Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Kern County. No. PB-55099 Louie L. Vega, Judge.
Dake, Braun & Monje and Craig N. Braun for Defendants and Appellants.
Hulsy & Hulsy Law Offices and James R. Hulsy for Plaintiff and Respondent, Ede-Ann Walters.
Law Office of Gerald H. Oldfield and Gary H. Oldfield for Plaintiff and Respondent, Harry Geyer III.
OPINION
Poochigian, J.
INTRODUCTION
Kern County residents Edith G. and Casper S. McDonald were married in December 1959. Each spouse had two children from prior relationships. Plaintiffs, Ede-Ann Walters (Walters) and Harry Geyer III (Geyer), were children of Edith and defendants, Valerie Napier (Napier) and Gail Pedersen (Pedersen), were children of Casper. Edith died in 1985 and Casper died in 2004, never having remarried. Edith and Casper executed a living trust in 1983. The trust created separate A and B subtrusts. “Trust A” included the couple’s community property, including their residence. “Trust B” consisted of Edith’s separate property. Defendants and plaintiffs were named as successor trustees of the living trust and signed the trust instrument as “successor trustees.”
The trust provided that after the death of either trustor, the surviving trustor could revoke any portion of the trust agreement as to an undivided one-half interest therein by filing a written instrument with the trustees. Before Casper’s death, he borrowed money against the residence via a home equity line of credit. The line of credit had a limit of $168,000. Casper borrowed about $115,205 on the line of credit and deposited the funds in two bank accounts and one credit union account, which he and his daughters held jointly.
Following Casper’s death, Pedersen assumed possession of the accounts and divided the proceeds with her sister, Napier. The trial court held the funds in the joint accounts were trust assets, that the creation of the accounts contravened the express method of modifying the trust, and that Pedersen’s accounting was incomplete because it did not include the $115,205 in funds that Casper had drawn on the line of credit secured by trust real property.
STATEMENT OF THE CASE
On May 9, 2007, Walters filed a petition in superior court for an order for sanctions and surcharge for successor cotrustees’ failure to file a court-ordered account and report (Prob. Code, § 17200, subd. (b)(7)).
On June 14, 2007, Napier filed verified written objections to the petition.
On July 24, 2007, Napier filed a trust accounting with the court. The accounting showed total charges and credits of $330,299.95.
On May 20, 2008, the court conducted a contested hearing on the petition and objections.
On August 7, 2008, the court filed a detailed minute order concluding the joint bank account contravened the expressed method for modifying the trust and, therefore, the funds in the account remained an asset of the trust because of the way they originated. The court ordered Napier to bear her own attorney fees and awarded attorney fees and costs to Walters.
On October 29, 2008, Walters filed a formal order after the hearing on petition noting “the total of the joint accounts ordered to be trust assets is the sum of $115,205.11 as of date of death on November 4, 2004 together with interest at the legal rate.”
On December 2, 2008, the court filed an order for $15,424.20 in attorney fees and $493.94 in costs and judgment in favor of Walters and against Napier and Pedersen.
On January 21, 2009, Napier and Pedersen filed a notice of appeal from the order entered on August 7, 2008.
Probate Code section 1304 states in pertinent part:
STATEMENT OF FACTS
A. Facts elicited from trust documents and pleadings
Trustors, Edith G. McDonald and Casper S. McDonald, were married on December 20, 1959. Each had children by prior relationships. Defendants Napier and Pederson were the children of Casper. Plaintiffs Walters and Geyer were the children of Edith. On July 29, 1983, Casper and Edith executed the “Living Trust of Casper S. McDonald and Edith G. McDonald.” They recorded the document on November 9, 1983 (book 5604, page 1359, Official Records of Kern County).
