Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County. No. BP085900 Aviva K. Bobb, Judge.
John A. Bunnett for Defendants and Appellants.
John Frank Davis for Plaintiff and Respondent.
ZELON, J.
Married couple Tobias and Isabel Rival established a family living trust. After Tobias’s death, Isabel modified the trust and later conveyed the trust’s assets into a new trust in her name alone. Potential heirs of the Rivals dispute the title to trust assets: Doris Gonzalez and Gloria Traches contended that one-half the original trust’s assets became Tobias’s separate property at his death. Trustee Arleen Rival maintains that the entire contents of the family trust passed to Isabel as survivor and were properly conveyed into Isabel’s new trust. Each party filed a petition under Probate Code section 850 seeking determination of title to property held in trust. The trial court granted Rival’s petition and denied the petition filed by Gonzalez and Traches. Gonzalez and Traches appeal. We affirm.
For clarity, we refer to the Rivals by their first names.
Unless otherwise indicated, all further statutory references are to the Probate Code.
FACTUAL AND PROCEDURAL BACKGROUND
The facts are taken from the parties’ joint statement of facts in the trial court. On March 17, 1989, Isabel and Tobias executed a trust document entitled, “The Rival Family Living Trust.” Each executed a will with a pour over provision through which the remainder of any property not already conveyed to the trust would be “administered and disposed of in accordance with its terms.” The original trust instrument provided that after the death of the second spouse, the entire remaining estate would be divided equally between Gonzalez and Traches, Isabel’s only children. The assets in the Rival Family Trust were the community property of Isabel and Tobias; all property belonging to the Rivals was community property.
During Tobias’s lifetime, no amendments, modifications, or revocations were made to the Rival Family Living Trust. Tobias died April 2, 1998.
On June 23, 1999, Isabel executed an amendment to the terms of the trust that revoked one paragraph and restated the terms relative to which heirs would obtain assets. On October 4, 2002, Isabel executed a handwritten document entitled, “New Living Trust, ” in which she stated, “I have changed my beneficiaries.” The document altered the allocation of assets held in the trust and also designated recipients of previously unmentioned items. The document also contained the phrase, “[N]o fighting whoever fights gets nothing.” The parties dispute the legal effect of this document.
On or about October 1, 2003, Isabel terminated the Rival Family Living Trust and established, by means of a new document, a trust called the “Isabel C. Rival Living Trust.” She conveyed all the property of the Rival Family Living Trust to her new trust.
On December 1, 2006, trustee Arleen Rival filed a petition pursuant to section 850 to determine title to the property held in the Isabel C. Rival Living Trust. Arleen maintained that the assets of the Rival Family Living Trust were conveyed in their entirety to Isabel’s new trust. On January 12, 2007, Gonzalez and Traches filed their own petition pursuant to section 850 to determine title to the property held in the Isabel C. Rival Living Trust. They argued that upon Tobias’s death, his half of the community property in the Rival Family Living Trust became the property of the Estate of Tobias Rival; could not be conveyed by Isabel into her new trust; and should be distributed according to Tobias’s will.
Hereafter “Arleen, ” for clarity.
The trial court granted Arleen’s petition and denied that of Gonzalez and Traches. The court concluded, “[O]ne half of the total assets existing at the time of death of TOBIAS RIVAL held in the RIVAL FAMILY LIVING TRUST are NOT the property of the Estate of Tobias Rival BUT belong to the ISABEL C. RIVAL LIVING TRUST.” Gonzalez and Traches appeal.
DISCUSSION
On appeal, Gonzalez and Traches contend that when Tobias died, half of the community property in the Rival Family Living Trust was transmuted into his separate property and was subject to disposition according to his will. As authority for this result, they rely on the decision in Estate of Powell (2000) 83 Cal.App.4th 1434 (Powell). In Powell, a married couple created a trust, naming the wife as the trustee and the wife’s son from a previous marriage as successor trustee. (Id. at p. 1437.) The trust identified the husband and wife as beneficiaries and provided that upon the death of either spouse, the other would become the sole beneficiary. (Ibid.) All income from the trust assets was to be distributed to or for the benefit of the trustors or their survivor. (Id. at pp. 1438-1439.) Upon the death of both spouses, the trust estate was to go to the wife’s son. (Id. at p. 1438.) The trust instrument originally provided that it could be revoked at any time during the lifetime of the trustors; the spouses later executed a new trust that was essentially the same except that it permitted revocation at any time during the lifetime of either trustor. (Ibid.) The wife executed a will leaving all her property to the trustee of the trust to be held, managed, and distributed in accordance with the provisions of the trust. (Ibid.)
