Stebbins v. Stebbins CA1/3 ( 2024 )

Filed 10/2/24 Stebbins v. Stebbins 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or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
JEFFREY STEBBINS as Trustee,
etc.,
Plaintiff and Appellant, A169424
v. (Humboldt County Super. Ct.
STEFANIE STEBBINS, No. PR2300026)
Defendant and Respondent.
Jeffrey Stebbins appeals from an order rejecting his division of certain
personal property between himself and his sister, Stefanie Stebbins, and
instead requiring the property be sold and the proceeds divided between the
siblings.1 Jeffrey contends the order exceeds the probate court’s authority
because it is contrary to the terms of his father’s trust. While we do not
adopt Jeffrey’s argument, we reverse and remand for the probate court to
reconsider the issue.
BACKGROUND
Jeffrey and Stefanie are each 50 percent beneficiaries of the Francis
Stebbins Living Trust, u.a.d. September 21, 1992, as amended on March 20,
1 We use the parties’ first names for clarity. No disrespect is intended.
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2008 (Stebbins Trust). Pursuant to the terms of the Stebbins Trust, Jeffrey
became the successor trustee upon the death of Francis Stebbins in 2019.
As relevant to this appeal, the Stebbins Trust required the trustee to
provide an accounting “[w]henever any person is added or removed as a
Trustee.” The accounting “shall describe assets in sufficient detail to apprise
beneficiaries of the assets making up the Trust estate.” Schedule C of the
Stebbins Trust states that, upon Francis’s death, the trustee “shall
distribute” all “jewelry, clothing, household furniture and furnishings,
personal automobiles, boats, paintings, books and other tangible articles of a
personal nature, and any interest in any such property, not otherwise
specifically disposed of in any other manner” to Jeffrey and Stefanie “in
shares of equal value in the opinion of the Trustee held in good faith.”
In February 2023, Stefanie filed a “petition for instruction re
distribution of trust.” She alleged the Stebbins Trust contained real estate
valued at approximately $6.8 million, a bank account valued at
approximately $400,000, and various personal property. She asserts that,
upon Francis’s death, Jeffrey was required to (1) “ ‘provide an accounting’ to
the beneficiaries ‘in sufficient detail to apprise’ them of ‘the assets making up
the [Stebbins] Trust’ and of the ‘debts and obligations of the Trust,’ ” and (2)
promptly distribute the assets. Stefanie contends Jeffrey has not provided a
complete inventory or valuation of Francis’s personal property, and he has
not distributed any trust property. As relevant to this appeal, the petition
requested the court order (1) “a full inventory of all personal property of
[Francis] as of his date of death,” (2) a division of that property “into two . . .
equal shares, and allow [Stefanie] her choice of which list of property she
prefers,” and (3) an immediate distribution of those assets.
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In response, Jeffrey asserted the Stebbins Trust only required the
assets be distributed “after the death of Francis,” and the particular timing of
doing so was left to his discretion. He also contends he provided a list of
Francis’s personal property to Stefanie, but she had not identified which
property she wanted. Nor, he contends, is she entitled to “first choice” of
what personal property she receives.
On March 30, 2023, the court granted the petition for instructions
regarding distribution. The court noted “[t]here is no ambiguity in the Trust
terms. By its terms, the Trust was required to be distributed upon the death
of Francis Stebbins. To date, the Trust has not been distributed in whole or
in part to the beneficiaries.” In connection with Francis’s personal property,
the court ordered Jeffrey to “provide a full inventory of all personal assets
held by Francis Stebbins at death” within thirty days, and to distribute such
assets “in equal shares” within sixty days. The court cautioned Jeffrey that,
[i]n making the distributions required by the Trust, and this Order, the
Trustee must comply with all of his duties under the Probate Code, including
his duty to act solely in the interest of the beneficiaries and to act fairly and
impartially with regard to the beneficiaries, and his failure to so act may
subject his interest in the Trust to a charging order.”
On May 8, 2023, Jeffrey filed a motion to extend the deadline for
distributing trust assets to September 30, 2023. Jeffrey noted appraisals for
the real property would not be completed before the pending distribution
deadline.
Stefanie opposed the requested extension. She noted that, apart from
the real estate, Jeffrey has not distributed the personal property and such
distribution “should not be any further delayed.”
