206 Cal. App. 4th 875
Cal. Ct. App.2012Background
- Grandfather executed a 1955 will creating a trust and reserved 3/4 of the appointive estate for his son’s then-living issue (Thomas Jr., Laurie, Harley).
- The trust included Grandfather’s controlling stock in San Diego Trust & Savings Bank; the donor asked the trustee to retain it.
- Father survived Grandfather by decades and died in 2006, leaving Laur ie and Harley but disinheriting Thomas Jr.
- Under pre-CPAA law (Estate of Sloan), a power of appointment was nonexclusive, requiring a substantial share to all eligible appointees unless the donor specified minimums/maximums.
- CPAA enacted in 1970 changed the presumption to exclusive unless minimum/maximum shares are specified; the CPAA’s statute 601 also addresses retroactivity and creation vs. exercise.
- The issue on appeal is whether Grandfather’s pre-1970 power remains nonexclusive (and thus Thomas Jr. must receive a substantial share) or whether the CPAA retroactively makes it exclusive.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Retroactivity of CPAA to pre-1970 power | Sloan nonexclusive applies; CPAA retroactively alters donor intent. | CPAA governs exercise; exclusivity applies at time of exercise. | Second sentence of §601 preserves pre-CPAA power’s character; does not retroactively alter donor intent. |
| Whether Grandfather’s power was nonexclusive under Sloan | Intended to benefit all living issue; nonexclusive required substantial shares. | CPAA (652) makes the power exclusive unless minimums/maximums specified. | Power remains nonexclusive under Sloan as created, so Thomas Jr. is entitled to substantial portion. |
| Constitutional concerns and retroactive application | Retroactive changes threaten vested rights and donor intent. | Statute could be applied retroactively to exercise. | Court interprets §601 to avoid retroactive impairment of vested rights; CPAA applied prospectively to creation, not to pre-existing rights. |
| Remedy for defective exercise of power | Thomas Jr. seeks a division of appointive property per Sloan. | Remedy governed by §670 or §672, depending on validity of exercise. | Remand to determine what constitutes a ‘substantial’ share under Sloan; Thomas Jr. entitled to costs on appeal. |
Key Cases Cited
- Estate of Sloan, 7 Cal.App.2d 319 (Cal. App. 1935) (nonexclusive presumption under pre-CPAA law; required substantial participation for all appointees)
- Newman v. Wells Fargo Bank, 14 Cal.4th 126 (Cal. 1996) (testator’s intent governs construction; timing of law affects interpretation)
- Kizer v. Hanna, 48 Cal.3d 1 (Cal. 1989) (retroactivity considerations; substantive rights vest at donor’s death)
- Yoshioka v. Superior Court, 58 Cal.App.4th 972 (Cal. App. 1997) (secondary retroactivity; limits on retroactive damages claims in context described)
- In re Marriage of Bouquet, 16 Cal.3d 583 (Cal. 1976) (retroactivity and vested rights; factors for constitutional validity)