The wife in Powell predeceased her husband. (Powell, supra, 83 Cal.App.4th at p. 1438.) Thereafter, the husband revoked the trust. (Ibid.) The wife’s son filed a petition to establish his rights as trustee over all trust assets existing at the time of his mother’s death on the basis of an oral agreement between the spouses that the first trust would become irrevocable upon the death of either spouse. (Ibid.) According to the wife’s son, the later trust was executed in furtherance of that oral agreement, and so the trust became irrevocable as of the wife’s death. (Ibid.) The husband, in turn, sought to have the wife’s son replaced as executor of her will and petitioned for the determination of title to bank accounts that had been established by the wife for the benefit of herself and her son. (Ibid.)
The trial court in Powell, supra, 83 Cal.App.4th at page 1439, concluded that the will and the later trust were valid and enforceable. The court denied the son’s request to reform the later trust to make it irrevocable upon the wife’s death, and ruled that the husband’s revocation of the trust was effective only as to his half of the community assets, with the other half remaining in the trust. (Ibid.)
The Court of Appeal affirmed. (Powell, supra, 83 Cal.App.4th at p. 1443.) Interpreting the trust instrument de novo, the court sought to ascertain the intent of the trustors as revealed in the document as a whole, and concluded that the surviving spouse’s revocation of the trust applied only to that party’s share, not the trust corpus. (Id. at pp. 1439-1440.) While the surviving husband was entitled both by Family Code section 761, subdivision (b) and by the terms of the trust to revoke the trust as to community property, by the time that the revocation was made, the trust no longer consisted of the parties’ community property. (Id. at pp. 1440-1441.) “At the time of [wife’s] death, Probate Code section 100 provided: ‘Upon the death of a married person, one-half of the community property belongs to the surviving spouse and the other half belongs to the decedent.’ [Citation.] Thus, to the extent [husband] and [wife] retained reversionary property interests in the trust assets during [wife’s] lifetime by virtue of the right of revocation provided in the trust, those property interests were transmuted from community to separate property upon [wife’s] death. Under Probate Code section 15401, subdivision (b), [husband’s] revocation was therefore effective only as to his half of the trust corpus, as the trial court ruled. [Wife’s] half was subject to disposition as provided in her will, i.e., in accordance with the provisions of the 1991 trust.” (Id. at p. 1441.)
Family Code section 761, subdivision (b) provides in relevant part, “Unless the trust instrument expressly provides otherwise, a power to revoke as to community property may be exercised by either spouse acting alone.”
Section 15401, subdivision (b) provides in relevant part, “Unless otherwise provided in the instrument, if a trust is created by more than one settlor, each settlor may revoke the trust as to the portion of the trust contributed by that settlor, except as provided in Section 761 of the Family Code.”
Gonzalez and Traches argue that the same reasoning and outcome should apply in construing the Rival Family Living Trust. They claim that six relevant facts in this matter are analogous to those in Powell, supra, 83 Cal.App.4th 1434. First, the Powell trust established the husband and wife as beneficiaries, with the survivor becoming sole beneficiary on the death of the other spouse; the trust here provided that during the life of the grantors, the trustee was to pay or apply the net income from the trust to the benefit of the Grantors. Second, the Powell trust allowed for revocation at any time during the lifetime of either trustor, and the trust here permitted revocation during the joint lives of the Rivals, with revocation and amendment permitted at any time by the surviving spouse. Third, in the Powell case, the spouse who was first to pass away had executed a will leaving all her property to the trustee of the trust to be held, managed, and distributed in accordance with the provisions of the trust; here, Tobias, the first spouse to pass away, had left his property to the trustee of the trust to be administered and disposed of in accordance with the terms of the trust. Fourth, when the wife in Powell died, the trust had not been revoked, and when Tobias died, there had not been any modifications, amendments, or revocations to the Rival Family Living Trust. Fifth, in both cases, the surviving spouse revoked or effectively terminated the trust after the death of the other spouse. Sixth, the property in each trust at the time of the first spouse’s death was entirely community property.