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The court granted the motion to extend until September 30, 2023, but
cautioned that it “is concerned regarding the amount of time it is taking to
distribute the assets.”
Jeffrey filed a subsequent motion to extend the deadline for
distributing trust assets to November 30, 2023. The court denied this
motion.
On August 30, 2023, Stefanie filed a motion for court supervision of the
equal distribution of Francis’s personal property. She alleged numerous
items were missing from Jeffrey’s inventory of Francis’s personal property,
and his proposed distribution was inequitable in value and number of items.
She asserts she has been unable to reach a resolution with Jeffrey.
Jeffrey opposed the motion. He noted the personal property was never
appraised because a probate referee stated it “was a waste of time because
personal property is of little relative value.” Accordingly, he created a list
allocating the property “in shares of equal value in [Jeffrey’s] opinion, held in
good faith.” Jeffrey stated the property had not yet been distributed because
Stefanie “does not yet have a place to store the personal property items
allocated to her.”
The court conducted a hearing during which Stefanie argued Jeffrey
repeatedly delayed providing her with a proposed division of personal
property and, when the list was finally provided, it was unequal. During the
hearing, Stefanie asserted (1) Jeffrey “determined the quality in an inexact
way judging the value rather than using specific numbers,” and (2) Jeffrey
claimed he had the exclusive right to determine the appropriate the division
and use his discretion to determine what is equal. Stefanie claimed Jeffrey’s
refusal to trade lists demonstrated the lists were unequal. In response,
Jeffrey argued Stefanie was allocated “a lot of the valuable property, lots of
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things that are nice.” He noted Stefanie “hasn’t made any kind of showing
that this property is not equal in value.” Following argument, the court took
the matter under submission.
On December 13, 2023, the court ordered that, unless the parties
otherwise agreed by way of stipulation, Francis’s personal property “is to be
auctioned off at a public estate auction” within ninety days and the net
proceeds equally divided between Jeffrey and Stefanie. Jeffrey timely
appealed.
DISCUSSION
On appeal, Jeffrey contends the probate court exceeded its authority in
ordering a sale of the personal property because there is no evidence he did
not act in good faith when dividing the personal property. He further asserts
the probate court’s order violates the expressed intent and purpose of the
trust.
I. Standard of Review
“ ‘The interpretation of a trust instrument, like any written document,
is a question of law. [Citations.] Under applicable rules of interpretation of
written instruments, where there is no conflicting evidence, the reviewing
court must independently interpret the document.’ ” (Estate of Cairns (2010)
188 Cal.App.4th 937, 944.) “ ‘ “[T]he duty of the court is to first ascertain and
then, if possible, give effect to the intent of the maker.” [Citations.]’
[Citation.] ‘Section 21102 provides, “[T]he intention of the transferor as
expressed in the instrument controls the legal effect of the dispositions made
in the instrument.” ’ [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.” [Citations.]’ ” (Ibid.)
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II. The Stebbins Trust
“The probate court has general power and duty to supervise the
administration of trusts. Proceedings in the probate court ‘concerning the
internal affairs of the trust’ are commenced with the filing of a petition.”
(Schwartz v. Labow (2008) 164 Cal.App.4th 417, 427 (Schwartz).) “[U]nder
sections 16061 and 16060, the term “internal affairs of the trust” includes
information relevant to the beneficiary’s interests, information necessary to
enforce the beneficiary’s rights, and information that could prevent or redress
a breach of trust.” (Babbitt v. Super. Ct. (2016) 246 Cal.App.4th 1135, 1145.)
“Presented with a section 17200 petition . . . , ‘the probate court has a duty
imposed by law to inquire into the prudence of the trustee’s administration.’ ”
(Schwartz, supra, 164 Cal.App.4th at p. 427.) “[T]o respond to perceived
breaches of trust, the probate court has wide, express powers to ‘make any
orders and take any other action necessary or proper to dispose of the
matters presented’ by the section 17200 petition.” (Schwartz, at p. 427.) This
authority includes intervening “ ‘to prevent or rectify abuses of a trustee’s
powers.’ ” (Ibid.)
