Siegel v. FifeSiegel v. Fife
Counsel
Orren & Orren, Tyna Thall Orren; Paul F. Cohen; and Leslie Barnett for Plaintiff and Respondent.
Opinion
TURNER, P. J.—
I. INTRODUCTION
The objector, Elisabeth Fife, appeals from a probate court‘s order confirming the sale of real property belonging to a trust. The objector is a beneficiary of the Betty Jean Brown Revocable Trust, dated September 1, 2005 (the 2005 trust). The trust provided that upon Ms. Brown‘s death, the objector would receive specific real property for the care of Ms. Brown‘s cats. Ms. Brown‘s conservator, Jeffrey Siegel, filed a probate court petition seeking approval of the sale of that specific real property belonging to the trust. Mr. Siegel contended the sale of the real property was necessary for the benefit of the settlor, Ms. Brown. Ms. Brown was under a conservatorship and resided in assisted living. Mr. Siegel argued that the conservatorship estate lacked funds to maintain Ms. Brown‘s care during her life. Mr. Siegel asserted the immediate sale of the real property was necessary. The trustee at the time, Michael Wilson (see post, p. 995) agreed with the conservator. The probate
II. BACKGROUND
A. Ms. Brown‘s September 1, 2005 Trust
Ms. Brown is the settlor and beneficiary of the 2005 trust. Ms. Brown was the first trustee and primary beneficiary. The 2005 trust was amended on April 12, 2007, by the first amendment. The second amendment amended the 2005 trust on August 14, 2011. The amended 2005 trust provides, “At the death, resignation or incapacity of Betty Jean Brown, George Wilson shall serve as the first successor sole trustee. If George Wilson shall fail or refuse to act as first successor sole trustee, his son Michael Wilson shall serve as the second successor sole trustee.”2 George is a longtime friend of Ms. Brown. By the second amendment to the 2005 trust, Ms. Brown made the trust irrevocable. On September 1, 2011, Ms. Brown resigned as trustee.
The trustee is vested under the 2005 trust with several powers: “To carry out the purposes of this trust and subject to any limitations stated elsewhere in this declaration of trust, the trustee is vested with the following powers, in addition to any now or hereafter conferred by law: [¶] . . . [¶] 2. To sell or convey, at public or private sale, for cash or credit; to exchange; to divide; to grant options; and to abandon a trust asset or any interest therein.” The 2005 trust provides for the settlor during her lifetime under section 3.03: “During the lifetime of the Settlor, the trustee shall at least annually, unless otherwise directed by the settlor in writing, pay to or apply to the benefit of the settlor, all of the net income from the trust estate. [¶] During the lifetime of the settlor, should the net income of the trust estate be insufficient to provide for the care, maintenance, support, or desires of the settlor as hereinafter defined, the trustee may from time to time, in the trustee‘s sole and absolute discretion, pay to or apply for the benefit of the settlor, such amounts from the principal of the trust estate as the trustee deems necessary or advisable for the care, maintenance, support or desires of the settlor. As used in this section, the term ‘care, maintenance, support or desires of the Settlor’ shall
Upon Ms. Brown‘s death, the 2005 trust‘s assets were to be distributed as follows under section 5.02. George would receive the Iron County, Utah, property, all of Ms. Brown‘s personal property excluding her cats and any remainder of the 2005 trust. The objector would receive the house at 1321 Edgecliffe Drive in Los Angeles, California (the Edgecliffe house), as well as Ms. Brown‘s cats. The 2005 trust would retain $50,000 for the care of the cats and upkeep of the Edgecliffe house. Richard, Carmen and Tony Perez were to receive $5,000 each.3 Richard Martin, Ms. Brown‘s second cousin, was to receive land in Riverside County, California. Ms. Brown was not deceased at the time of the filing of the notice of appeal.
B. The Purported 2011 Trust and Appointment of Mr. Siegel as Conservator
Ms. Brown formerly lived at 1651 East 85th Street in Los Angeles, California (the 85th Street house). Ms. Brown lived at the Edgecliffe house beginning in 1999 after the death of her brother. The objector, who lived across the street from the Edgecliffe house, began assisting Ms. Brown with errands in 2007. The objector cared for Ms. Brown‘s cats. The objector described how she began to care for the cats in her own home: “. . . I found the interior of [Ms. Brown‘s] home to be in a deplorable condition and exhibiting no kind of cleaning being done to it. There seem to be fewer things in the house, from which I inferred that Martin and/or Perez had taken things from the house, but the house remained far dirtier than it had been when Carmen and I first cleaned it and not a very healthy environment for [Ms. Brown] or her cats to live in. [Ms. Brown‘s] twelve cats remained in my house, where I continue to provide for their care.” As of the filing date of the notice of appeal, the objector continued to care for Ms. Brown‘s cats.
