Ellis v. Hurley CA2/5 ( 2020 )

Filed 12/21/20 Ellis v. Hurley CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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
SECOND APPELLATE DISTRICT
DIVISION FIVE
ANTON ELLIS, a Minor, etc., B300769 c/w B300790, B300798,
B3000799, B300804 & B300806
Plaintiff and Appellant,
(Los Angeles County Super. Ct. Nos.
v. 19STPB01612, 19STPB01614,
19STPB01615, 19STPB01622,
19STPB01623 & 19STPB01624)
DAMIAN HURLEY, a Minor, etc.,
et. al., ORDER MODIFYING OPINION
AND DENYING PETITION FOR
Defendants and Respondents. REHEARING
[There is no change in judgment]
BY THE COURT:
It is ordered that the opinion filed herein on November 20, 2020
is modified as follows:
1. On page 3, the second full paragraph that begins,
“Kira was born in 1988.” That sentence is deleted and replaced
with: “Kira was born in 1998.”
2. On page 4, delete footnote 4 and replace it with a new
footnote 4, that reads: “As of the filing of the petition, only Kira
and Lucy of the four grandchildren had reached 18. The record
does not reflect whether the trustee made any distributions to
Kira or Lucy.”
[There is no change in judgment.]
The petition for rehearing is denied.
RUBIN, P. J. BAKER, J. KIM, J.
2
Filed 11/20/20 Ellis v. Hurley CA2/5 (unmodified opinion)
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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
SECOND APPELLATE DISTRICT
DIVISION FIVE
ANTON ELLIS, a Minor, etc., B300769 c/w B300790, B300798,
B3000799, B300804 & B300806
Plaintiff and Appellant,
(Los Angeles County Super. Ct. Nos.
v. 19STPB01612, 19STPB01614,
19STPB01615, 19STPB01622,
DAMIAN HURLEY, a Minor, etc., 19STPB01623 & 19STPB01624)
et. al.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of Los
Angeles County, Daniel Juarez, Judge. Reversed and remanded
with directions.
Holland & Knight, Vivian L. Thoreen, Roger B. Coven,
Stacie L. Chau; Carico MacDonald Kil & Benz, Christopher D.
Carico, William G. Benz and Amber N. Morton for Plaintiff and
Appellant.
Sheppard, Mullin, Richter & Hampton, Adam F. Streisand,
Golnaz Yazdchi, Valerie E. Alter and Meghan K. McCormick for
Defendants and Respondents Elizabeth Hurley and Damian
Hurley.
Keystone Law Group, Sharon S. Kerendian, Lindsey F.
Munyer, Avi I. Pariser; Law Offices of James A. Bush and James
A. Bush for Defendant and Respondent Kira Kerkorian.
__________________________
A trustee, granted discretion to interpret an irrevocable
trust, construed the trust’s clause designating its beneficiary in a
manner consistent with current statutory rules of construction.
The trial court concluded the trustee’s construction was
unreasonable. We disagree and reverse.
FACTUAL AND PROCEDURAL BACKGROUND
This appeal arises from the trial court’s resolution of a
trustee’s six petitions for instructions in six identical probate
matters, arising out of six virtually identical trusts. More simply,
it is a family dispute. The ultimate issue for us to decide is
whether there are two or four grandchildren identified as
beneficiaries in the trusts.
1. The Family
The settlor/trustor of the trusts is Peter S. Bing.1 In
August 1980, he created six irrevocable trusts for the benefit of
his first six as-yet-unborn grandchildren. We will discuss the
relevant terms of the trusts in the next section.
As of the time of the trustee’s probate petitions in 2019,
Peter had two children, Mary and Stephen, and four
grandchildren. Peter’s daughter, Mary, is the mother of Lucy and
Anton. There is no dispute that Lucy and Anton are
grandchildren entitled to benefits under the trusts. Peter’s son,
1 To avoid confusion, we refer to the family members by their
first names; we intend no disrespect.
