Opinion
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County, No. A244725 Marjorie Laird Carter, Judge.
Law Offices of Marc T. Eagan for Petitioner and Appellant.
Leo Pelletier & Wu, Miriam Liu Wu and Ching C. Lim for Objectors and Respondents.
OPINION
O’LEARY, J.
Yen Huang Chang, also known as Michael Yen Chang (hereafter Michael) petitioned for an order confirming a trust, confirming he was the trustee, and confirming the trust assets pursuant to Probate Code sections 17200 and 850. He and his former girlfriend, Betty Ho Rosati (Betty) had executed a one page document entitled, “Living Will of Properties Transferable to Living Trust: Yen Huang Chang (aka Michael Yen Chang) & Betty Ho Rosati 7/01/05.” He asserted the document was a valid trust, he was the trustee, and Betty’s residence was a trust asset. Betty’s siblings objected to the petition. The trial court denied the petition, ruling the document was not a valid trust. We conclude Michael’s appeal challenging the court’s ruling lacks merit, and we affirm the judgment.
We refer to the parties by their first names to avoid confusion. (E.g., In re Marriage of Witherspoon (2007) 155 Cal.App.4th 963, 967, fn. 2 [“We refer to the parties by their first names for clarity and ease of reference, and intend no disrespect”].)
All further statutory references are to the Probate Code.
I
In 1993, Betty executed “The Betty Ho Rosati Living Trust (Trust Agreement)” (hereafter the 1993 Trust). In the first paragraph, she named herself as settlor and trustee. She appointed her sister, Mona Lu (Mona), to be her successor trustee. Her brother, Wei-Shih Ho (Wei-Shih) and her other sister, Mang-Ping Chang (Mang-Ping), were named as second and third successor trustees. The 1993 Trust provided that upon the settlor’s death, the assets would be equally divided among six beneficiaries, including her three siblings and two step-children, Linda Kay Rosati (Linda) and Anthony Victor Rosati (Anthony). The 15-page document contained many provisions typically found in revocable trusts such as a list of the trustee’s administrative powers and duties, perpetuities saving clause, spendthrift clause, and no contest clause. The trust stated all the assets described in “Schedule A” were transferred to the trust estate. Schedule A listed real property on Spring Street in the City of Walnut, California (the Walnut residence), real property on Village Drive in the City of Cerritos, California, and a 20 percent interest in real property located on Northview Drive in Walnut.
Three years later, in 1996, Betty met Michael and they lived together in the Walnut residence. In 1999, Michael purchased and gave Betty an engagement ring on her birthday. A few years later, Michael purchased a house in Fullerton (the Fullerton residence) and moved there with Betty. The grant deed recorded in December 2001, listed the owner as “Yen-Huang Chang, a Single Man.”
On February 27, 2003, Betty recorded a grant deed transferring the Walnut residence from her trust to herself. She refinanced the property in October 2003. The 2003 grant deed listed the owner as “Betty Ho Rosati, a widow.”
In 2005, Michael and Betty executed a document entitled, “Living Will of Properties Transferable to Living Trust: Yen Huang Chang (aka Michael Yen Chang) & Betty Ho Rosati 7/01/05” (hereafter the Document). Unlike Betty’s first trust, the Document contained many spelling and grammatical mistakes and it was evidently prepared and generated by the parties on their home computer. The text was confined to a single page and was printed in “landscape” mode to accommodate a large table graph containing 3 rows and 8 columns at the top of the page.
The first row of the table concerned Michael’s Fullerton residence. It provided “property ownership” was “actual” and “recorded” “100 [percent]” to Michael. It described the property as a single family home and listed the address. The last three columns of this row all related to designating who stood in line to inherit the Fullerton residence: The first column contained the words “Will to: (Upon Death of [Michael])” Betty “100 [percent].” The next stated, “Will to: (Upon Death of [Betty])” Michael “100 [percent].” And the final column noted, “Will to: (Upon death simultaneously)” Michael’s “heirs 100 [percent].”
