*1 Dec. S197694. 2012.] [No. GIRALDIN, A. Deceased.
Estate of WILLIAM al., v. GIRALDIN et Plaintiffs Respondents, CHRISTINE al., TIMOTHY GIRALDIN et Defendants Appellants.
Counsel Bidna, Bidna & Howard M. Richard D. and Jon A. Kéys, Keys Longerbone Defendant Giraldin. Appellant Timothy Giraldin, and Mark A. Ross for Ross Law Mary pro. per.; Group Defendant and Giraldin. Mary Appellant
Freeman, Lowe, Freeman & M. Jared A. Duncan P. Smiley, Barry, Stephen Hromadka and Thomas Aikin for C. Plaintiffs Respondents.
Opinion it, A revocabletrust is a trust that the who creates generally J. CHIN, settlor,1 called the can revoke lifetime. The beneficiaries’ person’s interest in the trust is and the settlor can eliminate that interest contingent only, time. When the of a is someone other than the trastee revocable trust beneficiaries, settlor, that trustee owes a not to the fiduciary duty time, as the alive. the trustee needs to account to long During settlor is dies, the trust the settlor and not also to the beneficiaries. When settlor only irrevocable, becomes and the beneficiaries’ interest in the trust vests. We must whether, dies, decide after the the beneficiaries have to sue the standing settlor trustee for breach of the committed while the settlor was alive fiduciary duty and the trust was still revocable. can
Because a trustee’s breach of the owed to settlor fiduciary duty against harm the beneficiaries trust’s value substantially by reducing wishes, do have to sue for a settlor’s we conclude after the has died. We reverse the judgment breach of settlor which the beneficiaries have no such standing. Court of concluded Appeal, History
I. Factual and Procedural *5 we take most of these facts rehearing, Because neither party petitioned Court, (See rule the Court of Cal. Rules of from Appeal’s opinion. 8.500(c)(2).) were married in When they
William Giraldin and Giraldin 1959. Mary married, and had three.2 William adopted William had four children Mary sons, and Patrick. William Timothy children. had twin Mary’s Together, they and and accumulated a substantial was a successful businessman investor fortune. issue, the William A. created the revocable trust at
In William February was the sole (the trust), and made the trustee. William Giraldin Trust (9th 2009) column 2. Dictionary page Law ed. See Black’s confusion, family Giraldin their will refer to members of the To avoid we sometimes names. first who Mary, were The remainder beneficiaries his lifetime. lifetime, nine and then the her of the trust entitled to the benefits William and
children, after both in what remained who would share equally including rights, to himself specified William reserved were deceased. Mary trust, from to add or remove property or revoke to amend rights actions, trustee, the trustee’s direct and approve and to to remove that Wil- trust document provided decisions. The investment including any only writing. could exercise these rights liam lifetime, that “[d]uring trust document also provided [William’s] The income and that amount of net principal distribute to Trustee shall [William] declared to be the event William was incapacitated, In as [William] direct[s].” of net income and principal to distribute the amount the trustee was instructed William’s “accustomed to be to support the trustee deemed appropriate “the of remainder that understanding manner of with living” trust document also provided be of no shall importance.” lifetime, shall have no duty provide “[d]uring that [William’s] After than other anyone information regarding [William].” him, have no duty William’s the trustee “shall if survived Mary of this trust or any than the existence [Mary] other any beneficiary disclose administration, law.” except required information about its terms or . . . statutory all requirements document also William specified “waive[d] to the beneficiaries . . . render a or account that the Trustee report trust.” not want the Trustee that William
The trust document also states “[did] the trust in administering liable for his or her faith efforts good be personally estate,” to the Trustee under this discretionary granted and that powers “[t]he can act the Trustee be absolute. This means Trust shall Agreement faith, that no act in bad he or she does not so arbitrarily, long his or her the exercise of shall apply of reasonableness requirement that the Trustee’s William the requirement absolute discretion.” “waive[d] care exercised times the standard of satisfy judgment conduct at all must the Trustee as reasonable, the decision of aby prudent person. particular, *6 the distribution stan- under to be made to beneficiaries to the distributions on all shall be conclusive persons.” in this Trust Agreement dards provided established, The trust document contained no assets. trust When first the Trustee the and “had transferred delivered indicated that William attached,” of schedule 1 but the version in schedule described property schedule 1 was never blank. It appears attached to the trust document was Before William had completed. establishing indicated the intent to million, fortune, $4 invest about about two-thirds of his in a his son company Patrick had started some before called SafeTzone years Technologies Corpo- (SafeTzone). ration was also a Timothy owner of the part company. January William a document signed detailing his investment in planned document, he executed company. day the trust William also signed another document that “after the stating trust has been set William A. up Giraldin and W. Giraldin will Timothy begin stock and process selling assets to fulfill converting investment into SafeTzone Technologies $4of million dollars.” William corporation other documents signed indicating his intent to invest the in the money company.