2
Stephen, is the father of Kira and Damian.2 The rights of Kira
and Damian under the trusts are at issue.3
The petitions which challenged the rights of Kira and
Damian under the trusts did not concede their paternity, and the
trial court did not resolve the question. Stephen had claimed he
had fathered both children.
Kira was born in 1988. She asserts that, at the time of her
conception, her mother and Stephen were involved in a romantic
relationship, but were unmarried. Their relationship ended prior
to Kira’s birth. Kira was raised by her mother and her mother’s
husband. At some point, it was established that the man who
raised her was not her biological father. After that man died,
Stephen contacted Kira and they began communicating regularly.
Stephen signed documents declaring he was Kira’s biological
father. At one point, Stephen expressed an interest in formally
adopting her, although he did not do so.
Stephen’s son Damian was born in 2002. His mother lives
in England. She asserts that, although she and Stephen were
never married, she and Stephen had joint legal custody of
Damian since his birth. She claims Stephen acknowledged
Damian as his son, has been judicially established as Damian’s
father, and has provided financially for Damian’s support.
Damian was raised by his mother, in England.
2 Stephen died by suicide while this appeal was pending.
3 For convenience, we sometimes refer to Lucy, Anton, Kira
and Damian as “grandchildren,” even though Kira’s and
Damian’s status as grandchildren under the trusts is contested.
3
2. The Grandchildren Trusts
The case involves the construction of six virtually identical
irrevocable trusts Peter created to benefit his first six
grandchildren. The beneficiary of the first trust is “the first born
grandchild of Peter S. Bing.” The beneficiary of the second trust
is “the second born grandchild of Peter S. Bing,” and so forth,
through “the sixth born grandchild.” The trusts were each
initially funded with $15,000. Their current value or values is
unclear.
Under the trusts, the trustee has discretion to make
distributions of income and principal when the respective trust
beneficiary reaches the age of 18.4 Each trust terminates on
October 31, 2020, at which time the entire principal and all
undistributed income shall be distributed to the beneficiary.
As Peter has fewer than six grandchildren—either two or
four, depending on the resolution of this case—the question
arises as to the distribution of the leftover trusts—that is, those
trusts whose primary beneficiary is a grandchild never to be
born. The trusts do not expressly provide for this scenario.
However, the parties assume a related provision governs.
Specifically, there are provisions for distribution of each trust’s
estate if the identified grandchild beneficiary is not living on
October 31, 2020: first, to any successor appointed by the
beneficiary; if none, to the beneficiary’s “living lawful issue”; if
none, to be equally divided “among all of the then living
grandchildren of Peter S. Bing other than the first six.” Finally,
4 As of the filing of the petition, only Lucy of the four
grandchildren had reached 18. The record does not reflect
whether the trustee made any distributions to Lucy.
4
“[i]f there is no living person in any of the above described
categories,” the trust is distributed to one or more of Peter’s
grandchildren, depending on how many living grandchildren
there are and which trust it is.5 The trustee takes the position
that this provision also governs distribution in the event Peter
has fewer than six grandchildren. For this reason, even though
each trust has its own direct beneficiary grandchild, Mary’s
children stand to benefit if Stephen’s children are excluded.
As we have explained, the case turns on the meaning of
“grandchild” in the identification of the beneficiary of each trust.
The trusts do not expressly define “grandchild.” However, they
do contain this potentially related descriptive clause: “The words
‘child,’ ‘children,’ and ‘issue’ whenever used herein, shall include
legally adopted persons, whether adopted by Grantor or by
Grantor’s natural or adopted children.”
3. The Dispute
While the chronology of events is not always apparent from
the record, the dispute is. Settlor Peter, his daughter Mary,
Mary’s children (Lucy and Anton), and the trustee all take the
position that Stephen’s children (Kira and Damian) are not
5 For example, if the first grandchild is not living and has no
successor, but there are one, two, or three living grandchildren,
the estate of the first grandchild trust will go to the eldest living
grandchild. If, however, there are four living grandchildren at
that time, the estate of the first grandchild trust will be shared
evenly between the third and fourth living grandchildren. The
grandchildren identified in this provision vary from trust to trust.