In 2010, Mr. Perez began performing maintenance work on the Edgecliffe and the 85th Street houses. Mr. Perez lived across the street from the 85th Street house. From 2010 forward, both Mr. Martin and Mr. Perez attempted
In the fall of 2011, Mr. Martin and Mr. Perez moved Ms. Brown from the Edgecliffe house back to the 85th Street house. Both the objector and George lost contact with Ms. Brown. On October 11, 2011, Ms. Brown purported to execute a new trust (the 2011 trust). The 2011 trust purported to revoke the 2005 trust. The 2011 trust named Mr. Martin as trustee and devised Ms. Brown‘s entire estate to him upon her death.
On January 23, 2012, Ms. Brown filed a voluntary petition for appointment of a conservator for her estate and person. The probate court granted the petition on March 20, 2012. Mr. Siegel was appointed conservator. Conservatorship letters were issued on March 26, 2012. The probate court brought both the 2005 and 2011 trusts under its supervision by the order. Mr. Siegel was also appointed interim successor trustee of both the 2005 and 2011 trusts.
On June 21, 2012, as interim successor trustee, Mr. Siegel filed a petition for an order to determine the validity of the 2011 trust documents; reinstate the original estate planning documents; revoke the 2011 trust; affirm terms of the 2005 trust; and nullify three deeds. On December 20, 2012, the probate court granted the June 21, 2012 petition. The probate court declared the 2011 trust void and nullified three purported deeds of transfer. The probate court also declared the 2005 trust as amended to be the operative trust. On April 26, 2013, Mr. Siegel formally resigned as interim successor trustee. The probate court appointed Michael as successor trustee due to George‘s inability to act as successor trustee. The 2005 trust remains under court supervision.
C. The Trustee‘s Petition to Sell Real Property Including the Edgecliffe House
Michael, as trustee, placed the Edgecliffe house, the 85th Street house and the five vacant lots adjacent to the latter property on sale. On November 26, 2013, the trustee received a bid to sell the Edgecliffe house for $560,000. On December 2, 2013, the trustee filed a report of sale and petition for an order confirming sale of the real property.
Mr. Siegel, as conservator, moved Ms. Brown from the 85th Street house to an assisted living apartment complex named Kingsley Manor. Mr. Siegel believed returning Ms. Brown to living at the Edgecliffe house was not in her best interest. The trustee submitted evidence that repairing the Edgecliffe house
The conservator, Mr. Siegel, attested that Ms. Brown‘s conservatorship estate was out of funds as of December 31, 2013. According to the conservator, Ms. Brown‘s assisted living costs were $4,000 per month. There were additional costs for incidental expenses, property taxes and maintenance of real property. Ms. Brown also owed Kingsley Manor several months of payments for her care. The conservator also declared capital gains taxes would not be a significant liability if the Edgecliffe house were sold.
On December 23, 2013, the objector filed her opposition to the petition seeking confirmation of the sale of the Edgecliffe house. The objector argued there was no showing a sale of trust assets was necessary; this was because the conservator, Mr. Siegel, had sufficient cash reserves to support Ms. Brown for two years; and
On December 31, 2013, Michael filed his response to objector‘s opposition. Michael, the trustee, argued he did not violate his fiduciary duties because he listed the Edgecliffe house, the 85th Street house, and the five vacant lots for sale concurrently. The conservator, Mr. Siegel, represented that Ms. Brown needed funds for her care. Michael argued, based on a review of the recent accounting, Ms. Brown‘s income was $2,800 a month while her expenses were $11,000 a month; the expenses included caregiving, assisted living, property taxes, insurance, maintenance and upkeep of the trust properties; when combined with the court-authorized conservator and attorney fees, there were no funds remaining and there were insufficient funds to pay for a 24-hour caregiver if Ms. Brown returned to living at the Edgecliffe house. Additionally, Michael argued the objector could recover a general pecuniary
On January 6, 2014, after the hearing, the probate court overruled the objections. The probate court noted the settlor, Ms. Brown, needed funds while she was living. The probate court held an overbid for the Edgecliffe house. The probate court accepted a bid of $650,000 for the Edgecliffe house. The objector appealed the order. On January 28, 2014, the probate court ordered the petition for sale of real property confirmed.