Between 2002 and William February May made six payments SafeTzone, various $4 amounts to invest in than ultimately more totaling million. The issued stock to William. After the investment was company fully funded, the stock was transferred into the name trust. William died in time, May 2005. this the investment in had By SafeTzone and the gone badly, trust’s interest in the was worth little. very company children, Giraldin,
Four of William’s Patricia Christine Michael Gray, Giraldin, and Giraldin sued in Philip (collectively his plaintiffs), Timothy trustee of trust for breach of his capacity duties. fiduciary They alleged, effect, in had life for and Timothy William’s his squandered savings benefit, Patrick’s the other seven children of their benefits from the depriving trust. Plaintiffs to remove as trustee and to him to sought Timothy compel account for his actions while as trustee. An amended acting alleged petition should be breach of Timothy surcharged3 alleged his duties fiduciary the SafeTzone and in regarding investment loans to himself and making Patrick from trust assets.4 trial,
A court trial held in October November 2008. After the court ruled in favor. It found had violated his Timothy plaintiffs’ fiduciary duty in various It also found that William did not authorize respects. many in Timothy’s actions and that William “was not writing required, late thereafter to either sufficiently mentally competent analyze benefits and risks of an investment in SafeTzone ... or to authorize and direct make an ordered be such investment.” court [Timothy] Timothy removed as trustee and that he make an of the trust for the accounting period 1, 2008, until removal. it ordered that be January Additionally, his Dictionary “surcharge” Law defines a in this context as the “amount that a court Black’s Dict., supra, (Black’s may charge fiduciary duty.” that has breached its Law col. 4 Mary community in the trust and other petition also filed her own to confirm her interest review, community regarding aspect assets. Because no issue of the case is before us on again. we do not mention it *7 to duties owed fiduciary the Trust and breach of “for his breach of
surcharged $4,376,044 of for the SafeTzone in the A. Giraldin” amount Decedent William disbursements, $625,619 other “unsupported for surcharged investment and return It ordered that Patrick funds . . . .” also and loans of Trust distributions $155,000 to him trust funds. the tmst loaned from to of additionally The Court Appeal several issues. raising appealed, it, whether, its describes of opinion asked the to brief parties question and to duty for of fiduciary had to maintain claims breach “standing plaintiffs tmstee dur- based his actions as against seek an accounting [Timothy] upon it the briefing, to death.” After receiving ing period prior [William’s] “duties as Timothy’s had no It standing. explained found such plaintiffs alive], time during were to William owed solely [William] [the beneficiaries, lack and not to the trust Thus [plaintiffs], beneficiaries. those duties alleged occurring to of breaches of standing any prior complain Moreover, no to an death. the beneficiaries have right compel to [William’s] the trust remained actions for the in which accounting period trustee’s [citations], to seek relief for revocable and thus also lack such standing death.” period prior [William’s] Court breach of alleged Timothy’s also believed this action Appeal “In the beneficiaries rather than toward William.
fiduciary solely towards case,” said, not Court “were Appeal plaintiffs purporting pursue claims, or seek done to him. alleged wrongs redress [William’s] Instead, interests, by to vindicate own distinct seeking were their they had breached duties owed to them claiming [Timothy] allegedly during owed them death. We hold period merely [Timothy] prior [William’s] duties, thus those claims. We no such lacked assert standing [plaintiffs] might no on merit claims that have theoretical express opinion been were.” asserted on behalf. None [William’s] prejudice Court of reversed the trial court’s “without judgment Appeal to seek a new right accounting solely period to [plaintiffs’] pertaining death . . after Giraldin’s . .” [William] the following question:
We for review limited to granted plaintiffs’ petition his during of a revocable inter vivos trust appoints, “When settlor trustee, lifetime, the settlor dies other than himself to act as once someone irrevocable, have do the remainder beneficiaries trust becomes the tmstee for breaches of committed fiduciary duty sue period revocability?”
II. Discussion lifetime, his and he reserved the right William created the transferred into a revocable inter vivos tmst to revoke it. Property *8 1066 considered the of the settlor for the property settlor’s lifetime. Accordingly, “
the beneficiaries’ interest in that is and property ‘merely can potential’ ” in a moment at the of ‘evaporate (Steinhart whim the County v. [settlor].’ of Los Angeles (2010) 47 Cal.4th 1319 223 P.3d Cal.Rptr.3d [104 57], Johnson v. quoting Kotyck (1999) 76 Cal.App.4th Cal.Rptr.2d [90 Thus, 99].) alive, long so as William was the he had divest the power beneficiaries of (See interest in the trust. generally County Steinhart v. of 1319-1320.) Los Angeles, supra, pp.
Consistent with these Probate Code section 15800 principles, provides: , to the extent that the instrument . . “Except otherwise . provides during the time that a trust is revocable the the to revoke person holding power the trust is competent:
“(a) revoke, The the person holding and not the has power beneficiary, the rights afforded under beneficiaries this division. “(b) The duties the trustee are owed to the power person holding of (Italics
revoke.” added.)5 (b), italicized from section language subdivision makes alive, clear that so as the settlor a long is trustee owes duty solely settlor and not beneficiaries. Court of this lawsuit Appeal viewed that a alleging only Timothy duty violated towards the beneficia fiduciary case, ries William’s lifetime. Had this been the during action could simply have been on the that no dismissed basis such exists. There would be no duty need to raise But this case does not involve an any standing question. simply alleged breach of towards the beneficiaries. some Timothy’s duty Although the trial order court’s underlying appeal ambiguous regarding whether had the court found a of a violation towards beneficiaries or duty William, towards substantial thrust this lawsuit the trial court’s order that is violated his William fiduciary duty towards William’s during extent, lifetime. To the if that trial court based its order on breach any, lifetime, towards William’s duty agree we court erred. No such exists. But to the extent court based its order on duty lifetime, a violation of we Timothy’s towards William his must decide whether the beneficiaries have after the settlor’s death to sue for breach of that duty.