5
“grandchildren” within the meaning of the grandchildren trusts,
and are thus not entitled to any distribution.6
The trusts contain a term granting the trustee “the power
to construe this Declaration of Trust, and any reasonable
construction adopted after obtaining the advice of responsible
legal counsel shall be binding on all persons claiming an interest
in the trust estate as beneficiaries or otherwise.”
On September 18, 2018, Peter signed a declaration, stating,
“when I created the 1980 [Grandchildren’s] Trusts, I believed
that they would not benefit any person born out of wedlock unless
that person had lived for a substantial period of time while a
minor as a regular member of the household of the natural
parent who is a child of mine. I . . . am executing this Affid[av]it
to ensure that my intent in this regard is clear.” His declaration
went on to explain how this interpretation was specifically
directed at excluding grandchildren like Kira and Damian from
the trusts: “I have never met Damian or Kira and neither of
them was raised by Stephen as part of his family. I know that
neither of them has lived with Stephen while a minor as a
regular member of his household. To the best of my knowledge,
Stephen has never met Damian and Stephen only met Kira after
she became an adult. [¶] Regardless of whether, when and if
6 While the petitions were pending and in briefing on appeal,
Anton’s interests were pursued by his father, Douglas Ellis, as
guardian ad litem. Similarly, Damian’s guardian ad litem was
his mother, Elizabeth Hurley. Both Damian and Anton reached
majority while these appeals were pending. They each filed
notices of appearance indicating they were now personally
represented by the same counsel who had represented their
respective guardian ad litem.
6
Stephen met with or had any relationship with Damian or Kira
while they are or were minors, because neither was raised by him
during their formative years I do not consider them my
grandchildren. Even were Stephen to develop a relationship with
Damian now, I would not consider him my grandchild because he
is nearing adulthood, and I do not believe it is possible for him to
live for a substantial period of time while a minor as a regular
member of Stephen’s household.” Peter specifically stated that
he did not consider Damian and Kira to be beneficiaries of the
trusts “and that this is consistent with my intention” at the time
he executed the trusts.
Armed with this declaration, the current trustee, William
Stinehart, Jr., sought “the advice of responsible legal counsel.”7
On February 14, 2019, counsel, having reviewed the language of
the trusts and Peter’s affidavit, concluded that “under California
law, it is reasonable to construe ‘grandchild,’ as the term is used
in the Grandchildren’s Trusts, to exclude a person born out of
wedlock to a child of Peter who never resided while a minor as a
regular member of that child’s household.” Specifically, counsel
relied on Probate Code section 21115, subdivision (b), a statutory
rule of construction which provides that, although persons out of
wedlock are considered children for the purposes of intestacy,
“[i]n construing a transfer by a transferor who is not the natural
parent [e.g., grandparent], a person born to the natural parent
shall not be considered the child of that parent unless the person
lived while a minor as a regular member of the household of the
7 The current trustee was not the original trustee. The
parties do not dispute his appointment as substitute trustee.
7
natural parent or of that parent’s parent, brother, sister, spouse,
or surviving spouse.”
The following week, on February 20, 2019, the trustee filed
six identical petitions (one for each trust) to determine
entitlement to distribution and for instructions—specifically
seeking approval of the trustee’s determination that
grandchildren born out of wedlock may not be treated as
beneficiaries unless they lived with one of Peter’s children, while
a minor, as a regular member of the household.8 Briefing
followed, with Mary’s children supporting the petition and
Stephen’s children opposing it.
On May 2, 2019, the court held a hearing. The objectors
took the position that the trust language was unambiguous and
included all grandchildren, including, without limitation,
grandchildren born out of wedlock. However, if the court were to
conclude the trust was ambiguous and extrinsic evidence
admissible for its interpretation, the objectors sought discovery.
The court determined that it would accept briefing, and have a
hearing, on the preliminary issue of whether extrinsic evidence
“is even allowed or required or of necessity here.”
