Some of you went into Estate Planning and Probate to avoid Civil Procedure and Evidence rules; but as the facts and decision in Estate of Gardner (2010), Cal.App.4th makes clear, demurrers, summary judgment, and parole evidence are a continuing part of even a Probate practitioner’s life.
James Gardner died leaving his mother, sister, ex-wives, and children. That probably wouldn’t matter except that prior to his death, James recovered $2.5 million as settlement for a personal injury lawsuit. He deposited eighty percent in two separate brokerage accounts; $1,008,661.80 with Atlas Funds and $1,008,661.80 with Wells Fargo Investments, L.L.C.
The Atlas account was set-up as “Pay-On-Death” (POD) to James’ mother and sister, equally. Wells Fargo was to set-up the account in the same manner, but the paperwork to establish the POD was never executed. James was informed that an ex-wife was employed at Wells Fargo. He was “concerned” and “elected to withdraw the entirety of the funds . . . and transfer them to Wachovia Securities.” Two months later, he executed documents and electronically transferred the Atlas account to Wachovia. Wachovia prepared an “Application for Registration of Account in Beneficiary Form, Transfer on Death Direction” to his mother and sister. James died before executing this application.
Appellant, mother, in her P.C. §850 Petition, claims in the alternative, that she and decedent’s sister are rightful owners of the funds because they were P.O.D. or Totten Trust accounts (P.C. §550 et seq) upon deposit; or, that an “express oral trust” was created upon deposit at Wachovia (P.C. §15201 et seq).
The trial court sustained objectors’ demurrer to the First Amended Complaint without leave to amend.
Appellant, on appeal, contended that “decedent intended to give the money to her; and second, that decedent “created an express oral trust’ by asking Wachovia to hold the funds for his mother and sister.”
The appellate court looked at non-probate transfers (P.C. §5000 et.seq.) and the Uniform TOD (Transfer on Death) Security Registration Act “UTSR Act” (P.C. §5500 et.seq.). The Appellate Court disagreed with Appellant that parol evidence could be used, by itself, to show an account was registered in beneficiary form. “The parol evidence rule . . . generally prohibits the introduction of any extrinsic evidence, whether oral or written, to vary or add to the terms of an integrated written instrument. The rule does not, however, prohibit the introduction of extrinsic evidence to explain the meaning of a written contract. . .”
In this case, the court said parol evidence could be used to “explain the meaning of a registration, but it cannot substitute for the actual registration. . .”
Alternatively, Appellant contended that the POD terms carried-over from Atlas to Wachovia. P.C. §5508 allows beneficiary accounts, but does not require an entity to provide for it. Thus, the court said Wachovia could allow for beneficiary accounts and that the Atlas registration was sufficient to carry-over a beneficiary registration. This, the appellate court finds, is a sufficient issue to support requiring a trial.
With regard to the “Oral Trust” the Appellate Court said “an oral trust in personal property is valid and may be proved by parol evidence.” Three elements are required: “a trust res, the manifestation of a trust interest, and a proper trust purpose” (P.C. §15201-15203). P.C. §15207 requires clear and convincing evidence to prove-up an oral trust. Appellant’s pleading that decedent “orally declared” the trust to Wachovia was sufficient to plead trust intent. That these facts were also pled to support a POD account is okay. The same facts are often used to plead alternative causes of action.
The Appellate Court reversed the trial court and found sufficient pleading of the facts existed to overcome a demurrer.
Mark your calendar for the upcoming Long Beach Trust, Estate Planning and Probate Brown Bag Luncheon:
Thursday, April 28, 2011, Michael Trainotti, Esq., will be sharing his thoughts on Estate Tax and Related Tax Law Changes for 2011-2012 (and 2010?) In addition, Judge Paul will give special recognition to those who have so faithfully given of their time and expertise to volunteer for the Pro Per Guardianship Panel.
We meet at the Long Beach Superior Court in Dept. G (on the 5th floor). There is no charge for the meeting.
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John T. Anderson, Section Chair
Certified Specialist in Probate, Trust and Estate Planning
by the California State Bar Board of Legal Specialization
Copyright © 2011 by John T. Anderson
All articles by John T. Anderson may be copied for personal use, only. All articles or outlines from others may be used only with their personal authorization. Any approval is for personal use, only, and for non-commercial purposes.
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