The Law that Revision Commission comment to section 15800 explains the “section has the effect of of beneficia- postponing enjoyment ries of revocable trusts until the death or of the settlor or other incompetence statutory All further references are the Probate Code unless otherwise indicated. thus . . . Section 15800 to revoke the trust. holding power of the trust revocation is control the holder of power
recognizes A corollary enforce the trust. ... right principle and should have direct the actions of of revocation may the holder of the power *9 section, account to beneficiaries . . . this the to inform and trustee. Under duty the the time that is to the to revoke holding owed the person power com., Ann. (Cal. Revision Com. 54 West’s trust is revocable.” Law presently 644-645, 15800, omitted.) (1991 ed.) Prob. Code foil. citations pp. § 15801, a (a), that when beneficia- subdivision Similarly, provides section that is the time a trust revocable ry’s given, “during consent or must be may to the is the the the revoke trust holding competent, person and person power revoke, to and the has the beneficiary, power the to not holding power The comment to or Law Revision Commission consent withhold consent.” rule, the the holding that under its “the consent of this section explains person revoke, beneficiaries, the excuses the trustee from to rather than power 16460(a) (limitations as on proceedings against Section liability provided Code, com., trustee).” (Cal. 54 Ann. Prob. supra, Law Revision Com. West’s 15801, 646.) foil. p. § that the time a is
Section 15802 that trust revocable provides “during the a notice that is to revoke the trust is person holding power competent, to be a shall be to the to given beneficiary holding power to given person comment Law beneficiary.” revoke not to Revision Commission a this section that it that notice to the of to explains “recognizes revocable would be an idle act in the case of a revocable trust since trust com., (Cal. 54 to act.” Law Revision Com. West’s beneficiary is powerless supra, Code, 646.) Ann. Prob. foil. p. § lifetime, he These and as long mean William’s provisions beneficiaries were act competent, powerless regarding trust this trust. A of the California Law Revision Commission also makes report of a revocable clear. law makes clear that the beneficiaries proposed “[T]he trust do not have the the court internal living right concerning petition until time other holding affairs of such or revocation, revoke, due to of whether is unable exercise power power (Dec. the Trust (Recommendation or death.” Law incompetence Proposing Witkin, 584-585; 13 1985) (1986) 18 Com. see Cal. Law Revision Rep. pp. Trusts, ed. (10th 2005) of Cal. Law 710 Summary [quoting language].) decide whether had after standing, we must plaintiffs question towards breach allege Timothy’s fiduciary
William’s is, That no directly. The Probate Code does not address this question William. section states that expressly a revocable trust either have code, or whole, do not have this But standing. as a that after the implies died, settlor has the beneficiaries of a revocable trust may challenge trustee’s breach fiduciary duty owed settlor to the extent that breach harmed the beneficiaries’ As the interests. Law Revision Commission section explained, merely the beneficiaries’ postponed enjoyment com., their until (Cal. after the settlor’s death. Law Revision Com. West’s supra, Ann. Prob. foil. matter,
As a general the Probate Code affords beneficiaries broad remedies for breach trust. (a), Section subdivision a trustee provides “[i]f trust, commits a breach of or threatens commit breach of . . beneficiary . commence a proceeding following *10 that is . purposes (Italics added.) . . .” appropriate These include purposes the trustee redress a of to breach trust of or compel by payment money “[t]o (Id., otherwise.” (a)(3).) subd. Revision Law Commission comment to this section that the (3) states “reference to of in money is payment paragraph and includes comprehensive might that be characterized as liability damages, restitution, com., (Cal. or Law Com. surcharge.” Revision 54A West’s pt.l, 16420, 256, (2011 Ann. Prob. Code foil. ed.) added.) italics Subdivision (b) of that section—which that states the of remedies for “provision breach (a) trust in subdivision not does resort to other prevent any appropriate statute or the remedy common law”—makes clear that the provided remedies the section are affords beneficiaries indeed broad. 16462, (a),
Section subdivision that trustee “a of a revocable provides trust is not liable to a for act or beneficiary omitted any performed pursuant to written directions the from the to revoke . . . .” person holding power (Italics added.) 15800, This is consistent with section which provision the that trustee’s duties are to “the provides owed holding power person revoke,” who in this is the If the case settlor. trustee’s is to the directions, and the trustee acts to the settlor’s trustee violated has pursuant 16462, no section But the italicized “to a benefi duty. including language, also that the trustee not act to the ciary,” implies if does settlor’s pursuant directions, be liable to beneficiaries. This may implication sense, would make section if the no 16462 would be meaningless, ever, have no an standing, bring beneficiaries action challenging while settlor no other trustee’s actions was still alive. We see textual or basis to dissent’s section 16462 actions argument only governs support (Dis. taken after the settlor has died. post, opn., 16064) that the trustee (formerly
Section 16069 part provides need of a beneficiary not account to the case of beneficiary “[i]n trust, 15800, in for the when the trust revocable Section provided period
1069 that not this means he need account argues be revoked.” may be ever his actions while trust could revoked. for indeed, read as be ambiguous may, is somewhat statutory language indicates, But, section as the cross-reference section 15800 Timothy argues. that the time read Section 15800 provides 16069 must be in context. revocable, We afforded beneficiaries. rights the trust the settlor has We not read must to be with section 15800. do read section 16069 consistent an that the trustee never has such provide section 16069 mean irrevocable, i.e., after trust the settlor’s even after the becomes accounting, death. (a) this further conclusion. Subdivision
Section provides support in or of that section Section a trustee states: “Except provided under concerning the court chapter petition affairs of or to determine the of the trust.” Other internal the trust existence not than as affected the reference to section section 17200 does (See Conservatorship between inter vivos trusts and other trusts. distinguish Irvine 587].) (1995) Section Cal.App.4th Cal.Rptr.2d [47 it (c), subdivision relates to a means states “beneficiary,” “[a]s or interest, (Italics contingent.” who has or future vested present Thus, a added.) only the court contingent beneficiary may petition subject But merely limitations section 15800. the latter provided provision revocable, states has “during the time” trust is the settlor *11 settlor, a trustee’s are to the not the beneficiary, beneficiary. the duties to the in section 15800 limits the of beneficiaries Nothing ability petition court the trust becomes irrevocable. after case, held
