Estate of Eimers ( 2020 )

Filed 5/15/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
Estate of TIMOTHY W. EIMERS, B295609
Deceased.
(Los Angeles County
Super. Ct. No. BP144326)
CARYN SALETTA and CHARLES
SALETTA,
Petitioners and Appellants,
v.
JAMES N. EIMERS, as Trustee,
etc.,
Objector and Respondent.
APPEAL from order of the Superior Court of Los Angeles
County, Daniel Juarez, Judge. Affirmed.
John F. Mounier, Jr. and Elder Protection Attorneys for
Petitioners and Appellants.
Law Offices of Jeffrey A. Coleman and Jeffrey A. Coleman
for Objector and Respondent.
_________________________
INTRODUCTION
One who owns property may confer a power of appointment
upon persons, the powerholders, to whom the owner gives
property. Under the power of appointment, the powerholders
may then designate who will receive the original owner’s property
at some point in the future. (Sefton v. Sefton (2012)
206 Cal. App. 4th 875, 882.) Sometimes a trustor will create a
trust conferring a power of appointment on trust beneficiaries,
empowering them to designate to whom they want to give their
shares of the trust. Sometimes a trustor will also require trust
beneficiaries to specifically exercise and refer to the power of
appointment in any will they create in order to designate who
should get their trust shares. This appeal poses the following
question: Where a trust beneficiary creates a will that gives
away his trust shares without also specifically referring to the
power of appointment as required by the trust, may the court
amend or reform that will to include a “specific reference” phrase
so as to preserve the validity of the gift? The trial court answered
no. So do we.
Reforming a will to conform to the testator’s true intent is
permissible if extrinsic evidence establishes that true intent.
However, we cannot do so in this case because reformation would
achieve a work-around of the requirements of Probate Code 1
sections 630, 631, and 632, effectively nullifying them. These
sections, taken together, do not excuse noncompliance. We
therefore affirm.
1 All further statutory references are to the Probate Code,
unless otherwise stated.
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FACTUAL AND PROCEDURAL BACKGROUND
A. The Family Trust
On September 11, 1991, Norbert Theodore Eimers
established the Norbert Theodore Eimers Family Trust (Family
Trust). The Family Trust provides that when Norbert and his
wife both died, the trust assets would be divided equally among
their children then living. The Family Trust also puts
restrictions on how the children could designate who would get
their trust shares at their deaths. The Family Trust reads as
follows:
“Upon the death of a child, any share held in trust for
the child’s benefit . . . shall be distributed to or for the
benefit of such one or more persons or entities, and on
such terms and conditions, either outright or in trust,
as said child may provide and appoint by will
specifically referring to and exercising this power of
appointment. If or to the extent that said child shall
have failed to exercise this power of appointment, or an
attempted exercise of this power shall have been
invalid or ineffective for any reason, or said child shall
have released or renounced this power, the property
subject to it shall be distributed to or retained in trust
for the benefit of the issue of the child . . . . Should no
such issue be then living, such share shall be divided
into as many equal parts as there are children of the
Trustor then living and children of the Trustor then
deceased who have issue then living." (Italics added.)
Norbert died in1992 and his wife died in 2011. Timothy
William Eimers (decedent) is one of Norbert’s children and a
beneficiary of the Family Trust.
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B. Decedent’s Holographic Will
On February 8, 2013, decedent wrote out a two and one-
half page holographic will. It provided, in relevant part:
“I Timothy William Eimers am writing this document
as my Last Will and Testament. I am doing this of my
own free will and of sound mind and body.
“To Charles J. Saletta and Caryn Saletta I hereby leave
my shares of the Norbert Theodore Eimers Family
Trust. I also leave all my other property and any funds
I have.” (Italics added.)
Decedent died four months later on June 22, 2013 in
Burbank.
C. Probate Proceedings in Los Angeles and Sonoma Counties
On August 15, 2013, in the Los Angeles Superior Court,
Charles and Caryn Saletta (the Salettas) filed a petition to
probate decedent’s holographic will. On September 10, 2014, the
court admitted the holographic will to probate and on November
4, 2014, the court issued the order for probate.
