Opinion
B293202
06-30-2020
Estate of GLORIA B. McGILL, Deceased. GAIL MCGILL, Petitioner and Appellant, v. TIMOTHY MCGILL, as Trustee, etc., Claimant and Respondent.
Law Office of R.M. Anthony Cosio, R.M. Anthony Cosio; Law Office of Thomas Armstrong and Thomas Armstrong for Petitioner and Appellant. Hill, Farrer & Burrill and Dean E. Dennis for Claimant and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. 16STPB05683) APPEAL from a judgment of the Superior Court of Los Angeles County, Maria E. Stratton, Judge. Affirmed. Law Office of R.M. Anthony Cosio, R.M. Anthony Cosio; Law Office of Thomas Armstrong and Thomas Armstrong for Petitioner and Appellant. Hill, Farrer & Burrill and Dean E. Dennis for Claimant and Respondent.
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The instant appeal concerns the interpretation of The Gloria B. McGill Separate Property Living Trust dated September 9, 2011 (the trust). At Gloria's death, the only surviving beneficiaries of the trust were her four children. One of these beneficiaries, appellant Gail McGill, argues the trial court erred in interpreting the trust as requiring the trustee to first make certain specific gifts of real property to two of Gail's siblings, and thereafter divide the remainder of the estate into percentage-based shares for each of the siblings. Gail contends that, instead, the language of the trust unambiguously requires an across the board percentage-based distribution of all assets. She also contends that, to the extent the court was permitted to consider extrinsic evidence, the evidence presented at trial does not provide a reasonable basis for the trial court's interpretation of the trust.
For the sake of clarity, we use first names to refer to the various members of the McGill family. No disrespect is intended.
We agree that the trust language is unambiguous, but disagree that it is susceptible, either on its face or in light of the evidence presented at trial, to Gail's proposed interpretation. Rather, the trust is unambiguous in requiring the distribution adopted by the trial court. Accordingly, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The trust names five beneficiaries: Gloria's husband, Thomas Patrick McGill (Thomas Sr.) and Gloria's four children, appellant Gail McGill, Lisa McGill, Thomas McGill II (Thomas Jr.) and respondent Tim McGill. The trust named Tim co-trustee, along with Gloria during her lifetime. Lisa has "special needs" as a result of her suffering from chronic fatigue syndrome and bipolar disorder.
At the time of Gloria's death, the trust estate included three parcels of real property: the Bogue property, the Capistrano property, and the Tujunga property, which was occupied by Lisa.
A. Key Terms of the Trust
The trust directs the trustee to "apportion" the "Distributable of Balance of Trust Estate" (the distributable estate) "into shares and as provided in whichever of Sections 3.3.1 through 3.3.9 are applicable." The trust defines the distributable balance to be so divided as "the balance of the Trust Estate remaining after" (1) the distribution of personal property items worth less than $500 each, and (2) the payment of certain debts and taxes.
1. Section 3.3.1 —the Tujunga property
Section 3.3.1 instructs the trustee to allocate "(a) . . . any interest in [the Tujunga property] which is then held or receivable by the Trustee, subject to any liens or encumbrances then existing thereupon or thereagainst; and [¶] (b) . . . any household goods, furniture and furniture [sic] usually and customarily located and used at the Tujunga property then held or receivable by the Trustee" (the Tujunga furnishings) "to the share apportioned for the benefit of Lisa pursuant to the provisions of whichever of Sections 3.3.2 through 3.3.5 is applicable." (Boldface & capitalization omitted.) Sections 3.3.2 through 3.3.6 set forth several different sets of instructions for distribution, depending on which beneficiaries survive Gloria. The parties agree that, because Thomas Sr. was the only beneficiary who predeceased Gloria, section 3.3.2 is applicable, and sections 3.3.3, 3.3.4, 3.3.5, and 3.3.6 are not.
Section 3.3.1 then goes on to clarify that Lisa is to receive the Tujunga property and Tujunga furnishings "in addition to any cash, other assets, interests therein or combination thereof allocated" to Lisa's share under section 3.3.2. (Italics added.)
