Trolan v. Trolan
243 Cal. Rptr. 3d 264
| Cal. Ct. App. 5th | 2019Background
- Parents created the Trolan Family Trust in 1974; mother (Alice) was sole surviving settlor and trustee until her death in July 2015. Six children (the Trolans) became cotrustees with majority-vote power.
- Section 5 dispositive terms provided partial distribution at age 25 and full distribution at age 30 "upon the death of the Surviving Spouse." The trust also authorized trustees to hold property, distribute in kind, and sell as needed (Section 6(H)).
- After Alice's death all six beneficiaries were over 30. One sibling (Nellie) demanded cash distribution of her 1/6 share; five siblings (majority trustees) preferred to keep assets in trust and proposed alternate valuation/distribution mechanisms.
- A valuation dispute (notably over Deer Creek Road property) led the majority to seek judicial guidance; Nellie sought liquidation and sale of real property with equal distributions and termination of the trust.
- Trial court ruled the Age‑30 provision unambiguous, ordered liquidation/distribution of the trust, removed all cotrustees, appointed a professional successor trustee, and directed the trust to pay both sides’ attorney fees. Majority appealed.
Issues
| Issue | Appellants' Argument | Respondent's Argument | Held |
|---|---|---|---|
| Whether trust requires distribution and termination upon surviving spouse's death where all beneficiaries are ≥30 | Trust grants trustees broad discretionary powers to continue holding property; majority vote should permit continued trust administration; ambiguity exists requiring extrinsic evidence | Age‑30 clause (in dispositive section triggered by surviving spouse's death) is clear: full distribution at 30 and termination thereafter | Court: Age‑30 provision, read with the instrument, unambiguously requires distribution/termination upon Alice's death when all beneficiaries were ≥30 (affirmed) |
| Whether trial court could order immediate liquidation (sale) of trust assets | No: trust gives trustees discretion to distribute in kind, partition or sell; court exceeded authority by ordering liquidation and substituting its judgment for trustees' discretion | Yes: liquidation necessary to effectuate the Age‑30 distribution to beneficiaries equally | Court: Trial court erred ordering liquidation; trust permits in‑kind distribution/valuation by trustees and liquidation is only one option (reversed as to liquidation order) |
| Whether removal of settlor‑appointed trustees was justified | Removal improper: trustees acted within powers, sought court guidance on valuation, and did not fail/refuse to act; no statutory basis shown | Removal justified by breach (failure to liquidate) and intra‑trust hostility impeding administration | Court: Removal was an abuse of discretion because it rested on the erroneous liquidation premise and record did not show statutory grounds for removal (reversed) |
| Whether trust must pay opposing party’s attorney fees | Appellants: Nellie acted as beneficiary to advance her own interest; fees should not be paid by trust | Respondent: Acts were necessary to enforce trust terms and thus benefit the trust; fees appropriate | Court: Remanded for reconsideration of fee awards in light of reversal on liquidation/removal; trial court erred to the extent fees were premised on the liquidation/breach finding |
Key Cases Cited
- Parsons v. Bristol Development Co., 62 Cal.2d 861 (interpretation of written instruments is a judicial function; extrinsic evidence only if ambiguous)
- Sanders v. Yanez, 238 Cal.App.4th 1466 (ancillary authority on instrument interpretation)
- Estate of Cairns, 188 Cal.App.4th 937 (de novo review where trial court did not consider extrinsic evidence)
- Ike v. Doolittle, 61 Cal.App.4th 51 (court administration of trusts and limits on substituting its judgment for trustees')
- Estate of Greenleaf, 101 Cal.App.2d 658 (specific clause controls over general trustee powers)
- Estate of Russell, 69 Cal.2d 200 (latent ambiguity doctrine and use of extrinsic evidence)
- Estate of Simoncini, 229 Cal.App.3d 881 (give effect to specific testamentary provisions even if they appear inconsistent with general terms)
- Copley v. Copley, 126 Cal.App.3d 248 (trustees' judgment exercised in good faith controls)
- Estate of Bixby, 55 Cal.2d 819 (court should not lightly remove settlor‑appointed trustees; removal is discretionary)
- Edwards v. Arthur Andersen LLP, 44 Cal.4th 937 (principles on interpreting unambiguous instruments)