8 In an apparent attempt to foreclose any attempt by
Stephen to effect Kira’s beneficiary status by means of adoption,
the trustee sought approval of a construction that excluded adult-
adopted grandchildren if they, similarly, did not live with one of
Peter’s children while a minor as a regular member of the
household. Peter had executed a declaration that this had been
his intent and the trustee obtained an opinion letter from counsel
on this issue as well. Stephen did not adopt Kira before his
death, and we do not address the issue of adult adoption, except
as relevant in our discussion of the law.
8
The parties then focused their briefing on that issue. The
trustee took the position that two types of extrinsic evidence
supported his interpretation of “grandchild” as excluding children
born out of wedlock who did not live for a substantial time as a
minor in the household of Peter’s child: (1) Peter’s declaration;
and (2) Probate Code section 21115.
On June 26, 2019, the parties returned for a hearing on the
consideration of extrinsic evidence. After argument, the trial
court took the matter under submission.
On July 16, 2019, the court ruled against the trustee and in
favor of Kira and Damian. Focusing on the trustor’s intent as
expressed in the words of the trust itself, the court concluded that
the word “grandchild” was not ambiguous and was not amenable
to the restrictive definition the trustee sought to impose. The
court found Peter’s declaration irrelevant, declining to accept his
after-the-fact attempt to “define a term that, on its own,
expresses no doubt as to its meaning.” Finally, the court rejected
the trustee’s reliance on the current statute as inapposite.
Anton, through his guardian ad litem, filed notices of
appeal in each of the cases. No other party appealed.9 We have
consolidated the six appeals for resolution in a single opinion.
9 The parties do not discuss whether Anton has standing in
each case, nor any impact of the failure of the trustee and Lucy to
appeal.
9
DISCUSSION
Because the trustee interpreted the trust, it is unnecessary
at the outset for us to do so.10 Our task is to determine only
whether the trustee’s interpretation is reasonable.
1. The Trustee’s Interpretation Will Be Upheld if
Reasonable
In this case, the trustee sought approval of its construction
of the trust. The terms of the trust granted the trustee the power
to construe the trust, but an interpretation would only be binding
if it was adopted after obtaining the advice of counsel and if the
construction was “reasonable.” The Probate Code is in accord; “a
discretionary power conferred upon a trustee is not left to the
trustee’s arbitrary discretion, but shall be exercised reasonably.”
(Prob. Code, § 16080.) A trustee “petitioning for instructions as
to the exercise of a discretionary power has the burden of proving
the exercise will be reasonable.” (Estate of Nicholas (1986)
177 Cal.App.3d 1071, 1087.) “[T]he basic inquiry, whenever the
exercise of a trustee’s discretion, absolute or otherwise, is
challenged, is always whether the trustee acted in the state of
mind contemplated by the trustor.” (Estate of Greenleaf (1951)
101 Cal.App.2d 658, 662.)
When a trustee is granted a power to act, “the court will not
control the trustee’s actions exercised pursuant thereto merely
because it disagrees with him, but it must find some abuse of
discretion or bad faith before it will interfere. [Citation.] Too,
while the court may not substitute its judgment for that of the
10 For the purposes of our discussion, we refer to “trust” in the
singular, recognizing that a virtually identical analysis applies to
all six trusts.
10
trustee, if it finds on substantial evidence that his powers have
been reasonably exercised, the question is not open to review
[citation]; a contrary finding, of necessity, is governed by the
same legal principle.” (Estate of Flannery (1969) 269 Cal.App.2d
890, 896.) Here, the trial court construed the contractual
language as a matter of law, effectively determining the trustee
did not meet its burden of proof. When an appellant challenges a
trial court’s finding that it did not meet its burden “ ‘ “the
question for a reviewing court becomes whether the evidence
compels a finding in favor of the appellant as a matter of law.