2. Section 3.3.2 — the "residue" of the distributable estate
Section 3.3.2 instructs that, "after making or providing for the distributions and allocation" of personal property worth less than $500 and "prescribed by . . . [s]ection . . . 3.3.1 [addressing the Tujunga property]," the trustee shall "divide the residue of the [distributable estate] into as many shares as there are persons in the group consisting of Gail, Lisa, Thomas [Jr.] and Tim." (Boldface & capitalization omitted.)
Section 3.3.2 does not divide this remaining portion of the distributable estate (the residue) into equal shares. Rather, it explains that, "[e]xcept as otherwise provided in Section 3.3.7 [regarding the Capistrano property, discussed below], the share of the [r]esidue . . . so apportioned for the benefit of: [¶] (a) Lisa . . . shall be equal to Forty Percent (40 [percent]) of the [r]esidue . . . ; [¶] (b) the share of Tim shall be equal to: [¶] . . . [¶] . . . Twenty Percent (20 [percent]) of the [r]esidue . . . if [Thomas Sr.] has not survived the Trustor; and [¶] (c) the shares of each of Gail, Thomas [Jr.] or the[ir] descendants . . . shall be equal to: [¶] . . . [¶] . . . Twenty Percent (20 [percent]) of [the residue] if [Thomas Sr.] has not survived the Trustor." (Boldface & capitalization omitted.)
3. Section 3.3.7 — the Capistrano property
Section 3.3.7 instructs that, "[n]otwithstanding the provisions of Sections 3.3.2 through 3.3.6 to the contrary," the trustee is to "allocate" the Capistrano real property to Tim. Specifically, it provides that "the Trustee shall allocate: [¶] (a) any interest in [the Capistrano property] held or receivable thereby [that is, held or receivable by the trustee]; and [¶] (b) any and all household goods, furniture and furnishings usually and customarily located and used at the Capistrano [property]" (the Capistrano furnishings) "to the share apportioned for [Tim] pursuant to whichever of the provisions of said Sections 3.3.2 through 3.3.6 is applicable."
The trustee is also to adjust Tim's portion of the residue apart from the Capistrano property and furnishings, depending on the fair market value of the Capistrano property. Specifically, section 3.3.7 provides: "[T]he share so apportioned for the benefit of: [¶] . . . Tim shall be equal to the greater of" either (i) the net fair market value of the Capistrano property and the Capistrano furnishings or (ii) "the [n]et [f]air [m]arket [v]alue of the percentage of the [r]esidue . . . which would be apportioned for his benefit pursuant to the provisions of whichever of Sections 3.3.2 through 3.3.6 is applicable, but for the provisions of . . . Section 3.3.7." (Capitalization omitted.) The section finally provides that other beneficiaries' shares of the residue may be reduced as necessary to effectuate the other portions of section 3.3.7.
B. Gail's Petition for Instructions
On August 12, 2015, Gloria died. Less than a month after Gloria's death, Tim, acting in his capacity as trustee of the trust, transferred two of the real properties. Namely, on September 9, 2015, he conveyed the Tujunga property to himself as "Trustee of the separate trust designated as the Lisa McGill Trust under the Gloria B. McGill Separate Property Living Trust" (Lisa's special needs trust). (Capitalization omitted.) Also on that date, he conveyed the Capistrano property to himself as an individual. Neither before, nor at any point after these transfers did Tim acquire appraisals for any of the three parcels of real property in the distributable estate.
Gail filed a petition for instructions seeking clarification regarding, inter alia, the terms of the trust regarding the Tujunga and Capistrano properties. In proceedings regarding her petition, Gail argued that neither the Tujunga property nor the Capistrano property should be distributed outright to any beneficiary, and that they should instead be distributed pursuant to the percentages set forth in section 3.3.2. She further argued that the trust required Tim to commission an appraisal of the Capistrano property to determine the appropriate distribution.
Tim argued the Tujunga and the Capistrano properties should first be distributed to Lisa's special needs trust and to Tim, respectively, and that the remainder of the estate should then be divided according to the percentage shares set forth in section 3.3.2. Tim also waived any right he may have to any portion of the residue other than the Capistrano property and furnishings, based on his belief that the Capistrano property was worth more than his 20 percent share of the residue under section 3.3.2.
C. Evidence Presented at Trial
At trial, both parties urged the court to interpret the trust on its face as containing unambiguous language that supported their respective interpretations. Nevertheless, they each introduced extrinsic evidence as well.
