Opinion
G056961
02-28-2020
CHARMAINE MAY B. VALERO MURRAY, Plaintiff and Appellant, v. DUANE REED MURRAY, as Trustee Defendant and Respondent.
Patterson Law Firm, Michelyn R. Miller, and Ilian Alchehayed for Plaintiff and Appellant. Heritage Law and Erik E. Woodbury; John L. Dodd & Associates and John L. Dodd for Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2015-00791728) OPINION Appeal from an order of the Superior Court of Orange County, Jacki C. Brown, Judge. Reversed and remanded with instructions. Patterson Law Firm, Michelyn R. Miller, and Ilian Alchehayed for Plaintiff and Appellant. Heritage Law and Erik E. Woodbury; John L. Dodd & Associates and John L. Dodd for Defendant and Respondent.
Charmaine May B. Valero Murray and Donald Murray were married at the time of his death in January 2015. The bulk of Donald's assets were held in a revocable trust for his two children that predated his marriage to Charmaine and was never amended to include her. Following his death, the trial court determined Charmaine an omitted spouse. She later asserted an interest in the trust's assets. The court held Charmaine was not entitled to share in the trust proceeds. This was error. An omitted spouse is entitled to share in revocable trust proceeds, pursuant to Probate Code section 21600 et seq. We reverse the order and remand the matter for further proceedings consistent with this opinion.
We refer to the parties by their first names for the sake of clarity and intend no disrespect.
All further statutory references are to the Probate Code.
FACTS
I. Underlying Facts
Donald and his first wife, Barbara Ann Murray, created the Murray Family Trust (trust) in 1988, amending the trust in August 2009. The trust included the family residence in Anaheim, as well as "vehicles, boats and other known tangible property."
The trust was revocable. It provided, "[o]n the death of the Deceased Spouse, the Surviving Spouse shall have the power to amend, revoke or terminate the Trust. On revocation or termination of the Trust, all its assets shall be delivered to the Surviving Spouse." Donald did not make any changes to the trust after Barbara's death. The trust further stated, "[o]n the death of the Surviving Spouse, no trust created herein may be amended, revoked or terminated."
Charmaine was hired by Donald and Barbara to provide Barbara with hospice care. Barbara passed away in November 2009. In or about January 2010, Donald hired Charmaine "to be his primary caregiver." Donald and Charmaine married in April 2011. The day before the wedding, the couple entered into a prenuptial agreement, which listed Charmaine's and Donald's separate property. The Anaheim property and all other financial accounts were specified as Donald's separate property "and constituted assets of the [trust]." Donald executed an amendment to the trust in April 2010, naming his son Duane Murray as co-trustee.
During Donald and Charmaine's marriage, Donald "changed the beneficiary designation to his Merrill Lynch investment accounts and accounts . . . at Chase Bank," making Charmaine the beneficiary upon his death. Then, in August 2014, Donald "executed a document purporting to revoke" the prenuptial agreement. Donald passed away in January 2015.
Charmaine is not a named beneficiary of the trust, but the trust also does not exclude her. Donald executed all trust documents prior to marrying Charmaine; he prepared no testamentary documents after marrying her.
II. Procedural History
After Donald's passing, Charmaine filed a petition to be determined his omitted spouse. Trial judge David L. Belz determined Charmaine an omitted spouse (2017 order). To support its determination, the court stated, "The [c]ourt struggles with this [issue] a bit because there were transfers to Charmaine prior to the revocation of the prenuptial - the IRA was transferred to her in a fairly sizable amount of money. But the [c]ourt doesn't really understand what Don[ald]'s thinking was, and he was a private guy, and he didn't share his thoughts. So the [c]ourt doesn't really know what his intention was. [¶] The fact that he purchased a house with Charmaine after the revocation of the prenuptial agreement also raises questions in the [c]ourt's view of the facts in this case because the [c]ourt - that particular act essentially could say any number of different things. It could say that this marriage was doing well, and he basically wanted to make her a full party in the estate. [¶] But the [c]ourt doesn't really know what it was that he was thinking when he did the other things that he did - in this case, purchase the house after he revoked the prenuptial. By revoking the prenup, he basically said we're going to share in the estate. So the [c]ourt looked at [section] 21611, and it just isn't clear to the [c]ourt on the . . . aspect of the intent. Because when he revoked the prenuptial, he understood that there would be legal consequences. But the [c]ourt doesn't really understand what his intent was. [¶] Part of the problem the [c]ourt has is that it just doesn't have information to understand what his intent was and that as to whether or not he really intended that Charmaine would or would not be included in the estate." Ultimately, it concluded, "there was insufficient evidence for the [c]ourt to make findings that the purchase of the Fullerton house or the transfer of the Merrill Lynch account was made to provide for Charmaine by transfer of the estate such to bring [section] 21611[, subdivision (b)] into play here. The evidence just was not sufficient for the [c]ourt to make those findings."