[Citations.] Specifically, the question becomes whether the
appellant’s evidence was (1) ‘uncontradicted and unimpeached’
and (2) ‘of such a character and weight as to leave no room for a
judicial determination that it was insufficient to support a
finding.’ ” ’ ” (Patricia A. Murray Dental Corp. v. Dentsply
Internat., Inc. (2018) 19 Cal.App.5th 258, 270.) Thus, we must
determine whether the appellant’s evidence necessarily
established that the trustee’s interpretation of the trust was
reasonable.
Our analysis begins and ends with whether the use of the
term “grandchild” in the trust is reasonably susceptible to the
interpretation of the trustee—that is, that it applies to
grandchildren born out of wedlock only if they lived a substantial
time, while minors, in the home of Peter’s child. As long as
“grandchild” can be reasonably construed as the trustee
construed it, we must reverse.
2. The Language is Reasonably Susceptible to the
Trustee’s Interpretation
First, we consider the language of the trust itself. Then we
turn to the extrinsic evidence relied on by the trustee. Finally,
11
we address two cases which have addressed similar factual
scenarios.
A. The Language of the Trust
We consider the language of the trust as a whole. (Trolan
v. Trolan (2019) 31 Cal.App.5th 939, 949.) Here, the trust
contains no definition of “grandchild.” To be sure, it contains
language confirming that “ ‘child,’ ‘children,’ and ‘issue’ whenever
used herein, shall include legally adopted persons, whether
adopted by Grantor or by Grantor’s natural or adopted children.”
But this is of little use to the question before us, as it fails to
include “grandchild,” and also fails to address children born out
of wedlock. Indeed, it is, in some ways, not a definitional clause
at all; it confirms that adopted children are “include[d]” in the
terms, but does not otherwise identify “child,” “children” or
“issue.”
B. Extrinsic Evidence
There are two pieces of extrinsic evidence on which the
trustee relies: (1) Peter’s declaration; and (2) relevant legal
authority.
1. Peter’s Declaration
The trustee relied on Peter’s 2018 declaration in which he
set forth what he believed he had intended, in 1980, with respect
to Stephen’s children who had not yet been born.
We are looking for evidence of the trustor’s intent at the
time of execution. (Estate of Russell (1968) 69 Cal.2d 200, 208-
209.) A decades-later declaration as to the testator’s prior intent
may well constitute evidence of the testator’s intent, but also may
be an attempt at revisionist history. (Cf. Estate of Pierce (1948)
32 Cal.2d 265, 273-274 [the remoteness of the extrinsic evidence
goes to its weight].) To the extent, however, it can be perceived
12
as a statement of Peter’s unspoken intent regarding a
circumstance he had not expressly considered because he never
imagined it could be otherwise, it may be relevant and may
provide a reasonable basis for the trustee’s interpretation.11
Other evidence convinces us that Peter’s statement of intent is
worthy of some level of consideration in determining the
reasonableness of the trustee’s interpretation – namely the law at
the time of the creation of the trusts suggests Peter’s declared
view was, in fact, common belief.
2. Governing Authority
“A testator is presumed to be aware of the public policy
reflected in the statutory definitions of the terms used in a will at
the time the will is executed and to intend that those definitions
be followed in construction of the will unless a contrary intent is
expressed in the will.” (Newman v. Wells Fargo Bank (1996)
14 Cal.4th 126, 136.) This does not extend to future law; we do
not presume a trustor would have intended to adopt an unknown
nonexistent statute as the means of interpreting his trust. (Id. at
p. 142.)
11 In his opening brief, Anton suggests that, when Peter
drafted the trusts, he “probably never gave a thought to the
possibility that his son would father a child or two that he would
never meet.” In reply, Kira suggests that this concession
confirms that Peter did not contemplate such grandchildren at
the time of drafting, and therefore his later declarations could not
reflect his intent at the time. This is an oversimplification. A
person who believes the only true children are those raised in the
family may not expressly consider sperm donation, egg donation,
or children born out of wedlock and raised by another, but the
belief may still hold true.