Other than the Court of in this no California court has Appeal Indeed, the beneficiaries we are aware of have no in this situation. statute, decision, state, no or other from this or other judicial authority, case has standing. such California on found denying standing. only point v. Presoto (Evangelho (1998) 67 615 Cal.App.4th Cal.Rptr.2d [79 146] (Evangelho).) case, In the of a trust after sought, revocable the which accounting settlor’s an from the trustee for the period during the trust was The trustee that “an should not be accounting revocable. argued ordered for the when decedent was alive and the trust was revocable period (Id. 617.) . . . .” of by decedent at The Court p. disagreed. Appeal Evangelho alive, (i.e., settlor) noted that the was court while trustor 61 (Evangelho, supra, the was revocable and to section subject trust 15800. [15800], at It then “The 623.) effect of section p. explained: Cal.App.4th section, the on this code is to Law Revision Commission comment according of trusts the of the of the beneficiaries revocable rights postpone enjoyment or revoke until the death or of the settlor the who can incompetence person 1070 (Cal. com., Code,
the trust. Com. Law Revision Prob. West’s Ann. supra, 15800, 644.) revoked, the foil. time the trust be the trustee During § is not required ([Former] 16064[, account to beneficiary. (d)] subd. § renumbered 9].) Stats. ch. [provision The clear § [][] of the legislative intent section import section 16064 [former] was to the under the law postpone enjoyment rights trust by contingent beneficiaries while the settlor could revoke or the modify trust. the During alive, time the the to revoke or person holding power competent duty has no to account to the contingent beneficiaries for when the period dies, bemay trust revoked. When the the person revoke holding power of the rights beneficiaries are no contingent longer contingent. Those rights, were alive, which the holder while of the to revoke postponed power into mature and enforceable under present rights division trust law. whole, “Considered as a the various Probate Code sections impose duty on the trustee to interests who are entitled to the protect persons of the trust. One facet of the is that proceeds protected can persons an case of a accounting. revocable two compel categories of revocable, are While trust is protected. is the protected person irrevocable, settlor. However once the becomes such the death of the beneficiaries become the The Law Revision protected persons. Commission comments about explicitly speak enjoyment ‘postponing beneficiaries of revocable trusts until the death or incompetence or other (Cal. settlor the trust.’ person holding power revoke Law com., Com. Revision 54 West’s Ann. Prob. foil. supra, actual words of the code sections and Accordingly, Law [][] Commission the will of the Revision reveal to be that Legislature only an decedent settlor could while she was alive and compel accounting died, But once decedent set out competent. right accounting compel code the . . . in the sections beneficiaries.” passed (Evangelho, supra, 67 623-624, omitted.) fn. Cal.App.4th pp. *12 Court of found Evangelho, here Appeal supra, Cal.App.4th and to follow it.” It first the Evangelho
“unpersuasive, decline[d] “note[d] did court not have the benefit of the in Court’s Steinhart Supreme opinion [v. 1298], 47 Cal.4th clear Los with its County Angeles, supra, explanation the nature of a revocable to aid in its Probate special interpretation Code section 15800.” But we said in about revocable what Steinhart trusts us, was the issue before which was a tax merely background regarding legal We not said about revocable trusts that was well question. nothing already established.
The Court of also that the trustee’s duties were owed to the stressed Appeal while he was still It then stated: “And the trustee’s duties are settlor alive. if death time acts in the to the at the of the question,
not owed beneficiaries This retroactively them owed the beneficiaries.” the settlor cannot make correct, of whether the is but it does not address question statement of the towards settlor to assert a breach standing duty beneficiaries have and can no do so longer personally. after settlor has died argument: to illustrate its The court a rather colorful provided hypothetical a of a trust learned he had terminal “For if the settlor revocable example, months, disease, he decide that his last and to die within six going might deluxe, on cruise around the wish was to take his mistress a six-month trustee, in his trust. The whose most of assets held world—dissipating have deny duties are owed the settlor at that would no basis to that point, However, deemed be retroactively last wish. if the trustee’s duties were owed to the the settlor’s widow and children—as trust beneficiaries—say, Bali, his on a in the trustee soon as settlor breathes last breath beach their liable find failed to sufficiently would himself having preserve words, interests in the the settlor’s death. In other prior corpus act, trustee when trustee’s which was not breach of owed any duty it, into of a different he committed would be transformed a breach suddenly That is not—and that came into existence when the settlor died. duty only cannot be—the law.” facts,
The court’s its is correct. argument, applied hypothetical would breached no so would have duty, the trustee have hypothetical, not are Let incurred no But that is the issue we us deciding. change liability. himself, the Let us somewhat. assume unbeknownst hypothetical (who and wishes behind a against large the wishes settlor to leave beneficiaries), trust for his on the six-month cruise around world goes funds, most The acts with trust of the trust assets the process. dissipating do not come to until the died and the beneficiaries discover settlor has light situation, the trustee would have violated In that the trust devoid of assets. harm, and, to the to the as section 16462 his much beneficiaries’ duty would to the The Court of is correct be liable beneficiaries. Appeal implies, alive to the while the settlor is trustee owes no beneficiaries duty after the duty change lack of does not retroactively competent, and can no his own longer settlor dies. But after the settlor has died protect interests, have to claim violation of trustee’s to the extent settlor that violation harmed beneficiaries’ one, trustee, A our cannot loot a revocable trust interests. like hypothetical without beneficiaries’ recourse after having the settlor’s wishes against has the settlor died. *13 83, Kotyck, Johnson v. illustrates the supra, Cal.App.4th
The case the settlor’s the beneficiaries’ before and after standing difference between case, death. In that alive, still although was under the care and of a custody whether, court-appointed conservator. The in question situation, of a beneficiary revocable trust was entitled to receive a trust accounting. Court of concluded the Appeal beneficiary was not so entitled. Its analysis instructive. The had relied beneficiary “on section 15800, which postpones rights trust beneficiaries the time that ‘during a trust is revocable and the person holding revoke the power trust is ” (Id. 88.) at competent.’ court p. rejected this reliance. provision “[T]his does not mean that a trust automatically becomes irrevocable when the trustor becomes a conservatee. The Law Revision Commission comment to section 15800 explains: ‘This section has the effect of postponing enjoyment of rights beneficiaries or revocable trusts until the death or incompetence the settlor or other person holding power revoke trust.’ (Cal. Law com., Revision Com. at 54 Ann. reprinted (1991 ed.) West’s Prob. Code foil. 15800[,] the Johnson italics added (Ibid.) The court p. court].)” [by conservator, that the explained court, with the working was a person holding (Ibid.) It concluded, revoke the trust. power “that section accordingly, 15800 does not give . . . so beneficiary to a trust any right long accounting as a conservator retains ... to have the authority trust revoked and to abrogate beneficiary’s] interest in the (Ibid., [the trust proceeds.” italics added.)
