Estate v. O'Connor

• Court: California Court of Appeals
• Writing for the Court: O'ROURKE, Acting P. J.
• Citation: Estate v. O'Connor, 26 Cal.App.5th 871, 237 Cal.Rptr.3d 519 (Cal. App. 2018)
• Decision Date: 29 August 2018
• Docket Number: D071284
• Parties: ESTATE OF John O'CONNOR, Deceased. Kevin O'Connor, as Executor, etc., Petitioner and Respondent, v. Brian O'Connor et al., Objectors and Appellants.

26 Cal.App.5th 871

237 Cal.Rptr.3d 519

ESTATE OF John O'CONNOR, Deceased.

Kevin O'Connor, as Executor, etc., Petitioner and Respondent,

v.Brian O'Connor et al., Objectors and Appellants.

D071284

Court of Appeal, Fourth District, Division 1, California.

Filed August 29, 2018

Palmieri, Tyler, Wiener, Wilhelm & Waldron, Don Fisher and Elise Malia Kern, Irvine, for Appellants.

Roehl & Glowacki, Cynthia Roehl, Laguna Hills, John P. Glowacki, Irvine; Sacks, Glazier, Franklin & Lodise and Margaret Glahn Lodise, Los Angeles, for Respondent.

O'ROURKE, Acting P. J. Appellants Brian O'Connor and Astrid O'Connor Bassett appeal from orders (1) declaring that decedent John O'Connor's power of appointment exercised in his will complied with the requirements of Probate Code ¹ section 632 and (2) for probate of his will. The sole question for our independent review arising out of both appeals is whether the language in the decedent's will—"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"—constitutes a valid and effective exercise under section 632, which requires, if directed by the instrument granting the power, that the exercise include "a specific reference to the power [of appointment] or to the instrument that created the power ...." We conclude the language of decedent's will contains enough detail to discern his conscious exercise of the particular power of appointment granted to him, and thus complied with the requirements of both the granting instrument and section 632 that he make a specific reference to the power of appointment. Accordingly, we affirm the orders.

FACTUAL AND PROCEDURAL BACKGROUND

We take much of the underlying facts from the referee's statement of decision, which was incorporated into the probate court's order. ( Mountain Air Enterprises, LLC v. Sundowner Towers, LLC (2017) 3 Cal.5th 744, 748, 220 Cal.Rptr.3d 650, 398 P.3d 556.) We disregard factual assertions by the parties that are not supported by references to the record. ( McOwen v. Grossman (2007) 153 Cal.App.4th 937, 947, 63 Cal.Rptr.3d 615 ["Statements of fact that are not supported by references to the record are disregarded by the reviewing court"].)

Arthur O'Connor and Hildis O'Connor were the parents of Brian O'Connor, Astrid O'Connor Bassett, John O'Connor, Kevin O'Connor and Eric O'Connor.² In 1979, Arthur and Hildis O'Connor created the Arthur P. O'Connor and Hildis M. O'Connor Family Trust (the Trust), which was amended and restated in August 1984 (the 1984 amendment), and again in April 1989 (the 1989 amendment). The primary asset of the Trust was an interest in a limited partnership that owns an apartment complex in San Diego. The Trust contemplated creation of a survivor's trust, a marital deduction trust, and an insurance trust upon the death of either parent, who were then the Trust's cotrustees.

The 1989 amendment allocated equal shares of the Trust estate to each living child, then directed that they be held and administered in one trust for Brian, Astrid and Kevin, and a separate trust for John, as to which the trustee would pay $1,000 per month for John's benefit. It designated Brian, Astrid and Kevin as successor cotrustees of the Trust. The 1989 amendment also granted John a power of appointment as follows: "Upon the death of JOHN N. O'CONNOR, the principal and undistributed net income of his trust shall be distributed to such of his issue, the issue of the Trustors, or the creditors of his estate, either outright or in trust, as he shall appoint by a will specifically referring to and exercising this general testamentary power of appointment."³

Upon Hildis's death in 1992, the Trust by its terms divided into the marital deduction subtrust (Hildis's subtrust) and a survivor's subtrust (Arthur's subtrust). Arthur also created the insurance trust holding his life insurance policies, the proceeds of which would be managed and distributed for John's benefit. At the same time, Arthur prepared a second amendment to his subtrust giving the trustees discretion to distribute (or not distribute) net income for John's health, maintenance, support, welfare and comfort, and removing the provision giving John a power of appointment over his interest in that subtrust. Thus, under Hildis's subtrust, the trustees were required to make lifetime payments of $1,000 per month for John's benefit and John had a power of appointment. Under Arthur's subtrust, the trustees had discretion to pay income and principal as they deemed appropriate, but John no longer had a power of appointment. John's total interest in the subtrusts included a 12.25 percent share in the apartment complex limited partnership.