The trust agreement established two subtrusts, Trust A and Trust B. The trustors funded Trust A with marketable securities, bonds, stock in the closely held corporation C.S. McDonald, Inc., life insurance, insured deferred annuities, open accounts, savings accounts, checking accounts, and the trustors’ community property personal residence on Silver Drive in Bakersfield (assessor’s parcel number 436-132-09-00-0). The trustors funded Trust B with Edith’s separate property, consisting of marketable securities, cash, checking accounts, bonds, and an individual retirement account.
The trustors designated themselves as initial trustees of the living trust, the surviving trustor as the sole trustee of the living trust, and the four children as “Successor Trustees” of the living trust. Casper and Edith executed the trust agreement as trustors and trustees and the four children executed the trust agreement as successor trustees. The agreement required the trustees to hold, manage, and distribute the trust estate according to the terms of the agreement. During the joint lifetime of the trustors, the agreement directed the distribution of all of the net income to Casper and Edith as beneficiaries of the trust. In the event the net income was insufficient to properly support or maintain the beneficiaries, the trustees were authorized to use the corpus of the trust estate for such purpose.
The agreement provided that upon the death, resignation, or incapacity of both trustors, then Napier (followed by Pedersen) would succeed as trustee to all of Casper’s interest in Trust A and Walters (followed by Geyer) would succeed as trustee to all of Edith’s interest in Trust A and Trust B.
The trust set forth several alternative distribution scenarios, dependent upon the sequence of the demise of the trustors. Edith passed away in 1985, and the trust agreement provided that all of her interest in Trust A would “remain therein” and continue for the use and benefit of Casper. The agreement further provided that all of Casper’s interest in Trust A would be “forthwith” distributed to the four children in equal shares and all of Casper’s personal effects were to be distributed to Pedersen’s son, Richard Belcher, Jr. Upon Casper’s death, all of Edith’s interest in Trust A would be distributed to the four children in equal shares. Further, all property in Trust B would forthwith be distributed to Walters and Geyer in equal shares.
We question the phraseology of Article Third, Section 2. Although the article is nominally titled “Provisions Effective Upon Death of Original Trustors,” it also includes a number of provisions relating to the support and maintenance of the surviving trustor. Section 2 of Article Third of the trust agreement governed Casper’s interest in Trust A “[i]n the event of the death of EDITH G. Mc DONALD prior to or simultaneous with the death of CASPER S. McDONALD.” In this scenario, Casper would have survived Edith and we question whether it was the trustors’ intent that Casper’s interest in Trust A be “forthwith” distributed to the four children and that his personal effects be “forthwith” distributed to Richard Belcher, Jr. Upon the demise of his trustor-spouse, Casper presumably would have retained these trust assets for his use and benefit during the remainder of his life and the ultimate distributions would have taken place upon his passing. The parties on appeal do not indicate whether this anomaly was the intention of the trustors or simply the byproduct of a drafting error or misdescription.
Casper and Edith, as trustors, reserved the right to jointly revoke the trust agreement in whole or in part and, by written instrument filed with the trustees, to alter or divest the interests of beneficiaries, change beneficiaries, and amend the trust without limitation. Section 2 of Article Fourth specifically provided: “Following the death of either Trustor, the surviving Trustor, by written instrument filed with the Trustees, may revoke any part or portion of the trust agreement as to an undivided one-half interest therein.” The trust agreement conferred upon the trustees the power to borrow and pledge and to place encumbrances upon real property.
Edith died on October 28, 1985, and Casper became the sole trustee pursuant to Article Sixth, Section 1. On January 6, 2004, Casper, as sole surviving trustee, recorded an equity line of credit deed of trust (instrument No. 0204003345) with the Kern County Recorder. The deed of trust placed a lien on the Silver Drive home and secured a Washington Mutual home equity line of credit with a maximum limit of $168,000. Casper subsequently drew funds on the line of credit and deposited a portion of those funds in Washington Mutual Bank accounts he held jointly with Pedersen and a Kern Schools Federal Credit Union account he held jointly with Pedersen and Napier. At least one of these accounts had a survivor’s clause that provided “‘upon death of one or more of us, the funds in this account become the property of the survivor(s).’”