13
The parties disagree as to precisely how the law treated
children born out of wedlock in 1980—and, therefore, the law of
which we presume Peter to have been aware.
As Witkin acknowledges, historically, a child “born out of
wedlock was excluded unless legitimated or acknowledged for
inheritance.” (Witkin, Summary of Cal. Law (11th ed. 2020)
Wills and Probate, § 250.) However, the law has since evolved,
and a child born out of wedlock is deemed included, unless a
contrary intent is shown. (Ibid.)
Presently, Probate Code section 21115 provides a rule of
interpretation for terms of class gifts or relationship.12
Specifically, Probate Code section 21115, subdivision (a) provides
that, except as in subdivision (b), “halfbloods, adopted persons,
persons born out of wedlock, stepchildren, foster children, and the
issue of these persons when appropriate to the class, are included
in terms of class gift or relationship in accordance with the rules
for determining relationship and inheritance rights for purposes
of intestate succession.” However, subdivision (b) provides an
exception for gifts from someone not the natural parent (e.g., a
grandparent). Specifically: “In construing a transfer by a
transferor who is not the natural parent, a person born to the
12 Kira and Damian suggest Probate Code section 21115
applies only to “class gifts,” while each individual grandchild
trust names a single beneficiary, and therefore is not a “class
gift.” Regardless of whether the grandchildren trusts, taken
together, constitute a “class gift,” the language of the statute is
not limited to class gifts, but speaks of “terms of class gift or
relationship.” (Prob. Code, § 21115, subd. (a).) “Grandchild” is a
term of relationship.
14
natural parent shall not be considered the child of that parent
unless the person lived while a minor as a regular member of the
household of the natural parent or of that parent’s parent,
brother, sister, spouse, or surviving spouse.”13
Probate Code section 21115 is based on former
section 6152, which was itself adopted in 1983, as part of an
overhaul of the law of wills and intestate succession. (Stats 1983,
ch. 842, § 55.) The Law Revision Commission comment to the
current statute explains that it “construes a transfer to exclude a
child born out of wedlock (where the transferor is not the parent)
if the child never lives while a minor as a regular member of the
parent’s household. A child is included in class gift terminology
in the transferor’s instrument if the child lived while a minor or
as a regular member of the household of the parent’s spouse or
surviving spouse. As a result, a child born of a marital
relationship will almost always be included in the class,
consistent with the transferor’s likely intent.”14 (Law Revision
13 Probate Code section 21115, subdivision (b) contains
similar limiting language regarding adopted children: “In
construing a transfer by a transferor who is not the adoptive
parent, a person adopted by the adoptive parent shall not be
considered the child of that parent unless the person lived while
a minor (either before or after the adoption) as a regular member
of the household of the adopting parent or of that parent's parent,
brother, sister, or surviving spouse.” Although we are not
concerned with the issue of adoption, the fact that the statute
provides the same rule for adopted children as it provides for
children born out of wedlock suggests that similar policy
considerations apply to both.
15
Com. com. to Prob. Code, § 21115; see also Witkin, Summary of
Cal. Law (11th ed. 2020) Wills and Probate, § 250 [citing Law
Revision Com. com. to Prob. Code former § 6152, subd. (b)].)
In sum, the law long before the execution of the trust would
have excluded all children born out of wedlock from the definition
of “grandchild,” and the law in effect now has liberalized to the
point of including only out-of-wedlock grandchildren who have
lived as regular members of the household of the natural parent
through whom they claim.