1. Testimony of drafting attorney , George Koide
George Koide, Gloria and Thomas Sr.'s attorney, testified that, in addition to drafting the trust, he discussed estate planning issues with Gloria and Thomas Sr. over the course of roughly 18 years, meeting with Thomas Sr. and/or Gloria approximately 10 times.
Around 1997, Koide discussed with the couple the implications of putting title to the Tujunga property in Lisa's name, given that it was Lisa's primary residence. Koide suggested doing so could jeopardize Lisa's eligibility to receive state subsidization to which she would otherwise be entitled, based on her special needs. Gloria and Thomas Sr. ultimately decided to retain the Tujunga property in their own names and take measures to assure Lisa "would be able to live there as long as possible."
When Thomas Sr.'s health began to deteriorate in approximately 2009-2010, he and Gloria chose to transmute all of their jointly owned assets into Gloria's separate property so that Thomas Sr. could qualify for state medical benefits. In 2011, Koide established the trust to hold that separate property.
Koide testified that, based on his work for and discussions with Gloria and Thomas Sr., he understood the couple's two primary objectives in their estate planning—and Gloria's objectives with the trust more specifically—to be: (1) providing for Lisa, given her special needs, and (2) assuring Tim would receive the Capistrano property. Gloria and Thomas Sr. indicated that they felt "that Lisa should have the disproportionate larger share, as well as the Tujunga condo because they felt she would require that more so than any of the[ir] other three children." They wanted to make sure that Tim received the Capistrano property because of the "connection Tim had with it."
Koide testified that he discussed with Gloria and Thomas Sr. "how . . . [they] want to distribute the balance" after they had "taken care of those two specific gifts" of the Tujunga and Capistrano properties. The couple wanted to provide some share of the estate for each of their children, realizing the shares wouldn't necessarily be equal because of their desire to provide for Lisa. "The thought was . . . 40 percent [would be] set aside for Lisa to fund the expenses of the [Tujunga] condominium and other expenses that she might have. That would leave 60 percent, and that [sic] each of the three of them should receive 20 percent."
Koide then went on to testify that Gloria and Thomas Sr. were concerned about what to do if the value of the Capistrano property Tim received ended up being greater than the 20 percent share Gail and Thomas Jr. would each receive. Gloria and Thomas Sr. therefore indicated to Koide that Tim should receive the Capistrano property, but if its value exceeded the 20 percent share they were otherwise contemplating for Tim, he would not receive anything besides the Capistrano property. On the other hand, if the net equity of the Capistrano property was less than that 20 percent share, they indicated to Koide that Tim should receive from the residue—in addition to the Capistrano property itself—the difference between that 20 percent and whatever "equity at that time represented in the Capistrano property."
Koide testified that he interpreted the trust as achieving these goals, and that this interpretation was "consistent with everything that Gloria McGill ever told [him] about what she wanted done with her property with regard to the trust." More specifically, he testified that the following interpretation of the trust reflected what Gloria had told him she wanted: "[T]he [Tujunga property and Tujunga furnishings] were to be set aside in a trust for Lisa's benefit. The Capistrano property and [Capistrano furnishings] were to be distributed to Tim outright. After expenses, debts and other amounts had been paid, whatever would be left, the residue would then be divided into shares. And because of Lisa's particular circumstances, Lisa was to receive 40 percent of that amount, plus the [Tujunga] condo and the household goods, et cetera. Tim was to receive a percentage, if the percentage of that value exceeded the value of the Capistrano condominium. . . . And then the balance would be distributable to [Thomas Jr.] and to Gail."
Koide testified regarding two letters he mailed to Gloria and Thomas Sr. a few months before Gloria executed the trust, as well as a letter he sent to Gloria in 2015—several years after Gloria executed the trust—following up on discussions about Gloria possibly wanting to disinherit Gail and Thomas Jr. These letters were admitted into evidence, as was a proposed revised trust enclosed with the 2015 letter. Gloria never executed this proposed revised trust, nor did Koide ever speak with her about it after sending the letter.
2. Other witness testimony
Gail, Tim, and Thomas Jr. also testified.
Tim testified that he had been present for several meetings between Koide and Gloria (and sometimes Thomas Sr.) based on which Tim understood both Gloria and Thomas Sr.'s main concern in crafting the trust to be sufficiently providing for Lisa. This specifically included allowing Lisa to continue to reside at the Tujunga property.
