Estate of Heggstad

• Decision Date: 21 June 1993
• Docket Number: No. A055005,A055005
• Citation: 16 Cal.App.4th 943,20 Cal.Rptr.2d 433
• Parties: ESTATE OF Halvard L. HEGGSTAD, Deceased. Glen P. HEGGSTAD, as trustee, etc., Petitioner and Respondent, v. Nancy Rhodes HEGGSTAD, Objector and Appellant.
• Court: California Court of Appeals Court of Appeals

Page 433

20 Cal.Rptr.2d 433

16 Cal.App.4th 943

ESTATE OF Halvard L. HEGGSTAD, Deceased.

Glen P. HEGGSTAD, as trustee, etc., Petitioner and Respondent, v. Nancy Rhodes HEGGSTAD, Objector and Appellant.

No. A055005.

Court of Appeal, First District, Division 2, California.

June 21, 1993.

Edward D. Thirkell, Daniel Passamaneck, Thirkell and Cretan, San Mateo, for objector and appellant.

Donald A. Wilson, Wilson & Wilson, Redwood City, Michael Patiky Miller, Weinberg, Ziff & Miller, Palo Alto, for petitioner and respondent.

PHELAN, Associate Justice.

In response to respondent's petition for order instructing trustee, the probate court decreed that the decedent's undivided 34.78 percent interest in property identified as 100 Independence Drive, Menlo Park, San Mateo County, was vested in Glen P. Heggstad, as successor trustee of the Heggstad Family Trust, and was not part of the decedent's estate. We hold that the settlor's written declaration stating that he holds this property as trustee was sufficient to create a revocable living trust, and we affirm the probate court's order.

FACTS

On May 10, 1989, decedent Halvard L. Heggstad executed a will naming his son, respondent Glen P. Heggstad, as executor. Concurrently, the decedent executed a valid revocable living trust, naming himself as the trustee and his son Glen, the successor trustee (hereafter the Heggstad Family Trust). All the trust property was identified in a document titled schedule A, which was attached to the trust document. The property at issue was listed as item No. 5 on schedule A, and was mislabeled as "Partnership interest in 100 Independence Drive, Menlo Park, California."

In truth, decedent had an undivided 34.78 percent interest in that property as a tenant in common. There is no dispute as to the nature of the decedent's interest in this property. This property remained in decedent's name, as an unmarried man, and there was no grant deed reconveying this property to himself as trustee of the revocable living trust. Both sides agree that decedent had formally transferred by separate deeds, all the other real property listed in Schedule A to himself as trustee of the Heggstad Family Trust.

About one month after executing these documents, the decedent married appellant Nancy Rhodes Heggstad. She was not provided for in either the will or the trust documents, and all parties agree that she is entitled to one-third of the decedent's estate (her intestate share) ¹ as an omitted spouse pursuant to Probate Code section 6560. ² She takes nothing under the terms of the trust and makes no claim thereto.

Decedent died on October 20, 1990, and his son was duly appointed executor of his estate and became successor trustee under the terms of the Heggstad Family Trust. The trust documents were recorded following decedent's death on January 10, 1991.

During the probate of the will, Glen, the successor trustee, petitioned the court for instructions regarding the disposition of the 100 Independence Drive property. The trustee claimed that the trust language was sufficient to create a trust in the subject property and that the property was not part of his father's estate.

In pertinent part, article 1 of the trust provided: "HALVARD L. HEGGSTAD, called the settlor or the trustee, depending on the context, declares that he has set aside and transfers to HALVARD L. HEGGSTAD in trust, as trustee, the property Appellant objected, arguing: the trustee is asking for a change of title, which is not available as a remedy in a petition for instructions; the property was not transferred to the trust by a properly executed document or by operation of law; and the trustee is also a beneficiary of the trust and should be removed because of this conflict of interest.

described in schedule A attached to this instrument."

The probate court concluded that the trust document, specifically article 1, was sufficient to create a trust in the subject property.

DISCUSSION

Appellant contends that a written declaration of trust is insufficient, by itself, to create a revocable living trust in real property, and the decedent was required to have executed a grant deed transferring the property to himself as trustee of the Heggstad Family Trust. None of the authorities cited by appellant require a settlor, who also names himself as trustee of a revocable living trust, to convey his property to the trust by a separate deed. ³ Our independent research has uncovered no decisional law to support this position. To the contrary, all the authorities we have consulted support the conclusion that a declaration by the settlor that he holds the property in trust for another, alone, is sufficient.