Kira and Damian argue, however, that for a brief period
coinciding with Peter’s execution of the trust, the law provided
that children born out of wedlock were presumed to be considered
“grandchildren” for the purpose of inheritance, even if they did
not live as regular members of the household of the parent
through whom they sought to inherit. But they rely on no 1980
law which directly supports this. For his part, Damian suggests
that, under section 286 the Restatement (First) of Property,
enacted in 1940, children born out of wedlock are normally
14 The legislative history of Probate Code former section 6152
confirms this. “Unless otherwise provided in the will, a child
born out of wedlock may take as a child of its natural parent only
if (1) the child is the child of the testator or (2) the child lived
while a minor as a regular member of the household of the
natural parent or of the natural parent’s parent, brother, sister,
or surviving spouse. Thus, for example, if the testator makes a
devise to the children of the testator’s sister, a child of the sister
born out of wedlock who never lived with the sister or one of the
designated relatives of the sister does not take under the will as a
child of the sister.” (Cal. Law Revision Com. Executive Secretary
John DeMoully, letter to the Members of the Assem. Com. on the
Judiciary, regarding Assem. Bill Nos. 25 and 68, April 11, 1983,
attached “Explanation of Assembly Bill No. 25,” p. 3.)
16
excluded, but may be included when “a contrary intent of
conveyor is found from additional language or circumstances.”
He finds such circumstances in Stephen’s acknowledgement of
Damian as his son. But the Restatement provision looks for a
contrary intent of the conveyor (here Peter); actions showing a
contrary intent on the part of Stephen are not relevant.15 Kira
relies on favorable language from sections 25.2 (defining “child”
to include illegitimate children in class gifts) and 25.8 (extending
section 25.2 to grandchildren) of the Restatement Second of
Property, enacted in 1988. But this Restatement post-dates the
execution of the grandchildren’s trusts by eight years, and
California’s adoption of the contrary rule in Probate Code section
21115 by five years.
To be sure, at the time the trust was executed, the law was
evolving to treat children born out of wedlock more equally with
respect to the right to inherit from their parents (e.g., Trimble v.
Gordon (1977) 430 U.S. 762, 763, 770-771 [striking down, as
violative of equal protection, an Illinois law which allowed
illegitimate children to inherit via intestacy from their mothers
but not their fathers, while legitimate children could inherit from
both].) But this does not mean that the law, or policy, of
California was such that children born out of wedlock and raised
by one parent would be considered the grandchildren of the
parents of the parent who did not raise them.
Instead, it appears to us that the statute enacted in 1983,
and understood to then effectuate the likely intent of testators,
15 In fact, this is the precise distinction recognized in Probate
Code section 22215 subdivision (b)’s different treatment of gifts
when the testator is the parent.
17
also effectuated the likely intent of testators in 1980. Kira and
Damian have identified nothing in the history of Probate Code
section 21115 that gives rise to an inference that it was
understood to effect a change in the then-existing understanding
of how out-of-wedlock children were to be treated in transfers
from people who were not their parents. (Cf. Abramovic v.
Brunken (1971) 16 Cal.App.3d 719, 723-724 [recognizing, with
respect to adoption, that there are strong policy reasons which
support treating an adopted child the same as a biological one
with respect to the child’s adoptive parents, but that no such
policy reasons apply with respect to the adoptive parents’
ancestors].)
Looking at it another way, we underscore that we are not
interpreting the trust document itself, but only determining
whether the trustee’s interpretation of “grandchild” is a
reasonable one. To say that it is not reasonable would be to say
that, three years after the trust was executed, the Legislature
adopted a rule of construction which was, at the time, not a
reasonable reflection of the general intent of trustors. This we
cannot do.
C. Case Authority
There are two cases that have dealt with similar
circumstances—one of which seems to favor Kira and Damian,
the other the trustee and Mary’s children. The cases are not
contradictory, however, and the fact which distinguishes them
compels the conclusion that the trustee and Mary’s children have
the better argument.