The second row concerned Betty’s Walnut residence. Like Michael’s row, the table showed the single family home was owned and recorded in Betty’s name “100 [percent].” The final three columns noted the death designations were as follows: “Will to” 100 percent to Betty if Michael dies first. “Will to” 100 percent to Michael if Betty dies first. “Will to: (upon death simultaneously)” to Betty’s heirs 100 percent.
Immediately underneath the table, were the words, “Appendix to: Living Will of Properties Transferable to Living Trust: Yen Huang Chang (aka Michael Yen Chang) & Betty Ho Rosati 7/01/05.” The first topic of the “Appendix” was entitled “Calculation Basis” and showed the market value of each property, the current mortgage loan amounts, and that the Fullerton residence had more equity. Specifically, the Fullerton residence had a market value of $800,000, a $300,000 mortgage loan, and therefore “values Betty to receive upon [Michael’s]’ death” was $500,000. The Walnut residence had a market value of $500,000, a $200,000 mortgage loan, and therefore “values Michael to receive upon [Betty’s] death” was $300,000.
Following the “Calculation Basis” was a section simply titled, “Note” followed by ten sentences numbered 1 through 10. The “Note” section provided the following information:
“1: As the loan is paid-off, [v]alues Betty to [r]eceive [sic] becomes... $800,000; for Michael... $500,000.
“2: Property receiver shall assume all loan and liability if present.
“3: As of today, the identifiable [Michael’s] heirs are: [lists 6 names].
“4: As of today, the identifiable Betty’s heirs are: Betty’s one [b]rother, 3 [s]isters and 2 step children [and] Michael Chang.
“5: If [Michael’s] death occurs earlier, Louis Chang and Rhonda Kinoshita are the designated “WILL EXECUTOR[.]”
“6: If [Betty’s] death occurs earlier, Betty’s [b]rother and Michael... are the designated “WILL EXECUTOR[.]”
“7: If [b]oth [Michael and Betty] death occurs [sic] simultaneously, the surviving executors listed bove [sic] are the designated “WILL EXECUTOR[.]
“8: At each party’s discretion, each party may give the other party portion [sic] of the properties/estates (share as part of [Michael’s] heirs or share as part [sic] [Betty’s] heirs) for any other estates unaffected by the above. [¶] Each party’s unique conditions will determine this discretion.
“9: This is a living will (living trust), the above can be altered at any time by any part. Prior to any alteration, [i]t is preferable that the changes are discussed. At a very minimum, one party shall notify the other party of any change affecting the above living will[.]
“10: The purpose to set up the living trust and living will is to avoid probation [sic] and seek fairness. [¶] This living trust will serve very well with accidental death. The living will also seeks mutual insurance for Michael and Betty. [¶] To preserfve [sic] the fairness, neither party shall alter the above during terminal ill [sic], knowledge of terminal ill [sic], heavy sickness, or knowledge or sense of death approaching.”
Above the parties’ signatures was the statement, “We, [Michael and Betty], being of sound mind and body do hereby declare this document as above [sic] dated 7/1/05 to be valid.”
Thereafter, title to the Fullerton and Walnut residences were not changed. In August 2005, Betty purchased an engagement ring for Michael and gave it to him on his birthday.
Approximately one year later, in December 2006, Betty moved out of the Fullerton residence and went to live with her mother in Walnut, California. The parties dispute why the couple separated, but because the reason is irrelevant to resolution of this appeal, we need not belabor the point.
At some point Betty began undergoing chemotherapy for cancer. In January 2007, she showed the Document to her siblings. Mona recalled being very surprised when she saw the Document and told Betty it was all in Michael’s favor.
Betty asked her brother to draft a declaration to void the Document, which she executed on January 26, 2007, in the presence of her three siblings. It contained one sentence: “I, Betty Ho Rosati, under clear conscious, [sic] sound mind, and without any pressure, declare that a private document-Living Will of Properties Transferable to Living Trust: Yen Huang Chang (aka Michael Yen Chang) & Betty Ho Rosati 7/01/05-signed by me on July 1, 2005, in its entirety is void and invalid.”