To create an express trust there must be a competent trustor, trust intent, trust property, trust purpose, and a beneficiary. (Prob.Code, §§ 15201-15205; Walton v. City of Red Bluff (1991) 2 Cal.App.4th 117, 124, 3 Cal.Rptr.2d 275.) The settlor can manifest his intention to create a trust in his property either by: (a) declaring himself trustee of the property or (b) by transferring the property to another as trustee for some other person, by deed or other inter vivos transfer or by will. (11 Witkin, Summary Cal.Law (9th ed. 1990) Trusts, § 26, p. 911; see also Getty v. Getty (1972) 28 Cal.App.3d 996, 1003, 105 Cal.Rptr. 259 ["An inter vivos trust can be created either by agreement or by a unilateral declaration of the person who assumes to act as trustee." (Emphasis in original.) ].)

These two methods for creating a trust are codified in Probate Code section 15200: "(a) A declaration by the owner of property that the owner holds the property as trustee," and "(b) A transfer of property by the owner during the owner's lifetime to another person as trustee." (§ 15200; see also Rest.2nd Trusts, § 17.)

Where the trust property is real estate, the statute of frauds requires that the declaration of trust must be in writing signed by the trustee. (§ 15206; accord Rest.2d, Trusts, § 40, com. b, at p. 105.) Here, the written document declaring a trust in the property described in Schedule A was signed by the decedent at the time he made the declaration and constitutes a proper manifestation of his intent to create a trust. Contrary to appellant's assertion, there is no requirement that the settlor/trustee execute a separate writing conveying the property to the trust. A review of pertinent sections of the Restatement Second of Trusts, illustrates our point. This consideration is particularly appropriate, since the Law Revision Commission Comment to section 15200 indicates: "This section is drawn from section 17 of the Restatement (Second) of Trusts (1957)." (Deering's 1991 Probate Code Special Pamphlet, p. 963.)

Section 17 of the Restatement provides that a trust may be created by "(a) a declaration by the owner of property that he holds it as trustee for another person; or [p] (b) a transfer inter vivos by the owner of property to another person as trustee for the transferor or for a third person...." The comment to clause (a) states: "If the owner of property declares himself trustee of the property, a trust may be created without a transfer of title to the property." (Ibid.)

Illustration "1" of that same section is instructive. It reads: "A, the owner of a bond, declares himself trustee of the bond for designatedbeneficiaries. A is the trustee of the bond for the beneficiaries. [p] So also, the owner of property can create a trust by executing an instrument conveying the property to himself as trustee. In such a case there is not in fact a transfer of legal title to the property, since he already has legal title to it, but the instrument is as effective as if he had simply declared himself trustee." (Emphasis added.)

Section 28 of the Restatement announces the rule that no consideration is necessary to create a trust by declaration. ⁴ This rule applies both to personal and real property, and it also supports our conclusion that a declaration of trust does not require a grant deed transfer of real property to the trust. Illustration "6" provides: "A, the owner of Blackacre, in an instrument signed by him, gratuitously and without a recital of consideration declares that he holds Blackacre in trust for B and his heirs. B is not related to A by blood or marriage. A is trustee of Blackacre for B."

More directly, comment m to section 32 (Conveyance Inter Vivos in Trust for a Third Person) provides in pertinent part: "Declaration of trust. If the owner of property declares himself trustee of the property a transfer of the property is neither necessary nor appropriate...." (Second emphasis added.) ⁵

Additionally, comment b to section 40 (statute of frauds) establishes that a written declaration of trust, by itself, is sufficient to create a trust in the property. Comment b states: "Methods of creation of trust. The Statute of Frauds is applicable whether a trust of an interest in land is created by the owner's declaring himself trustee, or by a transfer by him to another in trust." (Second emphasis added.) ⁶

Finally, Bogert, in his treatise on trusts and trustees observes: "Declaration of Trust [p] It is sometimes stated that the transfer by the settlor of a legal title to the trustee is an essential to the creation of an express trust. The statement is inaccurate in one respect. Obviously, if the trust is to be created by declaration there is no real transfer of any property interest to a trustee. The settlor holds a property interest before the trust declaration, and after the declaration he holds a bare legal interest in the same property interest with the equitable or beneficial interest in the beneficiary. No new property interest has passed to the trustee. The settlor has merely remained the owner of part of what he formerly owned." (Bogert, Trusts and Trustees (2d ed. rev. 1977) § 141, pp. 2-3, fn. omitted.)

These authorities provide abundant support for our conclusion that a...