Aрpellants Brian O'Connor and Astrid O'Connor Bassett appeal from orders (1) declaring that decedent John O'Connor's power of appointment exercised in his will complied with the requirements of Probate Code 1 section 632 and (2) for probate of his will. The sole question for our independent review arising out of both appeals is whether the language in the decedent's will-"I exercise any Power of Appointment which I may have over that portion of the trust or trusts established by my parents for my benefit or any other trusts for which I have
FACTUAL AND PROCEDURAL BACKGROUND
We take much of the underlying facts from the referee's statement of decision, which was incorporated into the probate court's order. ( Mountain Air Enterprises, LLC v. Sundowner Towers, LLC (2017)
Arthur O'Connor and Hildis O'Connor were the parents of Brian O'Connor, Astrid O'Connor Bassett, John O'Connor, Kevin O'Connor and Eric O'Connor.
The 1989 amendment allocated equal shares of the Trust estate to each living child, then directed that they be held and administered in one trust for Brian, Astrid and Kevin, and a separate trust for John, as to which the trustee would pay $1,000 per month for John's benefit. It designated Brian, Astrid and Kevin as successor co-trustees of the Trust. The 1989 amendment also granted John a power of appointment as follows: "Upon the death of JOHN N. O'CONNOR, the principal and undistributed net income of his trust shall be distributed to such of his issue, the issue of the Trustors, or the
Upon Hildis's death in 1992, the Trust by its terms divided into the marital deduction subtrust (Hildis's subtrust) and a survivor's subtrust (Arthur's subtrust). Arthur also created the insurance trust holding his life insurance policies, the proceeds of which would be managed and distributed for John's benefit. At the same time, Arthur prepared a second amendment to his subtrust giving the trustees discretion to distribute (or not distribute) net income for John's health, maintenance, support, welfare and comfort, and removing the provision giving John a power of appointment over his interest in that subtrust. Thus, under Hildis's subtrust, the trustees were required to make lifetime payments of $1,000 per month for John's benefit and John had a power of appointment. Under Arthur's subtrust, the trustees had discretion to pay income and principal as they deemed appropriate, but John no longer had a power of appointment. John's total interest in the subtrusts included a 12.25 percent share in the apartment complex limited partnership.
John died in November 2014. He had no children and was survived only by his wife. On November 12, 2014, approximately two weeks before his death, he signed a will bequeathing his entire estate to his wife and appointing Kevin as his agent. John's will provides: "I exercise any Power of Appointment which I may have over that portion of the trust or trusts established by my parents for my benefit or any other trusts for which I have Power of Appointment I exercise [sic ] in favor of my brother Kevin O'Connor. If possible, I request it be distributed to him outright, or if not possible, that he receive all income and have a maximum power of invasion for his health, comfort and welfare."
In early 2015, Kevin petitioned to probate John's will and sought to be appointed executor of John's estate. Kevin's petition sought to establish the validity of both the will and the power of appointment expressed in it. Brian and Astrid objected and filed a will contest, in part seeking to invalidate the power of appointment as not complying with section 632. They argued that thе will's language referring to "any Power of Appointment which I may have" was only a general reference and thus invalid.
The parties stipulated to having a judicial referee hear the power of appointment matters, and the issues were tried over the course of four days in 2015 and 2016. Thereafter, the referee issued a statement of decision ruling that the reference in John's will met the conditions established by the Hildis subtrust and the requirements of section 632. In part, it found: "John's Will specifically described the power he was attempting to exercise as 'any Power of Appointment which I may have over that portion of the trust or trusts established by my parents for my benefit or any other trusts for which I have Power of Appointment ....' There was not a scintilla of evidence provided in the [h]earing that would suggest there was any confusion in John's mind as to the precise power he was exercising and the precise document in which the power was created. There was only one trust (consisting of two sub-trusts) and only one power of appointment that could meet the description contained in John's Will. The reference in John's Will met the conditions established by the Hildis Sub-Trust and the requirements of [ section] 632. The additional phrase, 'or any other trusts fоr which I have Power of Appointment' does not change this result. This phrase is an independent clause and does not in any way modify the specific reference it follows." The referee further found Kevin had established by clear and convincing evidence that John intended to exercise the power of appointment provided for in the Trust in Kevin's favor, and that it was contrary to John's desires to have Astrid and Brian receive any part of his share of the Hildis subtrust. The referee ruled failing to reform the will would result in a distribution of John's beneficial interest in the subtrust contrary to John's intention.