But the Johnson court went on to that the explain conservator be might later, liable to the remainder irrevocable, after the beneficiary trust becomes for any malfeasance. It that “the explained conservator ignores misappropria- (Johnson tions of the conservatee’s at its own Kotyck, property supra, peril.” v. at Cal.App.4th court Accordingly, merely concluded that the “cannot beneficiary be accorded all the of a vested beneficiary before settlor)].” (Id. [(i.e., death of the trustor added.) italics This dies, discussion that after the settlor suggests would have conservator’s complain actions taken before the settlor’s death.
Other legal sources after the support finding standing settlor’s death. Although California’s law of trusts is it also draws on the statutory, common law. extent that the “Except common law rules are governing trusts statute, modified the common law as to trusts is the law of this state.” (§ 15002.) The Law Revision Commission comment to this section states that it refers “to the rules of decision contemporary evolving developed by courts exercise of their the law to new situations and to power adapt com., (Cal. conditions.” Law changing Revision Com. 54 West’s Ann. Prob. supra, 484-485.) foil. pp. with section Consistently California courts have considered the v. (See Restatement of Trusts in California trust law. Esslinger interpreting
1073 517, 528 Cummins (2006) Cal.Rptr.3d [interpreting 144 538] Cal.App.4th [50 Trusts].) The Rest.2d it with the in a that made consistent way 17200 § Trusts, does not expressly like the Probate Third of Restatement do here, that beneficiaries it the conclusion but supports address question the duty breach of death to sue for a trustee’s have after the settlor’s standing while the 74 of that Restatement provides owed to the settlor. Section revocable, (subd. directs what the settlor the trustee has a to do duty trust is are exercisable (l)(a)), and that of the beneficiaries rights “[t]he section, like the (l)(b)). This (subd. to the control of the settlor” subject 15800, But before us. section is inconclusive on question similar (l)(a), to subdivision section are instructive. The comment comments from for a loss that results states: “A trustee is not liable to the beneficiaries of that in accordance with the terms with a settlor’s direction compliance adds, Trusts, 74, b, 29.) that comment (Rest.3d com. Later direction.” p. § action, matter, however, the trustee surcharge in the event of a “As practical evidence to a defense based does run a risk in on unwritten relying support (Id., c, 30.) These comments on settlor direction or authorization.” com. p. in at least some that a trustee be liable to the beneficiaries imply circumstances, in turn that beneficiaries have to assert which implies that liability. directly.
One well-known on trust law does address this question treatise trust are “Consistent with the rule that the duties of a trustee of a revocable the settlor has owed least while exclusively capacity, trust are generally subject of non-settlor beneficiaries of revocable Thus, rule, the control of the as a the trustee cannot be held to general settlor. trust account other beneficiaries for its administration of revocable death, course, lifetime. the trustee is the settlor’s After the settlor’s of the trust accountable to the trust’s other beneficiaries for its administration Further, courts have allowed other many after the death. settlor’s beneficia- related to the duty ries to breach claims settlor’s pursue after when, administration the trust the settlor’s lifetime, example, the settlor’s duty during there are that the trustee breached its allegations influence, undue or and that the settlor- had lost was under capacity, lifetime The Law of Trusts did not or the trustee’s conduct.” ratify (Bogert, approve 103-105, omitted, added; 964, 2010) italics (3d and Trustees ed. fns. pp. § 684, see Estate Bowles (2008) Cal.Rptr.3d 169 692-694 Cal.App.4th [87 law].) in Cal. Among this treatise [considering interpreting 122] Evangelho, supra, the italicized language cases the treatise cites to support 35.) fh. (Bogert, supra, 615. Cal.App.4th fn. (Bogert, supra, cites Florida cases. Bogert also some 877, 882, America 2008) v. Bank So.2d Brundage (Fla.Dist.Ct.App. (as California) the trustee owes no recognized court “However,” held, the court “once the interest beneficiaries of a revocable trust. *15 settlor, of the contingent vests the death of the the upon beneficiary sue for breach that the trustee owed to the settlor/beneficiary which was breached the lifetime of the settlor and affects subsequently (Ibid.) interest of the vested Another reached a beneficiary.” Florida court v. Novak similar (Siegel conclusion while New York law. applying 89, 2006) So.2d It (Fla.Dist.Ct.App. explained denying standing would be our “contrary to sense of trustee should not be able to justice—a violate its . . . and because the settlor fiduciary duty yet escape responsibility lifetime. did not discover the her an transgressions during With interest in the mother, trust after the death of their have corpus [beneficiaries] .... standing challenge disbursements Without this remedy, wrongdo- (Id. concealed from a settlor her lifetime ing would be rewarded.” omitted.) fn. The Uniform Trust Code is also instructive. California has not adopted trusts, Uniform Trust Code. But it to illuminate the law of common helps which, noted, is also the law of California as modified statute. except by (§ 15002.) One section of that code “While a trust is revocable provides: [and trust], the settlor has to revoke the of the beneficiaries are capacity of, to, to the control and the duties of the trustee are owed subject exclusively substance, (U. (2000) (a).) the settlor.” Trust Code subd. is similar to section 15800. Like section it does not provision address the before us. But the comment specifically question accompanying does address the It states what the comment to section question. expressly the death or the benefi- “Following implies: incapacity ciaries would have a to maintain an a trustee right action breach against trust. However, with death to actions settlor’s respect occurring prior or an action beneficiaries could be barred settlor’s incapacity, by by consent or other the action events such as successor approval by 553-554, (U. added.) trustee.” Trust com. to italics pp.