Based on these similarities, Gonzalez and Traches conclude, “The same result [as in Powell, supra, 83 Cal.App.4th 1434] should follow in the instant matter, wherein pursuant to California Probate Code §100, upon the death of Tobias Rival, to the extent Tobias Rival and Isabel Rival retained reversionary property interests in the trust assets during Tobias Rival’s lifetime by virtue of the right of revocation provided in the trust, whose property interests were transmuted from community to separate property upon Tobias Rival’s death.” Therefore, they conclude, “the revocation of the Trust by Isabel Rival, was therefore effective only as to her half of the trust corpus, while Tobias Rival’s half was subject to disposition as provided in his will.”
Gonzalez and Traches’s approach, however, fails to note salient differences between the trusts in Powell, supra, 83 Cal.App.4th 1434 and here. The Rival Family Living Trust provided that “All property conveyed to this trust shall retain the same character it had prior to conveyance to this trust, whether separate, community, or quasi-community.” Moreover, the trust instrument granted the surviving trustee the rights of an absolute owner of the property: “The Trustee shall have all the powers of an absolute owner of property, including but not restricted to” specifically enumerated powers. Finally, the trustors specifically authorized the surviving spouse to modify or revoke the provisions of the trust after the other spouse had passed away: “This trust instrument may be revoked or amended at any time by the Survivor by delivery of written notice of revocation or amendment to the Trustee.” All these provisions clearly evince the trustors’ intent to convey their community property to the family living trust with the intention that it would remain community property, and the intent that whichever spouse survived the other would have full control over that property and full control over the trust, including the power to alter or revoke it. (Powell, at p. 1440 [in interpreting the trust instrument the court seeks the intent of the trustors as revealed in the document as a whole].)
The clear intent of the trustors here is an intent that is expressly contemplated by California law. Although section 100 does set forth a general rule for the division of community property at the death of a married person, it does not defeat trust provisions that make alternate arrangements: At all times relevant to this action section 104 has specifically provided that notwithstanding section 100, community property held in a marital revocable trust such as this one is governed by the provisions, if any, in the trust for disposition in the event of death. Moreover, for nonprobate transfers at death including trusts (§ 5000, subd. (a)), section 5023, subdivision (b)(3) provides that “If a written expression of intent of a party in the provision for transfer of the property or in the written consent to the provision for transfer of the property authorizes the person to execute a modification after the spouse’s death, the spouse’s interest in the community property is deemed transferred to the married person on the spouse’s death.”
The Probate Code was repealed and a new Probate Code enacted in 1990; section 104 was enacted to continue former section 104 without change. (Stats. 1990, c. 79, § 14.) The provision was later amended to substitute a reference to the Family Code provision that replaced a former Civil Code statute that described the type of marital revocable trusts containing community property. (Stats. 1992, c. 163, § 119.)
In light of the trust’s provisions that the property in the trust would remain community property; that during the life of Tobias and Isabel, the trustee should pay the income of the trust to them or for their benefit; that when one spouse died the other would become sole trustee unless incapable of assuming that role; that the trustee would have all the powers of an absolute owner of the trust assets; that after one spouse had died, the other spouse could revoke or amend the trust at any time; and that once both Isabel and Tobias had died, the trust would pay the expenses of their last illness and funeral, pay any death taxes, and divide and dispose of the trust estate by means of shares allocated to the Rival children or to their living children, there is no question that the Rivals intended the surviving spouse to retain control over all trust assets at the death of the first spouse, including the authority after the first spouse’s death to alter their ultimate allocation, and that the trust assets would be distributed upon the surviving spouse’s death. As California law permits the parties to make such arrangements in their revocable marital trusts, the trial court properly ruled that upon Tobias’s death, one-half of the community property did not transmute into separate property to be distributed by means of Tobias’s will.
DISPOSITION
The judgment is affirmed. Respondents shall recover their costs on appeal.
We concur: PERLUSS, P. J., WOODS, J.