Weilandt v. Novotny

Filed 12/15/08 Weilandt v. Novotny CA1/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

Jiri Novotny appeals from a probate court order granting Gerhard Weilandts petition to determine the construction of The Watson Living Trust (the trust), concluding that Novotny is not entitled to receive any distribution from the trust. We agree that the trial courts construction is inconsistent with the terms of the trust instrument and, therefore, shall reverse the order.

Factual and Procedural Background

Emil Watson and Ann Watson were the cotrustors of the trust they created in 1993. Emil died on September 2, 1995, leaving Ann as the surviving spouse. The trust agreement provides that after the death of the first spouse, the trust was to be divided into two subtrusts, Trust A and Trust B. The trust agreement further provides that on the death of the surviving spouse the assets of Trust B were to be distributed to Anns only son, Kenneth Watson. However, Kenneth died in 1998, predeceasing Ann, who died in March 2007. The trust agreement provides, in article VI(E)(7), In the event that there shall be no surviving named beneficiaries, including issue as set forth herein [i.e., in the event that Kenneth died before the surviving spouse], the trust shall terminate and the proceeds shall be distributed one-half (1/2) to the then surviving heirs-at-law of each Co-Trustor, as determined by the laws of intestate succession then existing in the State of California; excluding however, any provision for distribution to heirs of a predeceased spouse.

After Anns death, Weilandt, the brother of Ann, was appointed successor trustee of the trust. In November 2007, Novotny submitted a claim, alleging that he is the half-nephew and sole surviving heir of Emil Watson, entitled to receive one-half the corpus of Trust B. Weilandt filed a petition to determine entitlement to distribution of Trust B, disputing Novotnys right to receive any portion of the trust assets.

Novotny contended before the trial court, and continues to argue on appeal, that under article VI(E)(7), the heirs of Emil and of Ann are each entitled to receive one-half of the corpus of Trust B. Weilandt argues that the final clause of the paragraph, excluding, however, any provision for distribution to heirs of a predeceased spouse, means that the heirs of Emil, the predeceased spouse, are not entitled to any portion of the distribution. The trial court agreed with Weilandt, finding that article VI(E)(7) excludes any distribution to the heirs of Emil Watson (Emil being a predeceased spouse under article VI, paragraph E7), and entered an order distributing the entire corpus of Trust B to Weilandt. Novotny filed a timely notice of appeal.

Discussion

In determining the meaning of a trust instrument, the court applies the same principles of interpretation that apply to the construction of a will, deed, or other written instrument designating a beneficiary or making a donative transfer of property. (Prob. Code,[1]  45, 21101.) Section 21102 provides: The intention of the transferor as expressed in the instrument controls the legal effect of the dispositions made in the instrument. Interpretations that give effect to every expression in the instrument are preferred. (Ibid.) The instrument is to be read as a consistent whole, and the meaning of any one part is to be explained by reference to its other pertinent parts. ( 21121.) The words used in the instrument, both technical and nontechnical, are to be given their ordinary and grammatical meaning unless some other usage is clearly intended. ( 21122.)

On appeal, the reviewing court applies a de novo standard of review to the interpretation of the document when there is no conflict in the extrinsic evidence or issue of credibility. (Estate of Dodge (1971) 6 Cal.3d 311, 318.) The reviewing court is bound by the same rules of construction as the trial court. (Estate of Guidotti (2001) 90 Cal.App.4th 1403, 1406.)

Here, uncertainty as to the meaning of article VI(E)(7) arises only with respect to its final clause. The provision begins with the unambiguous statement that, under the contingency that occurred, one half of the proceeds of Trust B are to be distributed to the then surviving heirs-at-law of each Co-Trustor, as determined by the laws of intestate succession then existing in the State of California. Without dispute, this language gives Novotny, as the sole surviving heir of Emil, the right to one-half the corpus of Trust B. ( 6402, subd. (c).) However, Weilandt contends that the final clause, which follows the semicolon, excludes Novotny as the heir of a predeceased spouse.

