Wilkin v. Nelson

• Court: California Court of Appeals
• Writing for the Court: PERREN, J.
• Citation: Wilkin v. Nelson, 45 Cal.App.5th 802, 258 Cal.Rptr.3d 803 (Cal. App. 2020)
• Decision Date: 03 February 2020
• Docket Number: 2d Civ. No. B294530
• Parties: Gary Forrest WILKIN, as Trustee, etc., Plaintiff and Appellant, v. William NELSON, Defendant and Respondent.

45 Cal.App.5th 802

258 Cal.Rptr.3d 803

Gary Forrest WILKIN, as Trustee, etc., Plaintiff and Appellant,

v.William NELSON, Defendant and Respondent.

2d Civ. No. B294530

Court of Appeal, Second District, Division 6, California.

Filed February 3, 2020

Certified for Partial Publication.^*

M. Jude Egan, Santa Maria, for Plaintiff and Appellant.

Hoge, Fenton, Jones & Appel, Denise E. Chambliss, Pleasanton, for Defendant and Respondent.

PERREN, J.

William and Hanako Nelson were married in 1981.¹ In 2000, Hanako executed a trust leaving a separate property rental home to Gary and Jay Wilkin, her adult sons from a prior marriage. At that time, Hanako also executed a pour-over will granting "the residue of [her] estate" to the trustee for administration after her death. Hanako did not advise William of her estate plan, but he later discovered she had placed her rental home into a trust for the benefit of her sons.

Hanako died in 2016. Gary, who became the successor trustee, filed a probate petition requesting that Hanako’s separate and community property assets be transferred to her trust. He claimed the pour-over will required that all of her real and personal property be declared trust assets.

William filed a petition seeking reformation of the pour-over will to confirm Hanako’s intent to transfer only the residue of her separate property estate into the trust. He cited Estate of Duke (2015) 61 Cal.4th 871, 190 Cal.Rptr.3d 295, 352 P.3d 863 ( Duke ), which held that "an unambiguous 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 intent at the time the will was drafted." ( Id. at p. 898, 190 Cal.Rptr.3d 295, 352 P.3d 863.)

Following a three-day evidentiary hearing, the probate court found that clear and convincing evidence supported equitable reformation of the will to provide for testamentary control and disposition of Hanako’s separate property only. The court denied Gary’s requests under Family Code section 1101² for a community property award against William and ordered Gary to reimburse William for the attorney fees incurred to expunge the lis pendens on one of William’s properties. Gary appeals each of these rulings.

We dismiss the appeal from the attorney fees award because the order granting those fees is nonappealable.³ (See Code Civ. Proc., §§ 405.38, 405.39.) In all other respects, we affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

William and Hanako each brought a separate property residence into the marriage. Hanako owned rental property located at 6155 Covington Way in Goleta (Goleta property). William had a residence in Castro Valley. Hanako and William, who were married for 34 years, had no prenuptial agreements or joint estate plans.

William has five adult children from a prior marriage, plus numerous grandchildren and great-grandchildren. Hanako and her sons, Gary and Jay, enjoyed a close relationship with William’s extended family. They spent holidays together and went on many trips, including a Hawaiian cruise arranged by Hanako.

In 2000, Hanako retained Stephen McKee, a certified specialist in trust estates and probate law, to prepare a trust. Hanako was friends with McKee’s sister, Mary (Mimi) Warga, who also is one of McKee’s legal assistants. McKee has a law office in Northern California, but spends most of his time in his Southern California office. Warga "was the primary contact for living trusts in the Northern California office."

Jay, who assisted his mother in obtaining the trust, told Warga that Hanako wanted "just trust for home" and was given a quote of $600. Jay’s handwritten notes on McKee’s standard intake questionnaire listed the Goleta property as the only asset to be controlled by Hanako’s estate plan. Jay wrote: "Since remarriage, the aforementioned real estate is to be willed to Gary and Jay Wilkin. Father’s wishes."

On March 28, 2000, Hanako and Jay met with Warga at her office to confirm and clarify Hanako’s testamentary request for "just trust for home." Jay assisted Hanako in describing her intent, which was to leave the Goleta property to her sons equally. The meeting lasted approximately an hour.