Gail testified that both her parents had told her numerous times that they would leave each of their children a 25 percent share of their estate. According to Gail, she, Thomas Jr., and Tim all worked for their parents at various times, and their inheritance was to serve as the retirement plan they did not receive as part of that employment. Gail further testified that Thomas Sr. had told her she and Tim would be co-trustees of Gloria and Thomas Sr.'s estate. Neither Gail's testimony, nor any other part of the record suggests that Gail participated in or was present for any discussions between or among either of her parents and/or their attorneys regarding the couple's estate plan or the terms of the trust.
Thomas Jr. testified that he had worked for his parents as well, and that he likewise understood he would receive 25 percent of Gloria and Thomas Sr.'s estate in lieu of a retirement plan. He stated that he was "promis[ed]" that the siblings would each receive a 25 percent share for "[a]s long as [he] can remember."
D. Trial Court's Decision
The trial court issued a detailed tentative statement of decision denying Gail's petition. In an order dated August 6, 2018, the court overruled Gail's written objections to the tentative statement and adopted it as the final statement of decision.
In denying the petition, the court found that the trust provisions are "very clear and give precise directions to the trustee." As to the Tujunga property, the court found that these provisions instruct that "[t]he Tujunga property and furnishings are to be distributed to Lisa in addition to her 40 [percent] of the residue." The court further found that "the trust provides that Thomas [Jr.] and Gail and Timothy are each to receive 20 [percent] of the residue, except as provided in section 3.3.7," which provides that Tim is to receive the Capistrano property. The court further interpreted the trust as providing that, "if the value of the Capistrano distribution is less than 20 [percent], [Tim] receives additional residue to bring his share to 20 [percent]"; "if the value of the Capistrano distribution exceeds Tim's 20 [percent], then he receives nothing more from the residue." Because Tim did not seek any portion of the residue besides the Capistrano property and furnishings, the court found it would be "unnecessary" and a "superfluous expense" to obtain an appraisal of the Capistrano property.
Citing Gail's testimony that she did not think the Tujunga property should be sold, the trial court also found that Gail had not "challenge[d] the language leaving the Tujunga property to Lisa nor [did] she insist that the prior equal distribution should be applied to Lisa." Because the trial court went on to analyze and make findings regarding the proper distribution of the Tujunga property, however, we need not address Gail's contention on appeal that the trial court incorrectly found Gail had waived any arguments regarding the Tujunga property.
The court further concluded that "[e]ven if the trust language were ambiguous, which it is not, . . . [t]here is no doubt in the court's mind that by 2011, Gloria and [Thomas Sr.] . . . were very intent on making sure that the specific gifts of the Tujunga and Capistrano properties and furnishings to Lisa and Tim were executed."
The trial court filed a judgment on August 28, 2018, and Gail appealed on October 2, 2018.
DISCUSSION
On appeal, Gail argues that the trial court incorrectly interpreted the trust document with respect to the disposition of the Tujunga and Capistrano properties. According to Gail, the trust language, on its face, unambiguously requires that both the Tujunga property and the Capistrano property be divided among all beneficiaries as part of the residue, such that these properties should count towards Lisa's and Tim's respective percentage shares of the residue under section 3.3.2. Gail further argues that "an examination of the circumstances under which [the trust] was made reveals no ambiguity" and does not show that Gloria intended the Tujunga and Capistrano properties to be specific gifts.
As we discuss below, the language of the trust permits no interpretation other than that set forth in the court's statement of decision. Nor does the evidence regarding the circumstances under which the trust was executed render the language reasonably susceptible to some other interpretation or reveal some latent ambiguity; to the contrary, it further supports the trial court's construction of the trust.
A. Applicable Law and Standard of Review
"The interpretation of a trust instrument, like any written document, is a question of law," which we review de novo. (Brown v. Labow (2007) 157 Cal.App.4th 795, 812.)