John died in November 2014. He had no children and was survived only by his wife. On November 12, 2014, approximately two weeks before his death, he signed a will bequeathing his entire estate to his wife and appointing Kevin as his agent. John's will provides: "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 Kevin O'Connor. If possible, I request it be distributed to him outright, or if not possible, that he receive all income and have a maximum power of invasion for his health, comfort and welfare."

In early 2015, Kevin petitioned to probate John's will and sought to be appointed executor of John's estate. Kevin's petition sought to establish the validity of both the will and the power of appointment expressed in it. Brian and Astrid objected and filed a will contest, in part seeking to invalidate the power of appointment as not complying with section 632. They argued that the will's language referring to "any Power of Appointment which I may have" was only a general reference and thus invalid.

Thereafter, Kevin petitioned to reform John's will to conform to his intent to exercise the power of appointment granted to him by the Trust. Kevin asked that the will be amended to refer to John's power of appointment under the Trust with sufficient specificity so that his testamentary intent would be carried out as he expected.

The parties stipulated to having a judicial referee hear the power of appointment matters, and the issues were tried over the course of four days in 2015 and 2016. Thereafter, the referee issued a statement of decision ruling that the reference in John's will met the conditions established by the Hildis subtrust and the requirements of section 632. In part, it found: "John's Will specifically described the power he was attempting to exercise as ‘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 ....’ There was not a scintilla of evidence provided in the [h]earing that would suggest there was any confusion in John's mind as to the precise power he was exercising and the precise document in which the power was created. There was only one trust (consisting of two sub-trusts) and only one power of appointment that could meet the description contained in John's Will. The reference in John's Will met the conditions established by the Hildis Sub-Trust and the requirements of [ section] 632. The additional phrase, ‘or any other trusts for which I have Power of Appointment’ does not change this result. This phrase is an independent clause and does not in any way modify the specific reference it follows." The referee further found Kevin had established by clear and convincing evidence that John intended to exercise the power of appointment provided for in the Trust in Kevin's favor, and that it was contrary to John's desires to have Astrid and Brian receive any part of his share of the Hildis subtrust. The referee ruled failing to reform the will would result in a distribution of John's beneficial interest in the subtrust contrary to John's intention.

In July 2016, the probate court adopted the referee's statement of decision concerning the power of appointment as its own decision, and declared Kevin the prevailing party. It ruled the reformation issue was rendered moot by its decision as to the power of appointment. In January 2017, the probate court granted Kevin's petition for probate and entered its order for probate appointing Kevin executor of John's will.

Brian and Astrid filed these appeals from the probate court's orders.

DISCUSSION

I. Standard of Review

The issue presented—whether John's will language constitutes a "specific reference to the power or to the instrument that created the power"—is a matter of interpreting and construing the language of both Hildis's subtrust and section 632. We interpret the Hildis subtrust, as to which the parties did not present extrinsic evidence surrounding its execution, as a matter of law. ( Estate of Dodge (1971) 6 Cal.3d 311, 318, 98 Cal.Rptr. 801, 491 P.2d 385 ; Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865, 44 Cal.Rptr. 767, 402 P.2d 839 ; Aviles v. Swearingen (2017) 16 Cal.App.5th 485, 490, 224 Cal.Rptr.3d 686 ; Ammerman v. Callender (2016) 245 Cal.App.4th 1058, 1073, 200 Cal.Rptr.3d 38.) The paramount rule in construing the trust is to determine the trustor's intent from the whole of the instrument and in accordance with applicable law. (§ 21102, subd. (a); Ammerman , at pp. 1073-1074, 200 Cal.Rptr.3d 38 ; Estate of Cairns (2010) 188 Cal.App.4th 937, 944, 115 Cal.Rptr.3d 735.) We " ‘ " ‘consider the circumstances under which the document was made so that the court may be placed in the position of the ... trustor whose language it is interpreting, in order to determine whether the terms of the document are clear and definite, or ambiguous in some respect.’ " ’ " ( Ammerman , at p. 1074, 200 Cal.Rptr.3d 38.)

As for our ...