However, courts may only “alter administrative provisions of the trust
under ‘ “peculiar” or “exceptional” circumstance[s]’ where necessary to
accomplish the purpose of the trustor. [Citation.] The court cannot
substitute its judgment and discretion for that of the trustees’ if the trustees
are acting within proper limits, unless there is a complete failure or refusal to
perform the duties of the trustees. [Citation.] While the trustees’ discretion
is not unlimited or arbitrary, ‘. . .[t]he judgment of the trustees, exercised in
good faith, shall control. . . .’ ” (Trolan v. Trolan (2019) 31 Cal.App.5th 939,
956 (Trolan).)
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Jeffrey contends the trial court exceeded its authority by ordering
liquidation of the personal property because the trust provides for the equal
division of the property, not its value. We agree the express language of the
trust instructs the trustee to divide the property. “Absent language in the
trust explicitly mandating the liquidation of the trust, the sole authority, if
any, for the trial court’s order was the trial court’s overarching authority to
administer trusts.” (Trolan, supra, 31 Cal.App.5th at p. 956.) Such authority
only applies if the trustee has not exercised his or her discretion in good faith.
(See ibid.)
The record indicates some concerns regarding Jeffrey’s administration
of the Stebbins Trust in connection with the disputed personal property.
Under both the terms of the Stebbins Trust and by statute, Jeffrey was
required to provide an accounting to Stefanie of the trust assets, including
the personal property. This accounting includes “information relevant to the
beneficiary’s interests, information necessary to enforce the beneficiary’s
rights, and information that could prevent or redress a breach of trust.” (See
Babbitt v. Superior Ct., supra, 246 Cal.App.4th at p. 1145.)
Here, “information relevant to [Stefanie’s] interest” and “necessary to
enforce [Stefanie’s] rights” must encompass some level of information
regarding how Jeffrey valued the personal property. Otherwise, Stefanie
cannot assess whether she properly received her share of the property.
However, the record indicates Jeffrey only provided (1) lists to Stefanie that
included ambiguous line items such as, “shirts,” “bed,” “table,” “lamp,”
“trunk,” “small container,” and “vases,” and (2) 63 photographs that
presumably corresponded with some, but not all, of the 400 plus items of
personal property. The lists did not contain any formal or informal valuation
of the items. Nor did Jeffrey provide any information regarding how he
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valued the items when dividing the property between himself and Stefanie.
And this duty to provide an accounting also encompasses “the duty to prove
every item of [a trustee’s] account by ‘satisfactory evidence’; the burden of
proof is on [the trustee] and not on the beneficiary; and any doubt arising
from their failure to keep proper records, or from the nature of the proof they
produce, must be resolved against them.” (Estate of McCabe (1950) 98
Cal.App.2d 503, 505.) Accordingly, Jeffrey as trustee bears the burden of
providing valuations for the personal property at issue.
In response, Jeffrey asserts Stefanie’s complaints about the division are
meritless because they do not “pertain[ ] to whether [Jeffrey] had divided the
personal property into two shares of equal value in his opinion, held in good
faith.” But without some valuation—at least for the most valuable assets—it
is unclear how he could have exercised this discretion in any meaningful way.
Copley v. Copley (1981) 126 Cal.App.3d 248 (Copley) provides a useful
analogy. In Copley, the decedent created marital and non-marital trusts.
The beneficiaries of the non-marital trust asserted the decedent’s wife, who
was a trustee and the sole beneficiary of the marital trust, undervalued
shares of the decedent’s business to their detriment and to the benefit of the
marital trust. In relevant part, the wife asserted she had sole discretion to
set the fair market value of the stocks because the trust provisions
“empower[ed] the trustees to exchange or transfer trust property ‘upon such
terms as the Trustees, in their sole discretion, may deem advisable and for
the best interest of such trust . . . .’ ” (Id. at p. 284.) The court rejected this
argument, explaining “[w]hile these discretions conferred by the instrument
are indeed broad,” the authority conferred is not “unlimited or arbitrary
[citations]. It simply means the judgment of the trustees, exercised in good
faith, shall control [citation].” (Id. at p. 284.) The court further explained the
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evidentiary record indicated “the trustees made no realistic, good faith effort
to determine a fair market value on the stock . . . . This finding is equivalent
to a determination there was no effort at all, and certainly not a good faith
effort, in the matter of evaluating the stock’s value . . . . Viewed this way, the
trustees’ action cannot be deemed an exercise of judgment in good faith . . . .”