In interpreting a trust, courts seek to ascertain the trustor's intent, which requires that "we look first to the terms of [the] trust." (Burch v. George (1994) 7 Cal.4th 246, 256; see Prob. Code, § 21102, subd. (a) ["The intention of the transferor as expressed in the instrument controls the legal effect of the dispositions made in the instrument."].) "In order to first ascertain, and then, if possible, give effect to the intent of the trustor, the court must consider the whole of the trust instrument, not just separate parts of it." (Trolan v. Trolan (2019) 31 Cal.App.5th 939, 949 (Trolan); Estate of Powell (2000) 83 Cal.App.4th 1434, 1440 (Powell) [in interpreting a trust, "we seek the intent of the trustor[ ] as revealed in the document considered as a whole"].) " 'All parts of [a trust] instrument are to be construed in relation to each other and so as, if possible, to form a consistent whole' " (Blech v. Blech (2018) 25 Cal.App.5th 989, 1001 (Blech)), and to "give every expression some effect, rather than one that will render any of the expressions inoperative." (§ 21120.) "The words of an instrument are to be given their ordinary and grammatical meaning unless the intention to use them in another sense is clear and their intended meaning can be ascertained." (§ 21122.)
Unless otherwise indicated, all statutory references are to the Probate Code.
"[I]f the court can ascertain the testator's intent from the words actually used in the instrument, the inquiry ends," and the court "does not consider extrinsic evidence; it only looks to extrinsic evidence in the event of an ambiguity." (Trolan, supra, 31 Cal.App.5th at p. 949; see Estate of Avila (1948) 85 Cal.App.2d 38, 39.) "[A]n ambiguity [in a written instrument] is said to exist" only "when, in the light of the circumstances surrounding the execution of an instrument, 'the written language is fairly susceptible of two or more constructions.' " (Estate of Russell (1968) 69 Cal.2d 200, 211-212.) An ambiguity may arise on the face of a trust, or it may be "latent" in language that appears to have only one meaning. (Id. at pp. 206-207.) "The trial court can consider extrinsic evidence to reveal [such] a latent ambiguity." (Trolan, supra, 31 Cal.App.5th at p. 949.) In addition, " ' "[i]n interpreting . . . a trust, it is proper for the trial court in the first instance and the appellate court on de novo review to consider [extrinsic evidence regarding] the circumstances under which the document was made." ' " (Powell, supra, 83 Cal.App.4th at p. 1440; see Trolan, supra, at p. 949; see also § 21102, subd. (c).) This allows the court to " ' "be placed in the position of the testator or trustor whose language it is interpreting." ' " (Powell, supra, at p. 1440.) In considering such extrinsic evidence, however, the court may not "give [trust language] a meaning to which it is not reasonably susceptible." (Trolan, supra, at p. 949, citing Estate of Russell, supra, 69 Cal.2d at p. 211.)
B. The Trust Language Is Unambiguous and Requires Distribution of the Tujunga and Capistrano Properties as Set Forth by the Trial Court
Reading the trust as a whole, we agree with the trial court that the trust is unambiguous on its face and susceptible only to the interpretation set forth in the trial court's statement of decision. As to the Tujunga property, section 3.3.2 defines the residue as the assets remaining "after [the trustee] mak[es] or provid[es] for the distributions and allocation prescribed by . . . Section . . . 3.3.1 [regarding the Tujunga property]"—that is, only after allocating the Tujunga property to Lisa's special needs trust. (Italics added.) This language expressly excludes the Tujunga property from the residue to be distributed according to percentage shares under section 3.3.2. Moreover, section 3.3.1 instructs that the trustee "shall" allocate the Tujunga property to Lisa's special needs trust "in addition to" any interest in the residue—not as part of it. (Italics added.) This language leaves no room for Gail's proposed interpretation of the provision as requiring the Tujunga property be distributed as part of the residue under section 3.3.2, counting towards Lisa's percentage share.
The Capistrano property, by contrast, is part of the residue. But the language in section 3.3.2 requiring the distribution of the residue according to percentage shares expressly excludes the Capistrano property from its scope by using the introductory phrase "[e]xcept as otherwise provided in Section 3.3.7 [regarding the Capistrano property]." Section 3.3.7 then reiterates this exclusion by providing that, "[n]otwithstanding the provisions of Section[ ] 3.3.1 . . . to the contrary," the trustee "shall allocate" the Capistrano property to Tim.