The first is In re Estate of DeLoreto (2004) 118 Cal.App.4th
1048. In that case, the court was concerned with a 1964 will. In
the will, the testator indicated that he had three children and
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four grandchildren. The will created a residuary trust under
which the income would go to the testator’s children and the
corpus to the testator’s grandchildren. When the testator died in
1966, he had three children—two were childless and the third
had the four grandchildren identified in the will. Nearly 20 years
later, one of the testator’s formerly childless children adopted two
adults (the niece and grandniece of his deceased wife), who had
never lived in his home as children. When he died, the adopted
adults claimed a right to a share of the trust corpus as
grandchildren of the testator. (Id. at pp. 1051-1052.) The trial
court denied them relief and Division Six of the Second Appellate
District affirmed. (Id. at pp. 1050-1051.) Specifically, the court
relied on Probate Code section 21115 to interpret the will and
conclude that the testator had not intended to benefit adult
adopted grandchildren who had not lived with his son as
children. (DeLoreto, at pp. 1052-1053.) This was true even
though the will predated section 21115. Section 21115 is a rule of
construction, which applies to all instruments, regardless of when
executed. (§ 21140.) The court did not find any term in the will
ambiguous; it simply determined whether the will was
reasonably susceptible of the interpretation suggested by the rule
of construction. As it was, section 21115 applied. (DeLoreto, at
pp. 1053-1054.)
Six years later, Division Eight of the Second Appellate
District resolved Citizens Business Bank v. Carrano (2010)
189 Cal.App.4th 1200 (Carrano). In Carrano, the trustors had a
child, Christopher, who fathered a child out of wedlock by
drugging his physical therapist and having sex with her against
her knowledge. She and her husband raised the child, Jonathan,
as their own, unaware of his true parentage for a number of
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years. Christopher, however, bragged about having fathered
Jonathan, and there is evidence that his parents, the trustors,
were aware that Christopher claimed the child. (Id. at pp. 1202-
1204.) The trust in dispute was not irrevocable; the trustors
amended it a number of times. Not trusting Christopher with
money, they amended it so that he would receive income, but not
the assets. In the event Christopher did not survive his parents,
his “issue” would receive the trust assets. The trustors
repeatedly amended the trust to address whether adopted
children would be included in “issue,” but did not specifically
address children born out of wedlock. (Id. at p. 1203.)
Christopher predeceased his father and left three children, all
born out of wedlock. The appeal addressed whether Jonathan,
who had been raised as part of another family unit, was entitled
to a share of the trust assets. (Id. at pp. 1202, 1204.)
The trial court concluded the trust’s silence on the precise
circumstances of Jonathan’s situation constituted an ambiguity,
and, after considering extrinsic evidence, concluded the trustors’
intent had been to exclude Christopher’s children for whom he
was not legally a parent. (Carrano, supra, 189 Cal.App.4th at
p. 1204.) The appellate court considering the issue de novo,
reversed, concluding that the trust was unambiguous—in that it
defined “issue,” but made no effort to exclude Jonathan. The
court explained that the trustors, “through their lawyers, chose to
define the term ‘issue’ as a class of people who were lineal
descendants of Christopher and who had not been adopted out of
the bloodline. The definition of ‘issue’ was drafted by lawyers and
amended. Neither of those restrictions apply to Jonathan,
plainly Christopher’s lineal descendant. That [the trustors]
failed to expressly describe Jonathan’s ‘special case’ does not
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create a latent ambiguity.” (Id. at pp. 1207-1208, fns. omitted.)
The court confirmed its result with the extrinsic evidence that
the grandparents knew Christopher boasted that Jonathan was
his son, but did nothing to expressly disinherit Jonathan. (Id. at
p. 1208.)
Carrano distinguished DeLoreto on the basis that, in
DeLoreto, the critical terms were undefined, so reliance on
statutory rules of interpretation was appropriate. In Carrano, in
contrast, the trustors had actually defined “issue” as “lineal
descendants.” (Carrano, supra, 189 Cal.App.4th at p. 1208.)
Here, like in DeLoreto, Peter did not define the key term,
“grandchild,” in the trust. Like DeLoreto, we conclude the trust is
reasonably susceptible to the trustee’s interpretation.
Accordingly, we reverse.
DISPOSITION
The trial court’s orders interpreting the trusts in the six
probate matters are reversed. The matters are remanded with
directions to confirm the trustee’s interpretation of the trusts.
Each party is to bear its own costs.
RUBIN, P. J.
WE CONCUR:
BAKER, J. KIM, J.
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