In July 2016, the probate court adopted the referee's statement of decision concerning the power of appointment as its own decision, and declared Kevin the prevailing party. It ruled the reformation issue was rendered moot by its decision as to the power of appointment. In January 2017, the probate court granted Kevin's petition for probate and entered its order for probate appointing Kevin executor of John's will.
Brian and Astrid filed these appeals from the probate court's orders.
I. Standard of Review
The issue presented-whether John's will language constitutes a "specific reference to the power or to the instrument that created the power"-is a matter of interpreting and construing the language of both Hildis's subtrust and section 632. We interpret the Hildis subtrust, as to which the parties did not present extrinsic evidence surrounding its execution, as a matter of law. ( Estate of Dodge (1971)
As for our interpretation of section 632, the applicable statutory construction standards are settled: " ' " 'A fundamental rule of statutory construction is that a court should ascertain the intent of the Legislature so as to effectuate the purpose of the law.' " ' [Citation.] ' "The statutory language itself is the most reliable indicator, so we start with the statute's words, assigning them their usual and ordinary meanings, and construing them in context. If the words themselves аre not ambiguous, we presume the Legislature meant what it said, and the statute's plain meaning governs.' " [Citation.] 'If "the terms of a statute provide no definitive answer, then courts may resort to extrinsic sources, including the ostensible objects to be achieved and the legislative history." ' " ( Giammarrusco v. Simon (2009)
" ' "[T]he 'plain meaning' rule does not prohibit a court from determining whether the literal meaning of a statute comports with its purpose." ' [Citation.] '[W]e " 'must select the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute ....' " ' [Citation.] ' "We examine the history and the background of the statutory provision in order to
The parties agree that we independently review the question of whether the power of appointment language in John's will conforms to section 632. (See Poole v. Orange County Fire Authority (2015)
II. Legal Principles
" 'A power of appointment is a power conferred by the owner of property (the "donor") upon another person (the "donee") to designate the persons ("appointees") who will receive the property [ ("appointive property") ] at some time in the future.' " ( Sefton v. Sefton (2012)
The California Powers of Appointment Act (the Act), operative July 1, 1970, governs the creation and exercise of powers of appointment. (See Estate of Berdrow (1992)
Section 632 provides, "If the creating instrument expressly directs that a power of appointment be exercised by an instrument that makes a specific reference to the power or to the instrument that created the power, the power can be exercised only by an instrument containing the required reference." The Law Revision Commission comment on section 632 states: " Section 632 continues former Civil Code Section 1385.2 without substantive change. This section permits a donor to require an express referenсe to the power of appointment to ensure a conscious exercise by the donee. In such a case, the specific reference to the power is a condition to its exercise. This condition precludes the use of form wills with 'blanket' clauses exercising all powers of appointment owned by the testator. The use of blanket clauses may result in passing property without knowledge of the tax consequences and may cause appointment to unintended beneficiaries. This section embodies the rule set out in Michigan and Wisconsin law. See Mich.Stat.Ann. § 26.155(104) (Callaghan 1984); Wis.Stat.Ann. § 702.03(1) (West 1981)." (Cal. Law Revision Com. com., 52 West's Ann. Prob. Code (2002 ed.) foll. § 632, p. 333; see also Relocation of Powers of Appointment Statute (1991) 21 Cal. Law Revision Com. Rep. 91, 109.)
Though the Act permits a court to excuse compliance with some formal requirements for an аppointment under certain conditions, it expressly does not allow courts to excuse compliance with a donor's specific reference requirement. (§ 631, subd. (b).
The Court of Appeal in Estate of Eddy (1982)
After the wife's death, her will's administrator petitioned to determine whether she had validly exercised the power of appointment over the property in trust A. (Eddy , supra ,
A majority of the Court of Appeal disagreed and reversed. ( Eddy , supra , 134 Cal.App.3d at pp. 298, 303,
The Eddy majority adopted the reasoning of the Virginia Supreme Court in Holzbach v. United Virginia Bank (1975)
III. Contentions
Appellants contend John's will does not comply with section 632's requirements. They maintain that in order for the will to do so, it "must specifically refer to 'The First Amendment to The Arthur P. O'Connor and Hildis M. O'Connor Family Trust established June 6, 1979 and amended and restated
Kevin distinguishes Eddy , arguing it is unhelpful because John's exercise of his power of appointment is significantly different. Kevin asserts John's exercise refers to the donors (their parents), their document (the trust) and his power, when he referred to "any power of appointment which I may have over that portion of the trust." He points to cases from other jurisdictions that he argues have factual similarity to the present case in which the courts found valid exercisеs by donees who were required to make specific references to the power. Kevin argues John's exercise was not a blanket clause in a form will as the record indicates John was aware of the power, discussed it with his attorney, and referred to it specifically in his will. Nor, Kevin argues, was John's exercise invalidated by the reference to other trusts or his desire to provide for his wife. Kevin distinguishes the cases appellants rely upon, stating in those the donee either completely failed to reference a power of appointment, or made only a generic reference to "any power of appointment." Kevin maintains that under California law an approximate reference to the creating instrument and power sufficеs. Finally, Kevin asks that if we determine the power was not sufficiently exercised, we direct the trial court to consider the referee's findings that the will could be reformed given evidence of John's intent.