According to Warga, Hanako did not request the preparation of any instruments other than the trust and a grant deed transferring the Goleta property into the trust. Warga testified there was no discussion regarding community property or a possible will and noted that the section of the questionnaire designating the proposed executor of the will was left blank. Jay testified, however, that Warga brought up the issue of a pour-over will and that Hanako agreed to purchase one. Jay paid for McKee’s legal services with a $600 check. The memo line of the check contains the handwritten word "trust."

Jay testified that Warga told him what to write on the intake questionnaire, which lists only the Goleta property. In response to the question asking whether Hanako considered all her property to be community property, she answered "[n]o." The portions of the questionnaire seeking information about bank accounts, investments, retirement benefit plans, life insurance and any safe deposit boxes were either left blank or marked "N/A" (i.e., not applicable). The proposed successor trustees to Hanako’s trust were listed on the form, but there were no proposed executors of a will. Warga explained that if the will had been discussed, the section regarding the executors would have been completed.

Page 7 of the questionnaire asks about "[d]istribution of balance of property (residue) in estate." This section was marked inapplicable, but Warga recalled Hanako raising the possibility of future joint estate planning with her husband which would involve "the rest of [Hanako’s] property."

Warga sent the intake questionnaire to McKee, who then had a single phone call with Hanako. The only asset they discussed was the Goleta property. There was no conversation regarding the couple’s community property, bank accounts or investments. McKee believed Hanako’s sole testamentary intent was to place the Goleta property into a trust. Although he did not discuss this with Hanako, McKee’s general practice is to prepare a pour-over will with any trust.

McKee and his Southern California staff prepared the estate planning documents and sent them to Warga. On May 3, 2000, Hanako met with Warga at Hanako’s home to execute the trust and grant deed. The first page of the trust states: "The property transferred is the settlor’s separate property and shall be known as the ‘separate trust estate.’ " Warga also provided Hanako with a pour-over will, which states in Article 2: "Residue – Pour-Over to Living Trust, to Descendants: I give the residue of my estate to the trustee of the trust identified below, terms the ‘pour-over beneficiary,’ to be held and administered by the trustee according to the terms and conditions of that trust." This was the first time Hanako had seen the documents.

Hanako signed all three documents, but did not read the pour-over will. Warga notarized the trust and deed and served as a subscribing witness to the will. Warga also brought another witness to sign the will. Warga explained to Hanako that the will "would cover any assets in her case, separate property assets, ... that were only in her name" and "that [those] would be left to the trust." Once again, there was no discussion regarding any community property assets.

Warga mailed the original trust and pour-over will to Jay. Hanako never saw the will again. William did not learn of its existence until after Hanako’s death.

In 2009, Hanako asked McKee to prepare a first amendment to the trust. That instrument nominated Gary as the new first successor trustee and moved Jay into second position. It also disinherited Jay from the trust, assuming Gary and his issue survived Jay. Jay had been experiencing substantial financial difficulties and Hanako wished to protect the Goleta property from any creditors. The pour-over will was not discussed, amended or republished.

Previously, in 2007, William and Hanako’s friend, Evelyn Moore, granted them a 50% interest in her San Leandro real property. That property was later sold and William and Hanako received half of the sale proceeds. Hanako spent her share on a Hawaiian cruise for 38 members of their extended families.

In 2012, William and his daughter, Mary Smith, jointly purchased a condominium in Maui. They each paid approximately half of the $100,000 purchase price. William’s half came from the San Leandro property sale proceeds. Hanako approved of the purchase, which was intended to be a family vacation home.

Hanako subsequently developed dementia. In 2014, William engaged an estate planning attorney, Steven Dimick, to prepare a trust for the couple. Hanako went with William to the appointment, but Dimick said he could not do a trust for her because of her dementia. He advised William to get his own trust.

William designated Hanako as the primary beneficiary in his trust, with the residue going to his children upon her death. Based upon Dimick’s advice, William funded the trust with $137,233.68 from the couple’s joint accounts, leaving the accounts with a $168,658.67 balance. Most of that money was generated by William’s employment and retirement accounts. William also transferred the Castro Valley residence and the Maui property into the trust.⁴

After Hanako’s death, Gary filed a probate petition seeking to confirm the validity of Hanako’s trust, the Goleta property’s status as a trust asset and Gary’s entitlement to all rents from that asset. He also sought a determination that Hanako’s remaining assets, whether community or separate property, were transferred to the trust through the pour-over will.

William opposed Gary’s petition and filed his own petition seeking to invalidate Hanako’s trust as to any community...