We are aware of no common law source to beneficiaries denying standing law in the situation here. The cited sources indicate that the common strongly after the death. Because no rule is that beneficiaries do have settlor’s rule, California statute has modified that we find these sources persuasive. breach of the that other remedies exist for trustee’s Timothy argues He there be a claim for suggests might owed to settlor. fiduciary duty et elder abuse under Welfare and Institutions Code section 15600 seq., alive, while he or or a suit of a conservator for settlor she is appointment under Code Civil of the deceased settlor personal representative Procedure section 377.30. that the deceased’s Recognizing personal represen- trustee—indeed, be, is, Timothy’s attorney tative and often also the might here—and that are at oral that is situation acknowledged argument people themselves, he that if the argues personal representative to sue unlikely court might probate the beneficiaries petition trustee are the same person, could then investigate who an personal representative to appoint independent the beneficiaries’ claims. and possibly pursue section Welfare and Institutions Code
A claim for elder abuse under circumstances. be a under might remedy appropriate 15600 et seq. possible a claim and Institutions Code that such suggests But in the Welfare nothing all other actions. replaces possible *16 relevant: “A cause of Procedure 377.30
Code of Civil section provides entitled to commence an action or action that survives the death of the person interest, an action in . . . and to the decedent’s successor proceeding passes or, none, if by be commenced the decedent’s may by personal representative certainly gives the decedent’s successor in interest.” This provision But action like the one here. to an standing personal representative pursue and the that statute is a of to general grant standing. Contrary Timothy’s of is grant standing dissent’s in this statute its arguments, nothing suggests (dis. that “only” opn., exclusive. The dissent asserts this statute provides one, 1079) at an action like this post, bring p. personal representative may but the word is not found in that section. “only” above concern Probate Code discussed provisions specifically and, of trusts a broad and list they recognize nonexclusive explained, Those remedies for beneficiaries to use to seek redress for breach trust. 377.30’s grant make clear that Code of Civil Procedure section provisions these They give is not exclusive when it comes to trusts. standing expressly at least. In addition to Probate beneficiaries some actions standing bring above, Code Probate Code section sections 16420 discussed a (a), subdivision “The file following petition request provides: persons [(J[] (3) . . . The trustee or court make an order under this ing part: [f] interested (B) any cases: . . . Where following [f] [f] which trustee has a claim to real or title to or possession personal property, “ ” term, (Italics added.) held another.” ‘interested includes person,’ Thus, Code of Civil Procedure (Prob. (a)(1).) a subd. beneficiary. when it comes to standing section 377.30 is not the exclusive designation a to a deceased settlor. We must look duty claims breach of trustee’s the relevant Code sections to determine whether beneficiaries Probate answers have such an action. no statute standing bring Although precisely this give this we conclude the Probate Code does question, of Civil Procedure section for the reasons above. Code standing explained 377.30 does not this standing. preclude sure, rule, is the real in interest To be a the trustee general party “[a]s (Estate Bowles, defend on the trust’s behalf.”
with to sue and standing 1076 at But
supra, general rule does not extend to an Cal.App.4th action the trustee itself breached a alleging can duty. “[A] (Ibid., bring a trustee for breach of proceeding against trust.” citing 16420, 17200; accord, (2009) v. Johnston King §§ Cal.App.4th 269].) Cal.Rptr.3d [101
Thus, the existence of other remedies under other codes does possible not mean the beneficiaries lack under the Probate Code simply assert, after the settlor’s a breach of the the trustee owed the settlor to the extent that breach harmed the beneficiaries. Contrary Timothy’s (dis. 1079), and the dissent’s arguments beneficiaries do not opn., post, have to move either go through two-step process—(1) appoint personal exist, if one does not or to have the representative, already existing personal one, (2) removed and a new and then have the new representative replaced the action. the action personal representative bring They may bring directly, themselves. *17 and the dissent also that the actual trust him
Timothy argue gave great act, (Dis. discretion to and that action with the this conflicts settlor’s intent. 1079-1080.) at But this to whether there opn., post, argument goes pp. just case, awas breach of a towards the settlor in this not to whether the beneficiaries have to assert a breach if there was one. We no standing express that, view regarding merits this case. We hold after particular merely death, the settlor’s have a beneficiaries assert breach of the standing the trustee owed to the settlor to the extent that breach harmed fiduciary duty the beneficiaries. that even if such
Finally, vested beneficiaries have stand- Timothy argues the actual have still not vested. As still ing, rights long Mary plaintiffs’ lives, entitled after she is benefits of trust. she dies will Only Thus, beneficiaries’ vest. remaining rights Timothy argues, only Mary may William; a towards the other beneficiaries will now assert breach of his duty have to await her death to this action. We Section 17200 bring disagree. internal concerning a court trust’s permits “beneficiary” petition we have section 15800 affairs as section 15800 As except provides. explained, until the death. Section the beneficiaries’ settlor’s merely postpones (c), subdivision defines to include “beneficiary” contingent beneficiary. need wait death to this action. argued children not for Mary’s bring that the brought in both the trial court and the Court of beneficiaries Appeal late, is, action that it is time-barred the statute of limitations too We no on this but this action is or doctrine of laches. express opinion point, because is still alive. Mary not premature simply have no standing
Because the Court of concluded that plaintiffs Appeal died, any it did not decide actions before William Timothy’s complain in the case. It should do so on remand. other issues
III. Conclusion matter to We reverse the of the Court of and remand the judgment Appeal that court for further consistent with our opinion. proceedings Liu, J., J., Baxter, J., J., and concurred. C.