Meanwhile, on December 12, 2013, the trustee of the
Family Trust, decedent’s brother James N. Eimers (trustee) filed
a petition in Sonoma County, where the Family Trust was
administered. In the petition, trustee asked for instructions on
whether he could distribute decedent’s share of the Family Trust
to the Salettas. Trustee took the position that decedent had not
validly exercised the power of appointment in the holographic
will, because he failed to specifically refer to this power in the
will as required by the terms of the Family Trust. The court held
a two-day bench trial on the petition. At trial, trustee
acknowledged decedent’s will “made a reference to the Norbert
Theodore Eimers . . . Family Trust,” which while “sufficient to
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identify that he was talking about the September 11th, 1991
trust . . . certainly wasn’t sufficient to be a specific reference
[¶] . . . [¶] [t]o a power of appointment.” Counsel for trustee
remarked to the court, “I think that we all could see what he was
trying to do, he just didn’t do it correctly. And by law, there’s no
excuse for his non-compliance.”
The Sonoma County Superior Court found the holographic
will did not comply with the Family Trust’s specific reference
requirement, and so did not qualify as a valid exercise of the
power of appointment pursuant to sections 630, 631, subdivision
(b), and 632. The court instructed the trustee not to distribute
decedent’s shares of the Family Trust to the Salettas. The
Salettas appealed.
In November 2018, the First District Court of Appeal
affirmed the trial court’s order, concluding decedent’s will did not
comply with section 632’s requirements: “The Probate Code . . .
does not allow for substantial compliance when a donor requires
a powerholder [decedent] to specifically refer to the power of
appointment as a condition of exercising the power.” 2
D. Underlying Petition to Amend Holographic Will
On June 13, 2018, the Salettas filed their first amended
petition in the Los Angeles County case to amend and reform
decedent’s holographic will “to clarify the intended testamentary
directive” because decedent’s “reference to giving his shares of the
Norbert Theodore Eimers’ Family Trust . . . necessarily refers to
and incorporates the ‘power of appointment’ buried deep i[n] that
2 Eimers v. Saletta (Nov. 14, 2018, A148339 [nonpub. opn.].)
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trust’s 30 plus pages.” The Salettas asked the court to reform the
holographic will and add what they called a “technical phrase”:
“To Charles J. Saletta and Caryn Saletta I hereby leave
my shares of the Norbert Theodore Eimers’ Family
Trust under the power of appointment. I also leave
all my other property and any funds I have.”
On October 30, 2018, trustee filed a demurrer to the first
amended petition pursuant to Code of Civil Procedure section
430.10, subdivision (e). He alleged sections 631, subdivision (b)
and 632 prohibited addition of the requested phrase. He asked
the trial court to sustain the demurrer without leave to amend.
E. Trial Court’s November 28, 2018 Ruling
After argument on November 28, 2018, the trial court
sustained trustee’s demurrer to the Salettas’ petition to amend
the holographic will, without leave to amend. 3
This appeal followed.
DISCUSSION
On appeal, the Salettas contend it is proper to reform
decedent’s will to add the phrase “under the power of
appointment” so as to clarify decedent’s testamentary intent. We
disagree.
3 The parties have proceeded without a reporter’s transcript,
and we do not know what was said on the record during the
November 28, 2018 hearing. For our purposes, the lack of the
reporter’s transcript creates no issue, as we review de novo.
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A. Standard of Review
We review de novo a trial court’s ruling on a demurrer.
(Dudek v. Dudek (2019) 34 Cal. App. 5th 154, 163 (Dudek).) When
reviewing an order sustaining a demurrer, we accept as true the
material facts alleged in the complaint or petition, but not
contentions, deductions, or conclusions of fact and law. (Ibid.;
Estate of Holdaway (2019) 40 Cal. App. 5th 1049, 1052.)
B. Powers of Appointment
As stated above, trustors often include powers of
appointment in trust documents. These powers allow a trustor to
control to whom and how the trust property can be further
devised after the trustor’s death. This appeal involves the
interplay of three sections of the Probate Code, which address
powers of appointment.
First, Section 630, subdivision (a), provides that if the
creating instrument “specifies requirements as to the manner,
time, and conditions of the exercise of a power of appointment,
the power can be exercised only by complying with those
requirements.” (§ 630, subd. (a).)
Section 632 goes further in discussing the significance of a
specific condition included in some types powers of appointment:
“If the creating instrument expressly directs that a power of
appointment be exercised by an instrument that makes a specific
reference to the power or to the instrument that created the
power, the power can be exercised only by an instrument
containing the required reference.” (§ 632, italics added.)