IV. Analysis
Hildis's subtrust directs that John's exercise be "by a will specifically referring to and exercising this general testamentary power of appointment." As the donee did in Eddy , supra ,
The subtrust's language does not require John to make an appointment by specific reference to the trust or the instrument creating the power. The "required reference" of section 632, therefore, is merely to the subtrust's power of appointment. We thus reject outright appellants' argument that to comply with section 632, John was required to recite in his will that he exercised the power of appointment contained in "The First Amendment to The Arthur P. O'Connor and Hildis M. O'Connor Family Trust established June 6, 1979 and amended and restated on August 8, 1984." Such a reference would be to the "instrument that created the power" ( § 632 ), which was not a requirement of Hildis's subtrust. To hold otherwise would fail "to recognize a distinction between a requirement for a reference to the instrument creating the power and a reference to the power itself, a distinction expressly made in the statutory provisions." ( Eddy , supra ,
Hildis's subtrust itself does not define the phrase "specifically referring to ... this ... power of appointment," and the parties do not point to evidence of Hildis's intent on the matter.
To "specify" means "to name or state explicitly or in detail." (Merriam-Webster's Collegiate Dict. (11th ed. 2006) p. 1198; see In re Julian R. (2009)
We accept the Law Revision Commission comment as an expression of the Legislature's intent on the meaning of a specific reference. It reflects that the stated purpose of section 632 is to mandate the donor's instructions for a specific reference are followed so that the donor is assured the donee/powerholder consciously exercises a particular power of appointment given him or her. Hence, the Legislature sought to "preclude[ ] the use of form wills with 'blanket' clauses exercising all powers of appointment owned by the testator." (Cal. Law Revision Com. com., 52 West's Ann. Prob. Code (2002 ed.) foll. § 632, p. 333.) The meaning of section 632's specific reference requirement is elucidated not only by this comment, but also by the statute in context. As we have stated, section 632 distinguishes a reference to the power alone from a reference to the instrument that created the power. The alternative language supports a conclusion that the Legislature contemplated that a particular reference to the power, but not the instrument, would suffice; that the statute does not mandate identification of the creating instrument. Thus, we hold that to constitute a sufficiently "specific reference" to the power, a donee's exercise must not merely state that he or she exercises all or any powers of appointment that he or she owns, but contain enough detail such that it is reasonable to conclude from the words used alone that he or she made an intentional and deliberate, not inadvertent, exercise of the particular power or powers of appointment granted to him or her by the donor.
Here, we conclude John's conscious and deliberate exercise of the power of appointment granted to him by Hildis's subtrust is clearly inferable from
Though we need not rely on out-of-state authorities such as Holzbach v. United Virginia Bank , we observe that the Holzbach court found the donee's will did not meet a specific reference requirement imposed by the donor because it made "no specific reference to donor, to his will, or to the power created by his will." ( Holzbach , supra ,
Appellants suggest we should consider extrinsic evidence on the matter. They argue that John's estate planning attorney, Thomas O'Keefe, was confused about which trust or trusts granted John a power of appointment, and his testimony explains why he drafted John's will in a "non-specific" manner. Our conclusion that the language of John's will is sufficiently specific to satisfy both Hildis's and the Legislature's intent eliminates the need to consider extrinsic sources surrounding the creation and execution of John's will. But that aside, we do not read O'Keefe's testimony before the referee-in which he described his recollection "as we sit here today " and explained he was "foggy right now " as reflecting confusion on his part at the time of drafting John's will. Indeed, O'Keefe was elsewhere asked whether he found limitations on the persons in whose favor John could exercise the power of appointment when he reviewed the Trust, and answered, "I know it had to reference the existence of the power of appointment." The testimony
Nor did attorney O'Keefe testify that the clause exercising John's power of appointment was a " 'form' will with boilerplate language," as appellants assert. Any such contention is contradicted by the language of John's will, which refers to his parents' trust. Further, as Kevin points out, attorney O'Keefe's testimony reflects that John's power of appointment clause was the product of at least two drafts. According to O'Keefe, he initially prepared an exercise of the power of appointment to benеfit John's wife, but when he reviewed the trust documents he realized it was not a permitted exercise, so he edited the language to have Kevin be the beneficiary of John's power of appointment. O'Keefe testified he had prepared an additional draft power of appointment identifying the full formal name of the family trust, but due to the sense of urgency stemming from John's poor health, they prepared the will in a rush and got it to John to sign. Rather than showing counsel's ignorance of the source and extent of John's power granted to him as appellants' assert, the record demonstrates that attorney O'Keefe was fully aware of that information from his review of the amended and restated family trust. Though the language of the will finally signed by John was less specific than counsel's last draft of the power of appointment, it nevertheless contained enough detail to render John's exercise valid under section 632.