The trial court also denied Charmaine's request to be included as a trust beneficiary, but ordered "one-third of [Donald's] separate property shall be distributed to [Charmaine]." It further specified, "[t]he [c]ourt does not address whether Duane . . . is to divide the assets of the Murray Family Trust."
In October 2017, Charmaine filed a petition to compel distribution from the trust, asserting her one-third share of Donald's separate property contained in the trust. Trial judge Jacki C. Brown purported to grant the petition in part, but only awarded Charmaine "[c]ertain assets . . . found to be Donald's property separate from his family trust" and denied a request to value those assets. The court reasoned as follows: "In ruling on Charmaine's latest petition, this [c]ourt determined that Judge Belz's [2017 order] must be respected and obeyed as consistently as possible. Charmaine's attorney argued that everything was Donald's separate property for purposes of this division, including all trust assets, except for the community property which Charmaine had already acquired upon Donald's death. Duane's counsel countered with the argument that [the 2017 order] meant that Donald's separate property was those assets separate from the trust and not designated to pass in some other way. In other words, Judge Belz was 'crafting' a compensation plan that preserves the trust and Donald's testamentary plan yet provides the omitted spouse with provisions, consistent with . . . section 21612, subdivision (b), although [Judge] Belz had rejected a plan under section 21612, subdivision (a)(2). Because [Judge] Belz had denied the request to 'breach' or modify the trust, Duane argued, he had to have meant Charmaine deserved to receive the benefit of assets either acquired or titled outside the trust. [¶] This [c]ourt agrees with Duane's interpretation of [Judge] Belz's ruling. Having crafted a disposition under . . . section 21612, subdivision (b), he desired to accord Charmaine with a one-third interest in assets 'separate' from the trust, which contained all assets Donald and Barbara had acquired and which were always intended for their two children, Duane and his sister."
DISCUSSION
Charmaine contends the court erred by determining she was not entitled to share the trust proceeds as part of Donald's separate property. We agree.
I. Res Judicata
Duane contends Charmaine's appeal from the 2018 order is barred by the 2017 order and the doctrine of collateral estoppel. Not so.
'"[A] former judgment . . . is a collateral estoppel on issues which were raised, even though some factual matters or legal arguments which could have been presented were not.' [Citation.]" (Interinsurance Exchange of the Auto. Club v. Superior Court (1989) 209 Cal.App.3d 177, 181.) This applies in probate cases. (Murphy v. Murphy (2008) 164 Cal.App.4th 376, 403-404.) The trial judge's opinion in the prior case is relevant to explain the scope of the judgment. (McClain v. Rush (1989) 216 Cal.App.3d 18, 28.)
During the 2017 trial, Judge Belz did not receive evidence on Donald's total assets, because the issue before the court was whether Charmaine was an omitted spouse and, if so, what her share in the estate would be. Judge Belz determined Charmaine qualified as an omitted spouse and therefore was entitled to one-third of Donald's separate property. Judge Belz specifically stated "[t]he [c]ourt does not address whether Duane . . . is to divide the assets of the Murray Family Trust." Based on the 2017 order, it was clear the court anticipated an additional petition for Charmaine to ascertain the size of the estate and what, if anything, she was entitled to. That is precisely what happened. The subsequent 2018 order determined trust assets should not be divided. There was no collateral estoppel.
II. Omitted Spouse's Ability to Share Trust Assets
Charmaine contends she is entitled to one-third of the trust assets as an omitted spouse, because they constituted Donald's separate property. We agree.
Section 21610 provides, in relevant part: "Except as provided in [s]ection 21611, if a decedent fails to provide in a testamentary instrument for the decedent's surviving spouse who married the decedent after the execution of all of the decedent's testamentary instruments, the omitted spouse shall receive a share in the decedent's estate, consisting of [¶] . .. [¶] (c) [a] share of the separate property of the decedent equal in value to that which the spouse would have received if the decedent had died without having executed a testamentary instrument . . . . " Section 21601, subdivision (a), defines "'decedent's testamentary instruments'" as "the decedent's will or revocable trust." Section 21601, subdivision (b), defines "'[e]state'" as "a decedent's probate estate and all property held in any revocable trust that becomes irrevocable on the death of the decedent."