The Law Revision Commission comment on section 632
states: “This section permits a donor to require an express
reference to the power of appointment to ensure a conscious
exercise by the donee. In such a case, the specific reference to the
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power is a condition to its exercise. This condition precludes the
use of form wills with ‘blanket’ clauses exercising all powers of
appointment owned by the testator. The use of blanket clauses
may result in passing property without knowledge of the tax
consequences and may cause appointment to unintended
beneficiaries.” (Relocation of Powers of Appointment Statute
(Sept. 1991) 21 Cal. Law Revision Com. Rep. (1991) p. 109.)
The third section, section 631, addresses when a court can
and cannot excuse compliance with the terms of a power of
appointment. Subdivision (a) carves out an exception allowing
the court to “excuse compliance with the formal requirements
[specified in subdivision (a) of section 630] and determine that
exercise of the appointment was effective” if two requirements
are satisfied: (1) the appointment approximates the manner of
appointment prescribed by the donor; and (2) the failure to
satisfy the formal requirements does not defeat the
accomplishment of a significant purpose of the donor. (§ 631,
subd. (b).) However, subdivision (b), states “[t]his section does
not permit a court to excuse compliance with a specific reference
requirement under Section 632.” Here, we see how the Probate
Code expressly calls for different treatment of (1) powers of
appointment, which must be exercised by a specific reference
thereto, and (2) powers of appointment, which need not be
referenced in a subsequent instrument.
C. Analysis
A will may be reformed to conform to the testator’s intent if
clear and convincing evidence establishes that the will contains a
mistake in the testator’s expression of intent at the time the will
was drafted and also establishes the testator’s actual specific
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intent at the time the will was drafted. (Estate of Duke (2015)
61 Cal. 4th 871, 879 (Duke).)
The Salettas contend the “intent of Timothy Eimers
controls the legal effect and interpretation of his will” and that
we should amend his holographic will “to acknowledge that
Timothy Eimers’ reference to giving his shares of the Norbert
Theodore Eimers’ Family Trust . . . necessarily refers to and
incorporates the ‘power of appointment’ buried deep i[n] that
trust[’s] 30 plus pages.” They argue that a will should be
construed according to the intention of the testator, and “not his
imperfect attempt to express it,” citing Estate of Kime (1983)
144 Cal. App. 3d 246, 264.) The Salettas contend Duke mandates
reformation of this holographic will by adding the phrase “under
the power of appointment” to effectuate decedent’s clear intent to
give his shares to them. Relying on Duke, they argue “extrinsic
evidence may support reformation of an instrument even where
the instrument is unambiguous, if to do so will achieve the intent
of the testator.”
We conclude Duke is not relevant to the question before us.
The issue is not whether decedent intended to give his trust
shares to the Salettas. The will is clear that he did. And let’s
assume the evidence would show decedent intended to exercise
the power of attorney but forgot to include that phrase in his will.
Neither does that assumption rescue the Salettas. The issue,
aptly framed by respondent, is whether a trial court may amend
or reform a will to excuse the testator’s failure to comply with
sections 631, subdivision (b) and 632, which expressly prohibit
the court from validating gifts that require a specific reference to
the power of appointment. Reformation as urged by the Salettas
eviscerates the statutes’ requirement of a “specific” reference.
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Creating a reference based on extrinsic evidence is nothing more
than nullification of the statutory requirement of an express
reference. Where, as here, discerning decedent’s donative intent
is not the issue, Duke does not apply. And it should go without
saying that a donor’s intent alone cannot trump the requirements
of the law.
We have determined that the omission of a “specific
reference” cannot be cured by amendment because to do so would
undercut the express provisions of sections 630, 631, and 632.
Here, the creating trust instrument expressly empowers
decedent to devise his trust shares in only one way: via an
instrument that makes a specific reference to the power of
appointment. Indeed, as set out above, the trust specifically
invalidates gifts not made by a specific reference and in that
event sets out those persons to whom the invalid gifts may be
given. The “specific reference” condition places the Family Trust
outside the exceptions carved out by section 631 and within the
restriction set out by section 632, i.e., that the power of
appointment “can be exercised only by an instrument containing
the required reference.” (§ 632.) Decedent’s holographic will fails
to satisfy this condition.
We acknowledge subsection (a) of section 631 provides the
trial court with some flexibility in excusing defective exercises of
certain powers of appointment. However, we conclude that by
creating separate subsection (b), which expressly limits the
exercise of powers of attorney requiring “specific reference,” the
Legislature intended noncompliance to be inexcusable.