Weilandts interpretation construes predeceased spouse as used in this clause to refer to the first of the two cotrustors to die. This interpretation is inconsistent with the terminology used elsewhere in the trust instrument. The trust agreement explicitly defines the first of the trustors to die as the Deceased Spouse[2] and refers to the Deceased Spouse at several places throughout the trust instrument.[3] Nowhere does the trust document refer to the first trustor to die as a predeceased spouse.

Weilandts interpretation also deprives the language of the disputed provision that precedes the semicolon of all meaning. Article VI(E)(7) applies because Anns son, Kenneth, predeceased the survivor of the two trustors. If it had been the intention of the trustors in that circumstance to leave the corpus of Trust B to the heirs of the second of the trustors to die, it would have been an easy matter to say so. Instead, the provision states that the corpus of the trust is to be divided between the heirs of each of the trustors. Construing the language that follows the semicolon to exclude the heirs of the first of the trustors to die is at complete odds with the language that precedes it.

The clause following the semicolon does not read, excluding heirs of a predeceased spouse. Rather, from the laws of intestate succession then existing in the State of California, which are to determine those heirs of the two trustors entitled to distributions, the clause excludes any provision authorizing distribution to heirs of a predeceased spouse. Section 6402.5 is the provision that now, as when the trust was executed, provides a scheme of distribution if there is no surviving spouse or issue of a decedent and the decedent had a predeceased spouse. The disputed clause renders this section inapplicable. Thus, the operative provision determining the proper distribution is section 6402, which applies [e]xcept as provided in Section 6402.5. Under subdivision (c) of section 6402, if there is no surviving spouse, the entire intestate estate passes, [i]f there is no surviving issue or parent, to the issue of the parents or either of them . . . , which includes Novotny as the issue of Emils parents.

The disputed clause, though inartfully expressed, has the effect of excluding the heirs of a predeceased spouse other than an heir of either of the trustors, that is, the heirs of any other spouse to whom either of the trustors previously (or subsequently) may have been married. The term predeceased spouse is defined broadly in the Probate Code to include any person who died before a decedent while married to the decedent, with certain exceptions in the case of divorce. ( 59.) As the Law Revision Commission Comment to the 1990 enactment recognizes, it is possible that the decedent may have more than one predeceased spouse. (20 Cal. Law Revision Com. com. Rep. (Dec. 1990) p. 1144.) In fact, the record discloses that Ann was married and divorced twice before she married Emil. Under section 6402.5, heirs of all predeceased spouses are entitled to a portion of an intestate decedents estate. By rendering section 6402.5 inapplicable, the disputed clause excludes from those heirs who might otherwise be entitled to a distribution, the heirs of any other predeceased spouse to whom either trustor may have been married.[4] It does not exclude Novotny, the heir of one of the trustors.

By interpreting the disputed provision in this manner, we interpret all of the language in the trust in a consistent manner and avoid rendering meaningless any of the trust provisions. Such an interpretation is to be preferred. (In re Estate of Norrish (1933)135 Cal.App. 166, 168). Since Novotny is acknowledged to be an heir of Emil under Californias laws of intestate succession, he is entitled to distribution of one-half of the corpus of Trust B.[5]

Disposition

The order denying Novotnys petition is reversed. Novotny shall recover his costs on appeal.

_________________________

Pollak, Acting P. J.

We concur:

_________________________

Siggins, J.

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Jenkins, J.

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[1] All further statutory references are to the Probate Code unless otherwise indicated.

[2] Article III (Irrevocable Provisions) begins: Upon the death of the first Co-Trustor to die, herein called the Deceased Spouse, the then surviving Co-Trustor, hereinafter called the Surviving Spouse . . . .

[3] Deceased spouse is referred to in article V (Dispositive Provisions After Death of Deceased Spouse), article VII (Additional Dispositive Provisions), and article IX (Limitation of Powers).

[4] Related distribution clauses limiting applicable provisions of the laws of the State of California to those relating to the succession of separate property not acquired from a predeceased spouse are suggested in Complete Plans for Small and Mid-Size Estates (Cont.Ed.Bar 2007) Termination of the Trust, section 10.32 at page 420, and section 11.29 at page 487. The request to take judicial notice of this publication is denied as unnecessary for the purpose for which the publication is cited.

[5] There is thus no need to consider potential remedies against the attorney who drafted the trust instrument, an issue which in all events was raised for the first time on appeal.