Gail argues that the phrases "pursuant to the provisions of whichever of Sections 3.3.2 through 3.3.5 is applicable" in section 3.3.1 and "pursuant to whichever of the provisions of said Sections 3.3.2 through 3.3.6 is applicable" in section 3.3.7 subject the Tujunga and Capistrano properties to the percentage distribution set forth in section 3.3.2. These phrases appear in the following context in both sections: "[T]he Trustee shall allocate: [¶] . . . any interest in [the Capistrano property/Tujunga property] . . . [¶] . . . [¶] to the share apportioned for [the benefit of Tim/Lisa] pursuant to [whichever of the provisions of] Sections 3.3.2 through [3.3.5/3.3.6] is applicable." Read in this context, it is clear that the "pursuant to . . ." phrases on which Gail relies are part of a precise description of the percentage share apportioned for Tim or Lisa pursuant to certain other applicable provisions. These phrases thus do not qualify the unambiguous language outlined above that leaves the Tujunga and Capistrano properties to Lisa and Tim, respectively, separate and apart from whatever portion of the residue section 3.3.2 requires (or, in Tim's case, section 3.3.2 and section 3.3.7 require) they receive.
As previously noted, of sections 3.3.2 through 3.3.6, only section 3.3.2 is applicable, given who survived Gloria, something neither party disputes.
C. The Discretionary Provisions of the Trust Do Not Warrant A Contrary Conclusion
Gail argues that various provisions granting the trustee broad discretion in dealing with the trust assets and/or Lisa's special needs trust are inconsistent with an interpretation of the trust as requiring the Capistrano and Tujunga properties be distributed as such to specific individuals.
For example, Gail points to section 3.11.2, which gives the trustee discretion to pay certain fees and unsecured debts from any trust asset, and sections 4.1(d) and (t), which provide that, "[t]o carry out the purposes of the Trust and subject to any limitations contained herein, the Trustees shall have all of the powers, rights and privileges set forth in sections 16220 et seq. of the Probate Code[,] . . . [and] [i]n particular, the Trustee is specifically authorized to: [¶] . . . [¶] . . . lease any trust asset or interest therein" and "sell, assign, transfer or otherwise convey . . . any trust asset." Similarly, Gail cites section 5.1(a)(1), which permits the trustee, upon establishing any separate trust (such as Lisa's special needs trust), to divide, allocate and distribute assets in that separate trust in cash, in kind, or partly in cash and partly in kind. Based on these and other similar provisions, Gail argues that the trust vests in the trustee discretion to dispose of the Tujunga and Capistrano properties in a manner inconsistent with the trial court's interpretation of the trust. By way of example, she notes that, "depending on the values of the respective properties, the [t]rustee could in theory distribute the Tujunga property as an asset with which to fund Lisa's 40 [percent] share [of the residue]."
Gail's argument makes too much of these general discretionary provisions and fails to understand them in the context of the document as a whole. When a trust contains a "general grant of discretion" and a "clause specifically direct[ing] the trustee to act," the "particular expressions qualify those which are general." (Estate of Greenleaf (1951) 101 Cal.App.2d 658, 664-665, italics omitted [specific direction that trust income and funds from the sale of trust property be distributed to one beneficiary controls over a general grant of discretion to trustee to dispose of trust property]; see McNeely v. Claremont Management Co. (1962) 210 Cal.App.2d 749, 753 ["where a general and a particular provision of a written instrument are inconsistent, the particular controls the general"], citing Code Civ. Proc., § 1859.) Sections 3.3.1 and 3.3.7 provide such specific instruction to the trustee regarding the Tujunga property and Capistrano property and thus control. Moreover, the broadest grant of discretionary powers to the trustee in section 4.1 is by its own terms subordinate to the trust's other, more specific provisions, in that it grants the trustee discretion "subject to any limitations contained herein."
Gail's proposed interpretation also ignores statutory guidance regarding the interpretation of trusts. Namely, interpreting the trust's general discretionary provisions as Gail suggests would render some if not all of sections 3.3.1 and 3.3.7 "inoperative," rather than, as does the trial court's interpretation, "giv[ing] every expression [in the trust] some effect." (§ 21120; see Blech, supra, 25 Cal.App.5th at p. 1001.)