Reformation of decedent’s will to add the phrase “under the
power of appointment” is a remedy contrary to the Legislature’s
clear instruction to courts not to validate gifts given under
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powers of appointment in wills which must include but lack
“specific reference” to the power. The omission in the will cannot
be cured by amendment, as the reformation the Salettas request
is precluded by sections 630 through 632.
The Salettas argue decedent’s reference to the Norbert
Theodore Eimers Family Trust “necessarily” includes, in of itself,
a reference to the power of appointment. We do not agree. We
note section 632 actually distinguishes between a specific
reference to the power of appointment itself and a specific
reference to the instrument (in this case the Family Trust) that
created the power. A creating instrument may require a
reference to either or both. Section 632 states the power of
appointment can be exercised “only by an instrument containing
the required reference.” We read section 632 to mean that if the
trust requires a specific reference to the creating document, only
a reference to the creating document suffices. If the trust
requires a specific reference to the power of appointment itself,
only a reference to the power of appointment suffices. One
reference cannot be substituted for the other. Here, the Family
Trust required a specific reference to the power of appointment
itself. Thus, the will’s reference to the Family Trust (the creating
instrument) is not the same as a specific reference to the power of
appointment and does not suffice. (Estate of O’Connor (2018)
26 Cal. App. 5th 871, 884 (O’Connor) [the Legislature’s use of the
disjunctive “or” in section 632 indicates that specific reference to
the power or to the instrument are independent means by which
a donor can restrict a donee’s exercise].)
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The Salettas focus on the many similarities between the
will here and the will in O’Connor. However, one discernable
distinction stands out to us: the will in O’Connor expressly
referred to the power of appointment, where the will here does
not. In O’Connor, decedent’s will provided: “ ‘I exercise any
Power of Appointment which I may have over that portion of the
trust or trusts established by my parents for my benefit or any
other trusts for which I have Power of Appointment I exercise
[sic] in favor of my brother . . . .’ ” (O’Connor, supra,
26 Cal.App.5th at p. 876.) Reliance on O’Connor is misplaced.
Finally, the Salettas argue trustee does not have standing
“to demur or otherwise oppose/contest the probate of the estate of
Timothy Eimers,” including the petition to amend. They contend
only individuals who are considered “interested persons”
pursuant to section 48 have standing to demur to the petition to
amend, and trustee does not fall within that category.
Section 48 defines an “interested person” to include: (1) an
heir, devisee, child, spouse, creditor, beneficiary, and any other
person having a property right in or claim against a trust estate
or the estate of a decedent which may be affected by the
proceeding; (2) any person having priority for appointment as
personal representative; and (3) a fiduciary representing an
interested person. The meaning of “interested person” as it
relates to particular persons may vary from time to time and
shall be determined according to the particular purposes of, and
matter involved in, any proceeding. (§ 48, subd. (b); Estate of
Sobol (2014) 225 Cal. App. 4th 771, 782.)
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Here, at the very least, the peculiar interrelated procedural
posture of the probate estate vis-a-vis the trust compels us to
conclude trustee has standing to file his demurrer. As the
proceedings stand now, trustee has been ordered by the Sonoma
County Superior Court not to distribute decedent’s trust shares
to the Salettas. That order has been affirmed by the First
District Court of Appeal. Trustee is under a fiduciary duty to
administer the Family Trust according to law. He must carry out
the order of the Sonoma County Superior Court. Many of the
arguments made by the Salettas were addressed and rejected by
the Sonoma County Superior Court and the First District Court
of Appeal, both of which adopted trustee’s arguments. The only
new argument here is whether reformation is allowed in light of
sections 630 through 632. Under these circumstances, we find
trustee qualifies as an “interested person” under section 48 with
standing to weigh in on the probate proceedings.
Moreover, as trustee of the Norbert Eimers Family Trust,
James Eimers is the only person under a duty to advocate for the
trustor’s wishes as specifically expressed in the language of the
Family Trust. The Family Trust specifies that a power of
appointment must be specifically referenced in order to effectuate
any child’s intended testamentary distribution. Trustee has a
fiduciary duty to carry out the trustor’s intent and to maintain
the integrity of his trust. By appearing in the probate action, we
conclude he is discharging his fiduciary obligations.
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DISPOSITION
The order sustaining the demurrer without leave to amend
is affirmed. Respondent James N. Eimers, as Trustee, is
awarded costs on appeal.
CERTIFIED FOR PUBLICATION
STRATTON, J.
We concur:
BIGELOW, P. J.
GRIMES, J.
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