A few days later, on January 29, 2007, Betty executed a seven-page “Last Will of Betty Ho Rosati.” She stated, “I hereby revoke all my previous wills, and I specifically revoke the living will of properties signed by and between [Michael and Betty] dated July 1, 2005. A copy of that agreement is attached to this Will.” On January 31, 2007, Betty executed an [a]mendment to her trust appointing Mona and Wei-Shih as successor co-trustees of the trust and dividing the trust estate in equal shares to her siblings. Betty executed a grant deed, transferring the Walnut residence back into her 1993 trust. In early February, Betty was admitted to a hospice facility and she passed away on February 14, 2007. Michael testified he was unaware of the revocation declaration or Betty’s execution of subsequent will and trust documents.
After considering the parties’ evidence and argument, the trial court concluded the Document was not a trust and it denied Michael’s petition to confirm the trust and its assets. The court based its ruling on several findings. First, the court determined the Document did not list any trustors. It concluded the word “transferable” in the titled implied the properties were merely transferable but had not actually been transferred. There was no reference to Betty or Michael as trustors, or language indicating an intent to transfer their property to the trust. Second, the court noted the Document failed to name any trustees. And finally, the court determined the beneficiary designation was missing. The court concluded the Document indicated an intention to do something with the property, but it did not actually create a trust.
II
Michael asserts the trust “may have been unartfully written” but no particular language is necessary when the parties’ intent to create a trust is clear. He points out the Document stated in several places it was a trust. He notes the properties to be put into the trust were clearly identified. The legitimate purpose of the trust was also plainly stated. He adds the beneficiaries were clearly designated as himself and Betty, and upon their simultaneous death, there was a list of heirs. Finally, he argues there is no requirement the settlor or trustee execute a separate document, such as a deed, to convey real property to the trust. (Estate of Heggstad (1993) 16 Cal.App.4th 943, 948 (Heggstad).) There is also no requirement that a trustee be named. (Id. at p. 949.)
We agree with the court’s conclusion the Document did not create a valid trust. “To create an express trust there must be a competent trustor, trust intent, trust property, trust purpose, and a beneficiary. (... §§ 15201-15205; Walton v. City of Red Bluff (1991) 2 Cal.App.4th 117, 124.) The settlor can manifest his intention to create a trust in his property either by: (a) declaring himself trustee of the property or (b) transferring the property to another as trustee for some other person, by deed or other inter vivos transfer or by will. [Citations.] [¶] These two methods for creating a trust are codified in 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.2d 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.)” (Heggstad, supra, 16 Cal.App.4th at pp. 947-948.) The question of whether a trust conforms to statutory requirements is a question of law subject to de novo review. (Harustak v. Wilkins (2000) 84 Cal.App.4th 208, 212-213.)
We find the Heggstad case instructive. In that case, decedent executed a revocable living trust naming himself as trustee and identifying various items of trust property on an attached schedule but did not execute or record a deed conveying a piece of real property to himself as trustee. (Heggstad, supra, 16 Cal.App.4th at p. 946.) Decedent later married but failed to provide for his spouse. During probate, the successor trustee petitioned for instructions regarding disposition of the real property. The court held the trust document was sufficient to create a trust in the real property. (Id. at p. 950.)
In reaching this conclusion, the Heggstad court relied on several respected legal treatises, including the Restatement Second of Trusts: “These authorities provide abundant support for our conclusion that a written declaration of trust by the owner of real property, in which he names himself trustee, is sufficient to create a trust in that property, and that the law does not require a separate deed transferring the property to the trust.” (Heggstad, supra, 16 Cal.App.4th at p. 950, fn. omitted.) However, the court also cautioned, “We hasten to note, however, that to be effective as to strangers, the declaration of trust must be recorded.” (Id. at p. 950, fn. 7.)