Gail next argues that trust provisions excluding shelter from the list of needs for which Lisa's special needs trust must provide, and instead leaving this within the discretion of the trustee, "further enhances the interpretation that Tujunga was not a specific gift." Gail specifically points to section 3.5.7.6, which states that the needs provided for through Lisa's special needs trust "shall not include . . . 'shelter' . . . provided by or under any [p]ublic [a]ssistance unless the Trustee, in [his] sole and absolute discretion, deems the level or quality thereof to be inadequate or not available to Lisa." (Capitalization omitted.) Gail further points to section 3.5.2, which notes that "the Trustor only intends to supplement the [p]ublic [a]ssistance to which Lisa would be entitled if Lisa's trust did not exist and not to provide for Lisa's basic needs such as . . . shelter." (Capitalization omitted.)
This argument again fails to construe the trust's provisions "in relation to each other" in a manner that "form[s] a consistent whole." (Blech, supra, 25 Cal.App.5th at p. 1001.) The trust repeatedly and expressly states that the dual objectives of the special needs trust are to (1) avoid negatively affecting Lisa's eligibility for any and all public benefits for which she might otherwise qualify, and (2) help her achieve the highest possible quality of life in all respects. It lists several specific quality of life goals for Lisa's special needs trust, including "liv[ing] in a clean and safe environment and as independently as possible."
For example, section 3.5.6 ("No Portion Used to Supplant, Replace[,] Reduce or Diminish Public Assistance") provides that "it being Trustor's intent that none of such income or principal be considered to be available to Lisa for the purposes of determining Lisa's eligibility for [p]ublic [a]ssistance. Accordingly, the Trustee is not authorized, directed, or required to pay any of the net income or principal of Lisa's Trust to Lisa or to apply any of such net income or principal to provide for her basic needs," defined to include shelter. (Capitalization omitted.) Section 3.5.5.3 then provides an "[e]xception[ ]" to the "general . . . guidelines": "Although preserving Lisa's eligibility for [p]ublic [a]ssistance is an important objective of the Trustor, the primary purpose thereof is to provide for Lisa's safety, good health and general welfare. Accordingly, the Trustee may, in the Trustee's sole and absolute discretion, but shall not be required to distribute net income, principal or both for goods, services or other support, the cost of which would otherwise be defrayed or provided by or under any [p]ublic [a]ssistance program, including but not limited to distributions in purchase of a residence and any costs of any alterations, special equipment and remodeling required to accommodate Lisa's needs or payment of rent, if the Trustee, in the Trustee's sole and absolute discretion, concludes that any consequent net loss in [p]ublic [a]ssistance, whether in whole or in part, temporary or permanent, is outweighed by the additional comfort or well-being resulting to Lisa." (Boldface, capitalization & underlining omitted.)
Understood in this context, the provisions stressing that the special needs trust need not necessarily provide for shelter, yet granting the trustee discretion to use it for this purpose, are best understood as a tool to achieve the dual goals of Lisa's special needs trust—not as contradicting the express terms of section 3.3.1 regarding the Tujunga property.
D. Gail's Arguments Regarding Koide's Testimony and Correspondence Are Without Merit
Gail argues that the court relied on Koide's testimony to "adopt an interpretation of the Trust to which it was not otherwise susceptible." But we conclude above that the trust language is reasonably susceptible only to the trial court's interpretation of the trust. As such, extrinsic evidence need not establish any ambiguity in order for the court's interpretation to be correct. Put differently, the extrinsic evidence need not prove what the trust document already unambiguously says.
Rather, the proper inquiry regarding extrinsic evidence is whether it shows that the circumstances under which the trust was executed render the trust language reasonably susceptible to Gail's proposed interpretation. In this regard, Gail appears to suggest that Koide's 2011 and 2015 letters reveal such a latent ambiguity. Koide's letters use the language " 'distribute' the property 'outright' " to describe specific gifts of the Capistrano and Tujunga properties in proposed drafts of the trust. Gail argues that, in light of this, the trust's use of other language—the phrase " 'allocate . . . to the share apportioned for' "—in addressing the Tujunga and Capistrano properties suggests the trust does not intend an "outright distribution" of those properties. According to Gail, "[h]ad the settlor meant to direct an outright distribution of [these properties,] . . . the instrument would have so stated" using that specific language, and had "Koide intended to draft a provision for outright distribution, he [would have] drafted it" using those terms.