Casper died on November 4, 2004, and one of the Washington Mutual accounts he held jointly with Pedersen had $115,205.11 on deposit when he died. On January 25, 2006, Walters filed a petition in superior court to compel the successor cotrustees, Napier and Pedersen, to file an account and report. On April 20, 2006, the court conducted a contested hearing on the petition and ordered Casper’s successor cotrustees to file an account and report by June 22, 2006. On May 30, 2006, Walters received an accounting and report but concluded the document did not comply with the applicable provisions of the Probate Code. She filed and served objections to the pleading on June 8, 2006. Sometime later, she received another copy of the May 30, 2006, accounting and report that she had previously considered inadequate under the Probate Code.
The October 29, 2008, formal order after hearing gives Casper’s date of death as “November 4, 2004.” Napier’s June 14, 2007, objections to petition for order for sanctions gives Casper’s date of death as “November 8, 2004.”
On May 9, 2007, Walters filed a petition for order for sanctions and surcharge for the successor cotrustees’ alleged failure to file an account and report pursuant to the April 20, 2006, court order. Walters alleged sanctions and surcharges were appropriate because the successor cotrustees: (1) failed to file a full account and report as ordered by the court (Prob. Code, §§ 1061-1064, 16060, 16063); (2) failed to account for all of the assets of the trust estate, particularly the approximately $120,000 held in the joint bank account; (3) failed to provide details of the sale of trust real property; (4) failed to equally divide and distribute the trust estate to the trust beneficiaries; (5) claimed excessive fees for their services as successor cotrustees; and (6) claimed and paid themselves sums as reimbursement of expenses.
On June 14, 2007, Napier filed written objections to the petition. Napier initially noted that on April 20, 2006, the court granted Walters’s petition and directed her counsel to prepare an order but counsel failed to do so. Napier noted “the Trustee is not in a position to comply with the exact order because the exact order is unknown.” Therefore, Napier maintained a surcharge of cotrustees was inappropriate. She further maintained Casper had the authority to modify the trust at any time and a deposit of trust funds into an account outside of the trust was a valid exercise of his rights as trustor. The court conducted a contested hearing on May 20, 2008, and determined the proceeds from the sale of the residence were handled properly as was the distribution of a Lincoln automobile to Pedersen. The court established a briefing schedule for the parties to discuss the issues of attorney fees and whether or not the funds in the onetime joint account should be restored to the trust estate. The court further indicated the cause would stand submitted as of July 1, 2008.
B. Facts Elicited from Napier’s Accounting
Napier filed a trust accounting with the superior court on July 24, 2007. The accounting reflected $310,596.73 in property on hand as of Casper’s date of death (November 4, 2004), additional property received of $18,730.62, and receipts of $972.60 for total amount of $330,299.95. Casper’s residence on Silver Drive was appraised at $309,000 and represented the most valuable asset of the property on hand as of Casper’s date of death. Napier reported trust costs of $14,395.62 and trustee compensation payments of $4,335.00. Napier reported total disbursements of $188,100.68. This amount included $168,000 to pay off the loan balance to Washington Mutual, as well as $1,090.78 in interest and $53 in other fees paid to Washington Mutual. According to Napier’s accounting, Geyer and Walter each received $28,874.01 in proceeds from the sale of Casper’s home and Napier and Pedersen each received approximately $31,874 from the sale of the home. Each trust beneficiary also received $493.15 in additional distributions. According to Napier, a total of $123,468.65 was distributed to the beneficiaries after Casper’s death.
C. Facts elicited from the depositions of the parties
The court admitted the deposition transcripts of Napier, Pedersen, and Walters--and the exhibits attached to those depositions--into evidence upon stipulation of the parties. This evidentiary order was subject to the right of Napier and Pedersen to have the opportunity to read and correct their deposition transcripts.