Section 21600 is clear, "[t]his part shall apply to property passing by will through a decedent's estate or by a trust . . . that becomes irrevocable only on the death of the settlor." Pursuant to section 21612, subdivision (a), an omitted spouse's share is first satisfied by that portion of "decedent's estate not disposed of by will or trust, if any" and then if that is insufficient, "from all beneficiaries of decedent's testamentary instruments in proportion to the value they may respectively receive. The proportion of each beneficiary's share that may be taken pursuant to this subdivision shall be determined based on values as of the date of the decedent's death."
Duane contends all of Donald's assets upon death comprised his estate. He asserts the total estate appeared to be worth more than $1 million. This included trust assets ($991,407), a Merrill Lynch account ($360,000), a Chase account held jointly with Charmaine ($180,000), other stock accounts ($27,000), and Bank of America accounts ($7,000.00). Charmaine was named as a beneficiary on the Merrill Lynch account. She also was the beneficiary on the joint Chase account. The parties agree the Merrill Lynch and Chase accounts passed to Charmaine as either an account holder or beneficiary upon Donald's death and accordingly, did not pass through his estate. Charmaine also acquired title to a house in Fullerton purchased by Donald for her a month before his death, which also did not pass through the estate.
Judge Brown noted in her 2018 order that the Merrill Lynch account was valued at between $160,000 to $360,000. She also remarked, "it was most definitively referred to as having a value of approximately $360,000." We adopt this value for the sake of our argument, as the lower figures likely represented amounts after Donald's death, and section 21612 requires a valuation at the time of death. --------
The 2017 order determined there was "insufficient evidence for the [trial c]ourt to make findings that the purchase of the Fullerton house or the transfer of the Merrill Lynch account was made to provide for Charmaine by transfer of the estate such to bring [section] 21611[, subdisivion (b)] into play here." While we may disagree with the trial court's conclusion, the parties agree the 2017 order was not appealed from. (See Estate of Shannon (1990) 224 Cal.App.3d 1148, 1150 [order on petition for determination of omitted spouse appealable].) We may not overturn that decision.
Duane's argument that Donald's estate includes all of his assets upon death is undermined by the precise statutory definition of an "estate" for purposes of determining an omitted spouse's share. (§ 21601, subd. (b).) Section 21601, subdivision (b), does not include the calculation of non-probate assets, which were included by Duane. With the 2017 order finding that Charmaine was an omitted spouse, from which Duane did not appeal, pursuant to section 21610, she was to "receive a share in the decedent's estate, consisting of the following property in said estate . . . . (c) a share of the separate property of the decedent equal in value to that which the spouse would have received if the decedent" died intestate.
Section 21610 provides where a spouse is omitted, they are to receive an intestate share of those assets that pass by will, pass by intestacy, or are part of a revocable trust that becomes irrevocable. As applied to this case, Charmaine is entitled to one-third of the total assets that either pass by will or by a trust that becomes irrevocable upon the death of the decedent. An asset that is not contained within the trust and which does not pass by probate is by definition not part of the estate. A jointly titled account, such as the Chase account, automatically transfers property outside of probate, as upon the death of either party ownership passes to the survivor. (§ 5203, subd. (a)(1).) Similarly, a named beneficiary on accounts, such as the Merrill Lynch account, pass outside of probate at death pursuant to a written instrument. (§ 5000.) Therefore, the assets Charmaine already received are not included in the calculation of what constitutes one-third of the separate property estate.
Duane concedes the Chase account was a joint account and Charmaine was a named beneficiary on the Merrill Lynch account. As such, both assets transferred to Charmaine upon Donald's death. The accounts were non-probate assets and did not pass via Donald's estate. Neither the Chase account nor the Merrill Lynch account should be included in the calculation determining Charmaine's omitted spouse share.
Accordingly, the assets remaining for Charmaine to receive her omitted spouse share are those separate property assets belonging to Donald, including those contained within his trust. Duane's accounting identified $991,407.09 in trust assets. The 2018 order also identified a Putnum account worth approximately $15,000, Boeing stocks worth approximately $12,000, a 2010 Chevrolet Camaro that was not valued, and two Bank of America accounts holding a total of approximately $7,000. Charmaine is entitled to receive one-third of each of these assets.
DISPOSITION
The 2018 order is reversed. The matter is remanded to the trial court with instructions to set a value on all non-trust assets, including the Putnum account, Boeing stocks, a 2010 Chevrolet Camaro, and two Bank of America accounts. Once the valuation is complete, the court shall enter judgment in favor of Charmaine of one-third of the trust, as well as one-third of the valued assets listed above. Charmaine is entitled to her costs on appeal.
O'LEARY, P. J. WE CONCUR: BEDSWORTH, J. ARONSON, J.