(Id. at p. 284.)
Here, as in Copley, the record does not indicate whether Jeffrey made
any realistic effort to accurately value the personal property at issue. This
lack of valuation includes certain categories of property, such as large
furniture, art, vehicles, silver, and crystal, which could have significant
value. Jeffrey acknowledged the personal property was never appraised and
stated he “had no objective values available for his use in dividing the
property into shares of equal value.” He explained that, without such
valuations, he “made a list of all the personal property” in the trust and “in
good faith, made a division of that property between himself and Stefanie in
shares of what he, in good faith, considered to be equal value.” But without
any valuations—even informal—it is unclear how he concluded what division
would create shares of “equal value.” Nothing in the record explains Jeffrey’s
process or how he valued various items. Nor does the record indicate
whether Jeffrey conducted any research into the value of any items, such as
researching the price of silver, obtaining Kelley Blue Book2 valuations for the
vehicles, or speaking with art and furniture dealers. Accordingly, the record
before this court does not disclose whether Jeffrey had a good-faith basis for
concluding his division of items awarded each sibling equal value. Such an
approach “cannot be deemed an exercise of judgment in good faith” and thus
2 Kelley Blue Book is an online website commonly used to obtain
informal vehicle valuations.
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does not demonstrate that Jeffrey satisfied his duties as trustee to create an
equal division of property in good faith. (See Copley, supra, 126 Cal.App.3d
at p. 284.)
The purpose of the Stebbins Trust was a division of the estate’s
personal property in a manner that ensured each sibling equally shared in
their value. While the record before this court leaves open the possibility
that Jeffrey did not comply with his duties to equally divide the personal
property in good faith—which could justify court intervention in the trust’s
administration—the record is silent as to whether the probate court assessed
the adequacy of Jeffrey’s valuation and division of the personal property.
Until the probate court finds that Jeffrey’s division failed to comply with the
terms of the Stebbins Trust, and he is unwilling to comply with those terms,
the probate court exceeded its authority in requiring that the personal
property be sold with the net proceeds equally divided between Jeffrey and
Stefanie.3 (See Schwan v. Permann (2018) 28 Cal.App.5th 678, 697
[“ ‘ “California courts have long had the equity power to modify the terms of a
trust where such modification is necessary to preserve the trust or serve the
original intentions of the trustor . . . .” ’ ”]; In re Greenleaf’s Estate (1951) 101
3 In so holding, we do not opinion on whether Jeffrey adequately valued
or divided the property. Additionally, in the event the probate court
concludes Jeffrey did not adequately perform his duties and he refuses to do
so, this opinion should not be interpreted as prohibiting the probate court
from entering a new order requiring the property sold and the net proceeds
equally divided. (See Schwartz, supra, 164 Cal.App.4th at pp. 427–428 [court
has “wide, express powers to ‘make any orders and take any other action
necessary or proper to dispose of the matters presented’ by [a] section 17200
petition.”].) However, we note Stefanie’s “you split, I choose” suggestion is
not supported by the terms of the Stebbins Trust, and nothing in the record
suggests Francis intended for the personal property at issue to be divided in
such a manner.
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Cal.App.2d 658, 662 [“The court should not be burdened with the duty of
administration, nor required, nor permitted to substitute its judgment and
discretion for that of the trustee so long as it acts within proper limits; nor in
any event until there is an entire failure or refusal on the part of the trustee
to perform its duty.”]). Accordingly, we reverse and remand for the trial court
to determine in the first instance whether Jeffrey properly divided the
personal property at issue between himself and Stefanie pursuant to the
terms of the Stebbins Trust.
DISPOSITION
The order is reversed and remanded for the court to reconsider
Stefanie’s motion for court supervision of the equal distribution of Francis’s
personal property in accordance with this opinion. The parties shall bear
their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(3).)
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_________________________
PETROU, J.
WE CONCUR:
_________________________
TUCHER, P. J.
_________________________
RODRÍGUEZ, J.
(Stebbins v. Stebbins/A169424)
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