1. April 23, 2008, deposition of Valerie Jean Napier
Napier, a resident of Groveland, Tuolumne County, testified her father, Casper McDonald, died on November 8, 2004. Prior to his death, Napier frequently spoke with him by telephone but he never discussed his borrowing on his house. Napier said a year before Casper died, he told her and her sister that all his money was gone and the only thing he had left was the home. This conversation took place in July 2003. Napier said Casper did not discuss his business with her “at all” but did say he had spent all his money. She became aware of his two Washington Mutual accounts and one Kern Schools Federal Credit Union account after he died. Napier and her sister, Pedersen, did not draw any money from those accounts during their father’s lifetime. After his death, each sister received about $57,000. The only transfers that occurred during Casper’s life were made by Casper. Napier said she first received a copy of the 1983 trust agreement only after she and her sister closed escrow on the sale on Casper’s home. Napier said she did not come to Bakersfield for the closing of escrow. She gave her sister authority to sign any necessary papers and documents were mailed to her later.
Napier said she and her sister made a mutual decision not to tell Edith’s children about the joint account money because she and her sister did not think the money belonged to them. Napier said she and her sister made the decision before Napier hired an attorney, but the attorney subsequently assured her that the money belonged to her and her sister. Napier noted that she and her sister withdrew the money from the accounts before they hired the lawyer.
Napier said she and her sister were reimbursed a total of approximately $3,000 ($1,500 apiece) for “fix-ups” from the sales escrow on Casper’s home. They reimbursed themselves at the rate of $50 per hour for such duties as hauling things to the dump and to Goodwill, cleaning the home, and meeting repair people at the house. According to Napier, the attorney she contacted said the rate of $50 per hour was a proper amount. The house was sold in January and the reimbursement took place after the escrow closed.
2. April 23, 2008, deposition of Gail Yvonne Pedersen
Pedersen said she and Napier were the daughters of Casper S. “Cap” McDonald, who died November 8, 2004. Pedersen said her father had been married to Walters’s mother and he did not remarry after she died. However, he did have a girlfriend named Tommie, cared for her as she suffered Alzheimer’s, and visited her every day at a nursing facility. Pedersen said Casper acted as a father to Walters after he married her mother. Pedersen had already moved away from home at the time of the marriage and did not live with Walters.
Pedersen acknowledged that her father and stepmother signed the Casper S. McDonald and Edith G. McDonald trust document in 1983 and that the agreement was drafted by the Young Wooldridge law offices. She also acknowledged that she and her sister signed the agreement. However, the signing took place at the Pedersen home and not at the Young Wooldridge offices. Moreover, Pedersen said Casper and Edith only brought over the signature page for Pedersen and Napier to sign. Pedersen said there was no notary present and she and Napier never received a copy of the trust agreement until the escrow on the sale of their father’s home took place in 2004 and 2005. According to Pedersen, American Title Company gave the two sisters a copy of the agreement. Once they received a copy of the agreement, the sisters did not try to determine the assets of the trust. Pedersen said she read the agreement a number of times to make sense of it.
Pedersen said she did not discuss the trust agreement with her father before his death. She and her sister discussed trust assets after Casper’s passing. They thought the house was the sole trust asset. They knew he had taken a loan against the house but did not know the amount and assumed he borrowed to have money to live on. Pedersen said she did not see a copy of Casper’s Washington Mutual home equity line of credit agreement until the April 23, 2008, deposition. At the time of the line of credit agreement, Casper was living by himself and his home had been paid off long before.
Pedersen said her father drove a 1995 Lincoln automobile until a few days before his death on November 8, 2004. The car had been wrecked at one point but he had it repaired. A few days before November 8, 2004, Casper fell getting ready for bed and hit his jaw on the metal part of the bed. He went to the hospital and died a few days later of pneumonia. Casper had put the Lincoln in Pedersen’s name about two years before he died. Pedersen said she had helped her father when he was sick by cooking for him, running errands, and having his car serviced. He asked if she wanted the car when he passed away and she said she would. After his passing, she sold the Lincoln in Bakersfield for $4,000.