The court in the Heggstad case explained, “Illustration ‘1’ of section 17 of the Restatement Second of Trusts is instructive. It reads: ‘A, the owner of a bond, declares himself trustee of the bond for designated beneficiaries. A is the trustee of the bond for the beneficiaries. [¶] 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.” (Italics added.)” (Heggstad, supra, 16 Cal.App.4th at pp. 948-949.)
The court noted this legal concept is approved of in other legal treatises. “Bogert, in his treatise on trusts and trustees observes: ‘Declaration of Trust [¶] 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.)” (Heggstad, supra, 16 Cal.App.4th at pp. 949-950.)
We conclude the legal principles articulated in the Heggstad case are inapplicable here. Michael is not the sole settlor/trustor of the written declaration of trust, he is not the sole owner of both pieces of real property purportedly transferred to the trust, and he was not designated the sole trustee. Indeed, the Document is silent as to whether the parties intended one or both of the settlors to act as the trust’s trustee.
The holding of Heggstad is limited to cases where the settlor, trustor, and trustee are all the same person. In those cases, the property owner need not record a new grant deed because no new property interest passes between the settlor/trustor and trustee of the trust. (Heggstad, supra, 16 Cal.App.4th at pp. 950-951.) This rationale does not logically extend to Michael and Betty, who were unmarried property owners, each having a separate property interest in the real property. To create a joint trust holding the two intended real property assets, Michael and Betty were required to actually transfer and record title to the property in the name of the trustee of the trust. Here, it appears the purported settlors retained title and right of control over their respective properties, having no intent to immediately transfer title to a trustee.
The court noted the Document’s failure to name any trustee was problematic. Contrary to Michael’s contention, the court’s statement is correct. True, there is case law holding the designation of trustee ordinarily is not essential because the court may appoint one. (13 Witkin, Summary of Cal. Law (2005 10th ed.) Trusts, § 27, p. 599.) However, for an effective declaration of trust, as described in the Heggstad case, the owner of the property must be both the trustor and trustee since no new property interest passes to the trustee. (Heggstad, supra, 16 Cal.App.4th at pp. 948-949.) To the extent Michael was asserting he created a declaration of trust like in Heggstad, the Document does not reflect he (as opposed to Betty) was the named trustee. The omission of a trustee designation, naming himself, defeats his claim.
Stated another way, an express trust can be created in one of two ways: (1) a declaration of trust (see Heggstad), or (2) a transfer in trust to another as trustee for a beneficiary (see 13 Witkin, Summary of Cal. Law (2005 10th ed.) Trusts, § 25, p. 596). Michael, the sole owner of the Fullerton residence, could certainly declare a trust as was done in Heggstad, by executing an instrument conveying the Fullerton property to himself as trustee for named beneficiaries. However, in this case Michael declared a joint trust with Betty. He testified it was their intent to avoid probate and to transfer in trust the properties to each other, or their heirs if they both died simultaneously. However, to create a transfer in trust there “must be an effective conveyance” of the property “either by deed or other transfer inter vivos, or by will.” (13 Witkin, Summary of Cal. Law (2005 10th ed.) Trusts, § 25, pp. 596-597.) None of these kinds of transfers occurred. Michael does not suggest how he could convey a new property interest to Betty via the trust without first recording a new grant deed transferring his property interest in the Fullerton residence to the trust’s trustee. Likewise he offers no legal basis to hold Betty conveyed a new property interest to him without first conveying title to the trust.
We note the property owner in Heggstad clearly declared his intention that he owned the property and held the property as trustee for named beneficiaries. The trust document in that case clearly 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 described in Schedule A attached to this instrument.’” (Heggstad, supra, 16 Cal.App.4th at p. 947.) In this case, as noted by the trial court, the title of the Document refers to “Properties Transferable” to a trust. There is no language clearly stating, or implying, the property owners intended to presently create the trust.