Cantil-Sakauye, Corrigan, KENNARD, J., death, a As ameans of Dissenting. transferring property (the (the settlor) into a trust for the benefit of another assets place time, reserve the to withdraw the trust assets at beneficiary), right (the trustee) a third to administer the trust. Such a trust appoint party (9th 2009) ed. (Black’s known as a “revocable trust.” Law Dict. generally lifetime, the settlor’s the trustee owes the settlor During pp. administer the trust assets. The Law of fiduciary duty (Bogert, properly 2010) 97-98.) of that (3d Trusts and Trustees ed. For breach pp. can the settlor can sue trustee. After the settlor’s duty, the trustee on the behalf? According sue deceased settlor’s view, can. I the estate’s majority, they disagree. my only personal exists, (or, interest) if none the decedent’s can sue successor representative Therefore, on deceased settlor’s behalf. unlike the I would majority, affirm the of the Court of which held that the trust judgment Appeal, beneficiaries here lacked to sue the trustee.
I *18 In created a his son designating William Giraldin revocable death, were to his go as trustee. After William’s the trust benefits to Timothy alive, nine children wife and were to if still after her death William’s Mary, share in the remainder. equally document,
As set forth in the trust trustee was to distribute trust Timothy directed William declared mentally assets as settlor William unless was by In was to Timothy the event of William’s incompetent. incompetency, provide William with trust assets sufficient to William’s “accustomed manner support “the of the remainder beneficia- living,” without consideration of ries.” The trust document also described the trustee’s “discretionary powers” “absolute,” so arbitrarily, “This means that the Trustee can act explaining: as he . . . does not act in bad faith.” The settlor long expressly “waive[d] reasonable, that the Trustee’s conduct” be that of “a requirement prudent person.”
Between 2002 and at the direction of settlor February May William, $4 more than million in SafeTzone invested trust assets of Timothy (SafeTzone), founded Technologies Corporation startup company brother, twin Timothy. William’s son Patrick and owned Patrick’s partly $155,000 not a loaned Patrick in trust assets. The was Timothy startup also success; in investment in original at William’s death the trust’s $100,000. SafeTzone was worth only after settlor William’s four of his children sued year (plaintiffs) had that duty. They alleged Timothy
trustee for breach Timothy fiduciary Patrick, on and twin brother William’s life himself savings squandered trust benefits. thereby reducing potential According plaintiffs, plaintiffs’ SafeTzone, William “was in the time of the trust’s investments in settlor health, Parkinson’s from Disease for suffering many years had been declining sought and unable to the influence of Plaintiffs Timothy.” resist [trustee] trustee, him to account for his removing Timothy court orders compelling trustee, in the trust’s value acts as him for loss surcharging (the death. William’s wife Mary primary before William’s period in the lawsuit. trust) other children did not join William’s trial, favor. It found At the the court ruled in beneficiaries’ plaintiff SafeTzone, that, $4 more than million of trust assets in by investing interest, avoid conflicts of to deal impartially breached his Timothy beneficiaries, and to diversify with the trust’s trust property, preserve said, SafeTzone, the court At the time of the investment in investments. the benefits analyze lacked mental settlor William sufficient competence make or to authorize Timothy and risks of an investment in SafeTzone be removed as trustee Timothy an investment. The court ordered such $4,376,044 investment and he be SafeTzone surcharged and that $155,000 $625,619 Patrick was ordered to return for other disbursements. had loaned to him. trust assets the trial court’s reversing judgment,
Trustee Timothy appealed. sue lacked held that Court Appeal plaintiff Timothy.
II *19 the trust to the extent that 15800 states: “Except Probate Code section , that a trust is revo- . . the time otherwise . instrument provides are owed to the (b) person The duties of the trustee cable . . . : . . . H[] HO Thus, here acknowledges, the majority revoke.” holding power with beneficiaries respect owed no Timothy plaintiff trustee William, SafeTzone, who held because settlor trust assets in investment of was made. was still alive when the investment to revoke power whether, ante, 1066.)1 in is silent on at But the statute (Maj. opn., question for the trust beneficiaries can sue the trustee after trust settlor’s lifetime. owed to the settlor settlor’s breaching fiduciary duty allows such an action. I would not. majority in Code of Procedure section 377.30: Pertinent here is this Civil language the death entitled to commence “A cause of action that survives successor in interest. . . an action or to the decedent’s proceeding passes or, if an action be commenced decedent’s may by personal representative none, bring the decedent’s successor in interest.” refusal to Any wrongful motion, such an action can be in challenged by beneficiary through court, Code, (Prob. 8500) to remove the on probate personal representative “[rjemoval that . . . or ground for of the estate necessary protection Here, (Prob. (d)). interested subd. beneficia- persons” plaintiff ries do not that are the allege of deceased settlor they personal representatives William, or that no exists and are William’s personal representative they successors in interest.2
Code Civil Procedure section 377.30’s that the dece- only provision (if dent’s sue on the decedent’s behalf personal representative any) may would avoid the conflict of interest inherent in the majority’s approach also the beneficiaries to sue: The have allowing suing generally in interest their share of the inheritance. That interest personal maximizing mind, be at odds with what the decedent had in as this case illustrates. document, Under the trust trustee had “absolute” Timothy discretionary in the trust and the settlor power administering requirement “waive[d] reasonable, that” Timothy’s conduct as trustee be that of “a prudent person,” the settlor’s intent from lawsuits language reflecting Timothy protect related to of his duties as trustee. The trust beneficia- Timothy’s performance inheritance ries’ interest their a successful personal increasing through intent; thus, lawsuit against conflicts with the settlor’s should Timothy they not be an filing deceased settlor’s interests permitted represent action on his behalf. here the above discussed