On June 16, 2014, Michael resigned as successor trustee of the trust. The probate court appointed Mr. Siegel as successor trustee. Mr. Siegel has taken the place of Michael as trustee for purposes of this appeal. After the filing of the notice of appeal, we issued a writ of supersedeas staying the sale of the Edgecliffe house. (Wilson v. Fife (Apr. 22, 2014, B253746) [nonpub. order].) While the appeal was pending, Mr. Siegel was substituted in place of Michael as the new successor trustee.
III. DISCUSSION
A. Trustee Power to Sell Trust Property
Under
B. Reduction in the Objector‘s Share of the Estate
The objector contends the proposed sale of the Edgecliffe house violates
Where a trust makes provisions for particular persons, but the settlor‘s property is insufficient to fully pay all the debts, some devises may be reduced to pay the trust obligations. (Burkett v. Capovilla (2003) 112 Cal.App.4th 1444, 1452; see Estate of Buck (1948) 32 Cal.2d 372, 376; 14 Witkin, Summary of Cal. Law (10th ed. 2005) Wills and Probate, § 658, p. 745 (Witkin).) In the context of wills, the Law Revision Commission described abatement or reduction of a distribution thusly, “[I]f property not disposed of by a decedent‘s will and residuary property are not sufficient to pay debts, expenses of administration, or family allowance, then general and specific devises must be abated (reduced).” (Recommendation Relating to Abatement (Nov. 1987) 19 Cal. Law Revision Com. Rep. (1987) p. 869.)
We now turn to
We turn to the pertinent provisions of the 2005 trust—sections 3.03 and 5.02. Section 3.03 of the 2005 trust grants the trustee broad authority to sell assets to provide for Ms. Brown‘s care. As noted previously, section 3.03 provides, “During the lifetime of the settlor, should the net income of the trust estate be insufficient to provide for the care, maintenance, support, or desires of the settlor as hereinafter defined, the trustee may from time to time, in the trustee‘s sole and absolute discretion, pay to or apply for the benefit of the settlor, such amounts from the principal of the trust estate as the trustee deems necessary or advisable for the care, maintenance, support or desires of the settlor.” Later, section 3.03 states, “[T]he trustee shall use broad discretion for the settlor‘s rights to withdraw principal, and rights of any remaindermen shall be considered of secondary importance.” (Italics added.) Section 5.02 provides for the distribution of Ms. Brown‘s assets upon her death. As noted, section 5.02 provides for the distribution after Ms. Brown‘s death of the Edgecliffe house to the objector for the care of the cats.
Construing these two sections together, we agree with the probate court that the trustee is authorized by the 2005 trust to sell the Edgecliffe
We express no opinion as to priorities for payment in the event that Ms. Brown passes away and funds remain under the control of the trustee. As we have explained,
C. The Proposed Sale
We review the probate court‘s order authorizing the sale of the Edgecliffe house for an abuse of discretion. (Estate of Barthelmess (1988) 198 Cal.App.3d 728, 735; Estate of Da Roza (1947) 82 Cal.App.2d 550, 553-554.) The probate court did not abuse its discretion by approving the sale of the Edgecliffe house. No abuse of discretion occurred given the precarious state of Ms. Brown‘s estate as we have described in the preceding part of this opinion. The probate court did not err by granting the petition to confirm the sale of the Edgecliffe house.
The probate court‘s January 6, 2014 order is affirmed. Jeffrey Siegel, as trustee of the Betty Jean Brown Trust, dated September 1, 2005, may recover his appeal costs from objector, Elisabeth Fife. Our previously entered stay order is vacated effective the date of finality of this opinion. Any further stay of proceedings should be pursued before our Supreme Court.
Mosk, J., and Kriegler, J., concurred.
On February 26, 2015, the opinion was modified to read as printed above. Appellant‘s petition for review by the Supreme Court was denied May 20, 2015, S225680.