Michael notes the phrase “living trust” is used throughout the Document proving it was intended to be a trust. Not so. In the Document, the phrase “living trust” is used interchangeably and often in combination with the phrase “living will” which confuses rather than clarifies matters. Generally, the term “living will” refers to medical directives, typically used by persons who do not wish to be kept alive by artificial means or heroic measures. (See e.g., Bartling v. Glendale Adventist Medical Center (1986) 184 Cal.App.3d 97, 100 [doctors fail to follow “living will” patient prepared with counsel stating his desire to be relieved from his ventilator and to die a natural and dignified death].) Trust documents are typically entitled “revocable living trusts” or “irrevocable trusts” not “living wills.”
Ironically, the Document calls itself a “living trust” but specifies there is no transfer of property until someone dies. No property is designated to be held in trust for beneficiaries during the life of the settlors. This final observation leads us directly to the final fatal defect with the Document-it fails to make a present disposition of property. A trust takes effect when it is executed. Therefore, “To create an express trust, there must be an actual conveyance or transfer of property to the trustee, by which the settlor is divested of either the legal or equitable ownership, or both, and the legal title rests in the trustee [citation]. There must be a present disposition of property [citation]. The beneficiary does not need to have a present right of enjoyment but some interest must presently vest [citation].” (60 Cal.Jur.3d (2005) Trusts, Summary, p. 67.)
It is well settled that “‘it is essential to the creation of a valid express trust that some estate or interest should be conveyed to the trustee and, when the instrument creating the trust is other than a will, that such estate or interest must pass immediately, although the enjoyment [to the beneficiaries] may commence in the future. The transfer may be of a future interest. [Citations.]... “(b)y such a trust, therefore, something of the [settlor’s] estate has passed from him and into the trustee for the benefit of the [beneficiaries], and this transfer of interest is a present one and in nowise dependent upon the [settlor’s] death.” [Citation.] [¶] “If, however, a trust is the instrumentality for making a testamentary disposition of property, the document creating the trust must comply with the requirements prescribed for the making of wills. [Citation.]” (Cohen v. Meyers (1970) 6 Cal.App.3d 878, 881.) The trial court recognized this defect, stating “we don’t have beneficiaries during this living trust, if that’s what it is. We have who it goes to upon the death of one or the other or both....” Michael misconstrues this statement, boldly arguing the court erred in holding the Document failed to name beneficiaries. No, the court concluded the Document failed to make a present disposition of property to be held in trust for the beneficiaries before the settlors’ deaths.
III
Based on our ruling, affirming the court’s conclusion the Document failed to create a valid trust, we need not address Michael’s claims relating to Betty’s attempts to revoke the Document during her terminal illness. Likewise, we need not address his contention Betty failed to comply with the notification requirements, or his assertion Betty’s siblings are estopped from claiming the trust was revoked.
IV
Michael presents an alternative argument on appeal, claiming the Document is an enforceable promise to create a trust. This theory is new on appeal. We recognize the trial court briefly commented it could be an alternative theory, but the court also specifically noted the issue was not property before it, stating, “nobody said it was a contract” at trial. Michael filed a petition to confirm a trust, not a contract action. His evidence centered on proving the Document was in fact a trust.
Generally, issues not presented to the trial court are waived on appeal. (Royster v. Montanez (1982) 134 Cal.App.3d 362, 366-367.) Nor are “parties... permitted to ‘“adopt a new and different theory on appeal. To permit [them] to do so would not only be unfair to the trial court, but manifestly unjust to the opposing litigant.” [Citations.]’ [Citations.] Only when the issue presented involves purely a legal question, on an uncontroverted record and requires no factual determinations, is it appropriate to address new theories.” (Mattco Forge, Inc. v. Arthur Young & Co. (1997) 52 Cal.App.4th 820, 847.) Here, the new issues raised by Michael would require the application of contract law to a record devoid of facts, disputed or undisputed, pertinent to such determinations. For reasons of fairness and the policies governing appellate review we conclude the issue is waived.
V
The judgment is affirmed. Respondents shall recover their costs on appeal.
WE CONCUR: BEDSWORTH, ACTING P. J., ARONSON, J.