by John T. Anderson, Chairman
Certified Specialist in Estate Planning, Trust
and Probate Law by the State Bar of California,
Board of Legal Specialization
The 2d Appellate District out of Ventura County has taken Estate of Heggstad (1993) 16 Cal.App.4th 943 another step. Heggstad itself gave a great tool to Trustees and those connected with the administration of a trust. There have been differences between courts in the application of Heggstad beyond the absolute facts of that case.
Megan Kucker (“Megan”) and Bonnie Alexander (“Bonnie”) are successor Trustees of the Mona S. Berkowitz Trust (“the Trust”). They filed a Probate Code §850 petition [850(a)(3)(B)] to confirm that shares of stock which were not properly registered in the Trust were Trust Assets, not by virtue of listing on Schedule “A”, but by virtue of a general property assignment. On June 29, 2009, the Trust and assignment of “all of my right, title, and interest in all property owned by me, both real and personal and wherever located” were executed. On October 29, 2009, an Amendment and Restatement of Trust were executed, as well as an assignment of specific shares of stock, not including the shares at issue.
Trustor died in November of 2009. In February 2010, Megan and Bonnie filed their Petition to confirm the shares of stock, which were not included in the October 29, 2009 Assignment, were, in fact, assets of the Trust.
Appellants set forth that the shares were not in the Trust’s Brokerage account; the share certificates had been lost; and by virtue of the General Assignment, Trustor’s intent was to include the disputed shares in the Trust.
The Trial Court agreed with Petitioners that under P.C. §15207, an oral trust can be created “if clear and convincing evidence in presented;” however, that §15207 “must be read in conjunctions with Civil Code §1624(a)(7) requiring a writing specifically describing property in excess of $100,000.
The appellate court found that the application of CC§1624(a)(7) was “misplaced.” It applies to “a contract, promise, undertaking, or commitment to loan money . . . by a person engaged in the business of lending . . ..”
“The Probate Court erred by not ruling that the General Assignment was effective to transfer the Medco shares to the trust.”
To satisfy the Statute of Frauds in Civ. Code §1624, a description of real property was required. But, in this case, the transfer was not of real property and thus “the Statute of Frauds does not apply . . ..” “There is no California authority invalidating a transfer of shares of stock to a trust because a general assignment of personal property did not identify the shares. Nor should there be.”
The court cited the CEB Practice Guide on Revocable Trusts that assignments of personal property by general assignment to the trust “so that a Heggstad Petition §850(a)(3) can be used to capture any later acquired items not titled in the nature of the trust” or any “overlooked items.”
Citing the Heggstad case, the court noted the reference in that case to the Practice Guides and that they were “not compelling authority , they are persuasive when there is an absence of precedent.” In Heggstad, the court concluded, regarding the transfer of real property to the trust, where no deed had been executed, “that a transfer of title is not necessary when the Settlor declares himself Trustee in his own property.” The Heggstad court further “stated that the probate court’s jurisdiction over trusts includes the ‘court’s inherit power to decide all incidental issues necessary to carry-out its express powers to supervise the administration of the Trust.’”
The Appellate Court concluded that the General Assignment sufficiently showed Trustor’s intent to hold the shares owned by him as Trustee of the Trust.
Query: If you own shares of stock both in a trust and out of a trust, must you do something affirmative to set forth your intent to EXCLUDE shares from the trust? Perhaps the trust will need to say “EXCEPT for those shares or other assets set forth on Schedule ‘B’?” But then, you could have just transferred the assets in the first place; or listed the intended shares on Schedule “A.”
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.
John T. Anderson, Section Chair
Certified Specialist in Probate, Trust and Estate Planning
by the California State Bar Board of Legal Specialization