Matter of Verna Perry Trust

Case Number

21PR00505

Case Type

Hearing Date / Time

Mon, 04/08/2024 - 08:30

Nature of Proceedings

Petition for Internal Affairs – Instructing Trustee

Tentative Ruling

Probate Notes:

Appearances required. 

As an initial matter, the Court should strike the Petition filed by Joseph Perry and Leslie Fitzgerald, as the petition was not served on any party.  There is no Proof of Service showing those Petitioners served Notice of Hearing and a copy of the petition on anyone. (Prob. Code, § 17203.)  The court should also strike Rhonda Rice’s “Response” for the same reason.

Despite the service flaws in the above-mentioned petition and response, the Court can still reach the merits of the Trustee’s Petition, because it requests instructions, properly frames the issue for the Court to determine, and was properly served on all parties. 

Thus, the following is noted for the Court at the hearing:

The analysis in this case is a simple question of interpretation of what the parties agreed upon in settlement, and whether the language of the trust governs that interpretation.

The parties are not in dispute as to the $40,000 reserve, or that the reserve is to be split three ways, if any of the reserve remains after payment of fees.  Thus, the issue is the proper interpretation of Paragraph six of the settlement agreement.

Paragraph 6 of the settlement agreement plainly states that Joseph’s share should be reduced by the amount of $100,000; and this is not in dispute.  Thus, initially, Joseph’s 1/3 share should be reduced by $100,000, which leaves $20,291.08 to be distributed to Joseph.

Because paragraph six of the settlement agreement plainly references the language in the Third Amendment to the trust, that section of the trust must govern how the trustee distributes the $100,000.  That trust language states the $100,000 is to be “charged against” the share set aside for Joseph, then “redistributed to the trust shares and subshares provided in this Section 7.05b.”

Provided however, One-Hundred Thousand Dollars ($100,000) shall be charged against the share set aside for JOSEPH or his issue. Such charge is for money previously advanced to him from the Trust estate. Such sum shall be redistributed to the Trust shares and subshares provided in this Section 7.05.b.

(3^rd Amndmnt. To Trust, ¶7.05c.)

The Third Amendment to the trust amended 7.05b to state:

All of Trustor’s interest in the real property located at and commonly known as 4680 5 Street, Guadalupe, CA 93434-1550 (APN: 115-152-002), shall be distributed to JOSEPH free of this Trust. If JOSEPH predeceases the Trustor or fails to survive her, then the property shall be distributed to JOSEPH’s issue in equal shares, share and share alike and subject to Trust provision 5.01f above.

(3^rd Amndmnt. To Trust, ¶7.05b.)

This distribution does not aid the Court’s interpretation, because this provision merely gives Joseph a home, and indicates that home is to be split in equal shares to Joseph’s issue, if Joseph fails to survive the settlor.  Thus, the Court is left to determine the settlor’s intent based on the remaining provisions of the trust.  (Petherbridge v. Prudential Sav. & Loan Assn. (1978) 79 Cal.App.3d 509, 516–517 [“The intention of the parties is to be ascertained from their words and conduct in light of the circumstances surrounding the transaction.”].)

Principles of Trust Interpretation

The guiding principle of trust construction is to discern the intention of the settlor as expressed in the instrument. (See Kropp v Sterling Sav. & Loan Ass'n (1970) 9 Cal.App.3d 1033, 1044-45 [“In construing a trust instrument, the court "must if possible ascertain and effectuate the intention of the trustor ... as expressed by the language of the instrument itself." [Citations.] ... the guiding principle must be the intention of the settlor -- his intention as expressed. Not, What did he intend to say? but, What did he intend by what he did say? must be the test." [Citations.]”.)  

"In construing a trust instrument, the intent of the trustor prevails and it must be ascertained from the whole of the trust instrument, not just separate parts of it. [Citation.]  In interpreting a document such as a trust, it is proper for the trial court in the first instance and the appellate court on de novo review to consider the circumstances under which the document was made so that the court may be placed in the position of the testator or trustor whose language it is interpreting, in order to determine whether the terms of the document are clear and definite, or ambiguous in some respect. [Citations.] Thus, extrinsic evidence as to the circumstances under which a written instrument was made is admissible to interpret the instrument, although not to give it a meaning to which it is not reasonably susceptible.  [Citations.]  On review of the trial court's interpretation of a document, the appellate court's proper function is to give effect to the intention of the maker of the document. [Citations.]

Particularly in the field of interpreting trusts and wills, each case depends upon its own peculiar facts, and " '... precedents have comparatively small value....' " [Citations.]  It is the intention of the trustor, not the trustor's lawyer, which is the focus of the court's inquiry. [Citations.]  Thus, in interpreting a trust, it is proper for the court to place itself in the position of the trustor and consider the circumstances under which the document was made.”

(Wells Fargo Bank v. Marshall (1993) 20 Cal.App.4th 447, 452-454.)

Application of Interpretation Principles to Facts Here

In this case, the following is apparent from the trust language:

1. Verna Perry’s intent was to distribute the Guadalupe Home to Joseph, or his issue, should Joseph predecease.
2. Verna Perry’s intent was to distribute the remainder/residue of the trust to each of her children, in equal shares, minus $100,000 “previously advanced” to Joseph.

What is not apparent from the trust language, is how Verna Perry would have intended the $100,000 to be distributed.  It appears from the langue in 7.05c that Ms. Perry considered redistribution of the $100,000. Unfortunately, the clause she cited to control that redistribution identifies a specific gift of real property, and does not contemplate distribution of the $100,000.  Thus, that specific re-distribution provision of the trust fails, and the $100,000 is considered residue, to be distributed by the residuary clause in the trust.  (Prob. Code, §§21110-2111.)

Since the residue clause clearly identifies an intent to distribute the residue equally to each child, the $100,000 charge against Joseph should be considered residue and redistributed to each child in equal shares.