Applying “personal representative” provision Code of Civil Procedure section 377.30 would avoid litigation strategy Timothy breaching The Court of Appeal plaintiff stated beneficiaries sued trustee beneficiaries, fiduciary duty Timothy breaching allegedly plaintiffs owed to not for But, notes, fiduciary duty majority alleged, owed plaintiffs to settlor William. as the also found, Timothy fiduciary duty the trial court (Maj. had breached the owed to William. ante, opn., argument, not a personal representative record does show whether exists here. At oral Timothy personal counsel for defendant said that is the decedent settlor’s representative. *20 1080 to ensue from the that both the likely majority’s holding personal
problems An A and the beneficiaries sue. representative may example: personal repre- of a trust the on sentative several beneficiaries revocable sue trustee the and the behalf of deceased defendant trustee offers to settle. Some offer; want to the others do not. What to do? Which of plaintiffs accept interests, all of whom the deceased settlor’s plaintiffs, purport represent to decide whether to the offer? This can be avoided get accept quandary section 377.30. Because this statute allows decedent’s applying only none, (or interest) if decedent’s successors in personal representative behalf, whether sue on the decedent’s decision just given example not settlement offer is entrusted to accept personal representative, else. anyone the absence of confer- majority acknowledges any statutory provision the trustee for a on beneficiaries of revocable trust sue
ring breach of the owed to the settlor the settlor’s lifetime. statutory duty ante, But, 1067.) at such a according majority, (Maj. opn., p. permitting (Id. 1068.) the Probate Code “as a whole.” at lawsuit is from implicit 16069, 16420, 16462, Code cites Probate sections support, majority 17200, which I discuss below.
Probate Code section states that the trustee of a revocable trust “is not required to account to the . . . [1] . . . of a revocable trust, be revoked.” in Section for the when provided period indicates, the cross-reference to section 15800 states: majority “[A]s that during section must be read in context. Section 15800 provides revocable, time afforded beneficia- the trust is the settlor has the rights . . We do read section to mean that the trustee never has ries. . not irrevocable, i.e., such an even after trust becomes accounting, provide ante, But whether or not after the settlor’s death.” (Maj. opn., the trustee beneficiaries to obtain an from accounting section 16069 permits beneficiaries can in this statute nothing after the settlor’s implies the fiduciary the deceased settlor’s behalf for a breach of sue the trustee on the settlor’s lifetime. the trustee owed settlor a broad range Code section it beneficiaries gives As to Probate commits threatens to commit a “a a breach or remedies when (a), added.) The (Prob. subd. italics breach of trust . . . .” violation the trustee of a “breach of trust” as Probate Code defines “[a] Code, 16400, (Prob. italics that the trustee owes the beneficiary.” any duty here, however, can whether added.) is not plaintiff The question the beneficia- he owed to breaching duty defendant trustee sue Rather, can the trustee for whether the beneficiaries sue question ries. *21 lifetime, a owed to the trust’s settlor the settlor’s a
breaching duty during silent, on which the section 16420 is thus no for point providing support majority’s position. (a),
With to Probate Code section 16462’s subdivision the respect majority relies on that a that “a trustee of revocable trust is not provision’s language liable to a for act beneficiary or omitted to written performed pursuant directions from the the . . . .” holding to revoke This power statutory states, the that if the act language, majority trustee does not “implies pursuant directions, to the settlor’s the trustee be to the beneficiaries.” may liable (Maj. ante, 1068.) at reliance opn., on this majority’s statutory language as I below. misplaced, explain in Probate Code language (a) section 16462’s subdivision quoted
the majority describes a defense that a may trustee assert to avoid held being (ibid.) “liable to a a beneficiary” revocable trust. But because the a revocable trust owes no to the beneficiary while settlor is alive Code, (Prob. 15800), a trustee is not liable to a for actions taken beneficiary Thus, settlor’s lifetime. relied statutory language on by (see majority a preceding must refer to lawsuit a paragraph) by beneficiary death, a revocable trust based on the trustee’s conduct the settlor’s after when the trustee (see owes trust beneficiary Prob. fiduciary duty (a)) subd. and can held be liable to the for that beneficiary breaching duty. such a lawsuit certain actions taken challenging trustee after the settlor’s Probate Code (a) section 16462’s subdivision absolves the trustee from liability if the trustee acted beneficiary “pursuant written (ibid.) directions” from the settlor. Notwithstanding majority’s insistence to the contrary, does not that a statutory provision imply sue the beneficiary may trustee on the behalf settlor’s based on the trustee’s conduct the settlor’s death. before as to
Finally, (a), Probate Code section 17200’s subdivision the majority relies on language stating in Section . . . “[e]xcept provided of a beneficiary . . may court. the internal affairs petition concerning of the trust. . . .” The majority reasons: provision,] contingent “[Under the court beneficiary may to the limitations petition subject only provided section 15800. But the latter time’ states that provision merely ‘during revocable, trust is the settlor has the of a and the trustee’s beneficiary, duties are to the not the in section 15800 limits beneficiary. Nothing the ability of beneficiaries to tlie court trust becomes petition after ante, irrevocable.” so. Neither (Maj. opn., Maybe Probate Code 15800, however, (a) section 17200’s subdivision nor section contains lan- trustee, that a of a guage revocable trust sue the on implying behalf, the deceased settlor’s the trustee breaching fiduciary duty owed the settlor settlor’s lifetime. above, I affirm the Court judgment
For the reasons set forth would of Appeal. 1, concurred.
Werdegar,