Appellants argue that John's exercise of his power of appointment circumvented his parents' testamentary wish that the trust assets would remain within the family. But John exercised his power of appointment in favor of Kevin, who was a permissible beneficiary of the power under the Trust, which contains no limitation on how a beneficiary may use the bequest. Appellants cite no authority permitting a court to invalidate an exercise of a power of appointment that is proper on its face, on grounds that the donee's subjective motive was something other than that objectively expressed in the document.
Nothing in thе out-of-state authorities cited by appellant compels us to change our conclusion. First, we are not obligated to consider them. ( Episcopal Church Cases (2009)
Other authorities are in accord with our conclusion. ( In re Passmore (1980)
Because we conclude the language of John's will alone contains sufficient detail to constitute a specific reference to the power of appointment granted to him by Hildis's subtrust, we need not consider whether or to what extent extrinsic evidence of John's intent is relevant on the issue. Nor do we need to address whether John's will can or should be reformed under principles of equity. (See Giammarrusco v. Simon , supra , 171 Cal.App.4th at pp. 1603-1604,
DISPOSITION
The orders are affirmed.
WE CONCUR:
AARON, J.
GUERRERO, J.
Notes
We refer to the parties by their first names for clarity, and intend no disrespect. Eric predeceased his parents.
That provision continued: "Any property not so appointed shall be distributed, free of trust, subject to section 10.3 below, to the then living issue of JOHN N. O'CONNOR, by right of representation, or, if there are none, to the then living issue of the Trustors, by right of representation; provided, however, that any share which would otherwise be distributed to a person for whose benefit a trust is then being administered under this trust shall thereafter be administered according to its terms."
Before 2017, the holder of the power was referred to as the "donee" (former § 610, subd. (d) ). After 2017, the statute designates that person as the "powerholder." (See §§ 610, subd. (g), 634, 640, 641, subd. (b); as amended by Stats. 2016, ch. 81 (AB 2846), § 8, eff. Jan. 1, 2017.)
Section 630 provides: "(a) Except as оtherwise provided in this part, if the creating instrument specifies requirements as to the manner, time, and conditions of the exercise of a power of appointment, the power can be exercised only by complying with those requirements. [¶] (b) Unless expressly prohibited by the creating instrument, a power stated to be exercisable by an inter vivos instrument is also exercisable by a written will."
Section 631 provides: "(a) Where an appointment does not satisfy the formal requirements specified in the creating instrument as provided in subdivision (a) of Section 630, the court may excuse compliance with the formal requirements and determine that exercise of the appointment was effective if both of the following requirements are satisfied: [¶] (1) The appointment approximates the manner of appointment prescribed by the donor. [¶] (2) The failure to satisfy the formal requirements does not defeat the accomplishment of a significant purpose of the donor. [¶] (b) This section does not permit a court to excuse compliance with a specific reference requirement under Section 632."
The dissenting justice in Eddy decided that the statutory scheme merely reinforced the requirements imposed by the husband's will, and that the requirement of an express reference was to assure a conscious exercise by the donee. (Eddy , supra , 134 Cal.App.3d at pp. 303, 305, 318,
Astrid admitted she did not know what her mother meant or her mother's intent when she created the power of appointment for John. The parties do not point to any extrinsic evidence of the circumstances surrounding Hildis's creation or execution of that provision in her subtrust. (§ 21102, subd. (c) [law does not limit use of extrinsic evidence as "authorized by law" to determine trustor's intention].)