But the 2015 letter itself expressly contradicts Gail's argument by noting that the trust as executed already accomplishes an "outright distribution" of the Capistrano property to Tim, despite not using this exact language. Specifically, in describing the proposed revised version of the trust enclosed, the 2015 letter notes: "[A]s set forth in the original trust instrument, upon your passing, any interest in the Capistrano property and the [Capistrano furnishings] are to be distributed to Tim, outright, if he survives you by at least 30 days." (Italics added.)
More broadly, as Gail herself acknowledges, the intent of the trust's settlor (Gloria)—not the trust's drafter (Koide)—is the proper focus of our inquiry in interpreting trust language. For this reason alone, we disagree that Koide having proposed the language " 'distribute' the property 'outright' "—either before or after the trust was finalized—and then not included it in the final version alone "betrays that the language in the . . . executed version of the trust cannot mean outright distribution." Without evidence as to how the settlor responded to these suggestions, the suggestions themselves cannot shed any light on what the settlor intended in signing a trust containing different language. Gail acknowledges as much by arguing that "one is left to speculate as to whether the matters [Koide] suggests in the various letters to the McGills . . . were understood by Mrs. McGill to mean that paragraph 3.3.2 provides for an outright distribution for Lisa." This disproves, rather than supports, Gail's position.
Gail also argues that Koide's testimony and the related letters he wrote the McGills "leave[ ] the court with conflicting inferences" regarding the trust's language and settlor's intent, because they reflect that "the settlor's original intention as to Capistrano was to distribute it among the four children, [and] that Koide was exploring potential ways to do so in order to avoid property tax reassessment, while avoiding disputes among sibling co-owners." But "[i]n construing the terms of the [t]rust, as noted, we seek to ascertain the [settlor]'s intent by the language of the document as of the time [the settlor] signed it." (Blech, supra, 25 Cal.App.5th at p. 1003, italics added.) Thus, even if we accept Gail's characterization of Koide's testimony about Gloria's "original intent[ ]," Koide also testified that the settlor's ultimate intent with respect to the version of the trust actually executed was to give a specific gift of the Capistrano property to Tim and a specific gift of the Tujunga property to Lisa. That is the intent we must follow. Thus, Koide's testimony does not render the unambiguous trust language discussed above reasonably susceptible to Gail's proposed interpretation.
E. The Trial Court Correctly Concluded the Trust Does Not Require an Appraisal of the Capistrano Property
Gail next argues that whether Tim receives the Capistrano property depends on the property's net fair market value, and thus that the court incorrectly interpreted the trust as not requiring an appraisal of the property. Again, the plain language of the trust is not susceptible to Gail's proposed interpretation. Rather, section 3.3.7 requires an appraisal of the Capistrano property in order to determine what percentage, if any, of the residue Tim should receive, in addition to the Capistrano property and furnishings. Because Tim did not seek any portion of the residue besides the Capistrano property and furnishings, no appraisal is necessary.
Gail relies on language in the trust requiring that Lisa's share of the residue be reduced "to the extent necessary to give effect to the provisions of . . . Section 3.3.7," and argues that, "given the trustee's duty to account to beneficiaries" such as Lisa, "it would seem impossible for the trustee to make such an election [i.e., choosing to forego any portion of the residue] without performing an appraisal." But under the correct interpretation of section 3.3.7, such an appraisal could only result in Tim receiving more from the residue than the Capistrano property and furnishings he has already received. As such, by declining to have the property appraised and declining to seek any assets in the residue besides the Capistrano property and furnishings, Tim could only have increased the size of the other beneficiaries' shares, not decreased them. This does not give rise to a duty to account.
In sum, the trial court correctly concluded that the trust was unambiguous, both on its face and in light of the evidence presented at trial. "We are required to construe the trust so as to give effect to each term it contains; the plain meaning of [sections 3.3.1 and 3.3.7] when construed with the trust instrument as a whole conveys [Gloria's] unambiguous intent" that the Tujunga property and furnishings and Capistrano property and furnishings be distributed as specific gifts to Lisa's special needs trust and Tim, respectively. (See Trolan, supra, 31 Cal.App.5th at p. 950.) The trial court correctly interpreted the trust as requiring such distribution and not requiring Tim to seek an appraisal of the Capistrano property. Accordingly, we affirm.
DISPOSITION
The judgment is affirmed. Respondent is awarded his costs on appeal.
NOT TO BE PUBLISHED.
ROTHSCHILD, P. J. We concur:
CHANEY, J.
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution. --------