartlett created the Higgins Family Trust (1994); primary beneficiaries were Bartlett’s sons (Maria’s stepsons). Maria’s will directed her bank accounts to be administered under the Family Trust.
- Maria experienced progressive dementia by 2009–2010. In March 2012, Clive (stepson) and his wife Lupe opened new bank accounts listing owners as “William Clive Higgins / Lupe Higgins / ITF Maria Lopez Higgins” and transferred nearly all of Maria’s checking, savings, and CDs into those accounts. “ITF” was typed on signature cards.
- Maria’s income (Social Security, rent, insurance) continued to be deposited into the accounts; Lupe signed signature cards and acknowledged the funds were for Maria’s care.
- After Clive’s death (May 2012), Lupe removed the “ITF Maria” designation and changed account ownership to herself; she paid some of Maria’s funeral expenses and trust distributions but later used substantial funds for her own benefit.
- Arthur (executor of Maria’s estate and successor trustee) sued Lupe to impose a constructive trust on the funds. After plaintiff’s case-in-chief, the trial court granted judgment for Lupe (CCP § 631.8). The Court of Appeal reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a constructive trust may be imposed despite the bank form (ITF/Totten/joint) | The ITF accounts were intended as irrevocable trust accounts for Maria; Lupe repudiated the trust by removing Maria and using funds, so a constructive trust is proper to prevent unjust enrichment | Bank form (ITF/Totten/joint) created revocable survivorship rights; Clive had legal right to withdraw and make Lupe surviving co-owner; statute of limitations bars claims against Clive’s estate | Court held clear and convincing evidence showed an irrevocable trust intent and Lupe repudiated it; constructive trust may be imposed to prevent unjust enrichment; remanded for further proceedings |
| Effect of Probate Code/Totten trust rules and who owned beneficial interest during parties’ lifetimes | Parties intended that Maria retain present beneficial ownership (not a Totten trust); transfers and deposits show Maria’s beneficial interest | Probate Code presumption for Totten/joint accounts gives owners present rights; absent clear and convincing evidence, account beneficiaries have no present rights | Court applied clear-and-convincing standard and found evidence supported that accounts were intended as irrevocable trusts with Maria as beneficiary during lifetimes |
| Statute of limitations / timing of claim | Repudiation of an express trust by the trustee (Lupe) triggered the limitations period; plaintiff’s suit was timely within 3-year breach-of-trust window | Any wrongful acts by Clive accrued at his death; claims against Clive’s estate may be time-barred; Lupe, as surviving joint owner, had legal rights | Court held action against Lupe for breach/repudiation of the express trust was timely (filed within three years of discovery/repudiation) |
Key Cases Cited
- Communist Party v. 522 Valencia, Inc., 35 Cal. App. 4th 980 (1995) (constructive trust overview and equitable remedy principles)
- Martin v. Kehl, 145 Cal. App. 3d 228 (1983) (Civil Code §§ 2223–2224 principles for constructive trusts and wrongful detention)
- Orella v. Johnson, 38 Cal. 2d 693 (1952) (constructive trust may be imposed to prevent unjust enrichment when oral trust is repudiated)
- Moeller v. Superior Court, 16 Cal. 4th 1124 (1997) (definition of trust and fiduciary duties)
- Presta v. Tepper, 179 Cal. App. 4th 909 (2009) (trust creation principles; transfers during owner’s lifetime can create trusts)
- Estate of Collins, 84 Cal. App. 3d 928 (1978) (discussion of Totten trusts and revocability)