In 2002, Casper put Pedersen’s name on his accounts at Washington Mutual and Kern Schools Federal Credit Union. She did not know how much was in the accounts when he added her name to the accounts. At one point, the accounts had around $115,000 but she did not know whether that sum came from the equity line of credit on the house. Pedersen said she did not draw any money from of the accounts while Casper was living. She also said he did his own check writing until the time he fell. He never discussed the possibility of Pedersen writing checks for him. Pedersen was aware that she had a power of attorney on the Washington Mutual and Kern Schools accounts and knew she could write checks on them while Casper was alive.
Pedersen said her sister handled the money and banking after Casper passed away. Pedersen did not remember an approximate $71,000 withdrawal from the Kern Schools account in November 2004, but did remember closing the account and guessed that she and her sister divided the closing balance. Pedersen did not recall withdrawing money from her father’s Washington Mutual account in October 2004 and said her father was able to withdraw money from his account at that time. Pedersen did recall dividing her father’s money after his passing and said she received about $57,000 and placed it in her own account. She believed her sister received a similar sum.
According to Pedersen, her sister said the four stepsiblings—two from Edith’s side and two from Casper’s side—were all named as cotrustees of the trust. However, Napier never said why she did not include the other two cotrustees in the postmortem financial dealings. Pedersen said neither she nor her sister knew anything about the trust at the time Casper’s house was sold. The two sisters thought all of the trust assets were gone except for the house. She explained that Casper told them he was broke and he had to borrow money on the house but he did not specify a sum. Casper claimed he borrowed the money for living expenses. Pedersen admitted she had not spoken with Walters in the 20 years preceding Casper’s death.
Pedersen said she and her sister arranged for Walters to come to Casper’s home after his passing and told Walters she could have everything. According to Pedersen, Walters took what she wanted and appeared to be satisfied. Pedersen did not know whether Walters and Geyer knew about the $113,000 she had divided with Napier. Pedersen acknowledged that she called Walters to go over and sign papers concerning the sale of Casper’s house. However, Pedersen did not know about the trust at the time. She just thought the four stepsiblings were “splitting the house” proceeds upon its sale.
3. April 23, 2008, deposition of Ede-Ann Walters
Walters testified she signed the “Living Trust of Casper S. McDonald and Edith G. McDonald” in a law office. At some point, Walters received a copy of the whole document, including the page bearing her signature. Walters said Edith, Casper, a woman, and a representative of the law office were present when she signed the trust document. She did not recall Napier and Pedersen being present.
Edith passed away in October 1985 and Walters read the trust agreement close to the time of her mother’s death. After Edith died, Walters and her brother became trustees of Trust B, although a woman at the law offices of Young Wooldridge handled the details. The property allocated to Trust B was distributed to Casper, Walters, and her brother. According to Walters, she shared a stock account with her brother and Casper received the other account. Pedersen and Napier did not receive any money from the account Walters split with her brother.
Walters said she had moved away from Bakersfield and then moved back in 2002 or 2003. She visited Casper as often as she could and took him to lunch two or three times. She visited him an average of two times a month and most of the time he wanted to sit in the living room of his home where there was no background noise. She noted that Casper was hard of hearing. In the year leading to Casper’s death, she became concerned about his health, noting he was losing weight and not eating enough. She asked Casper about his weight loss but he said nothing in particular. Walters said she had no communication with Napier but called Pedersen and asked her about Casper’s appetite. Pedersen said Casper’s housekeeper kept trying to bring food to him at home but that made him mad because he liked to eat out at Carrows and Marie Callender’s. Pedersen also acknowledged that Casper was starving himself to death but declined to confront him about it.
Walters said she and Casper once had a conversation about her buying out his interest in the family home. According to Walters, Casper offered her the opportunity. He explained he had taken a loan out against the house and was only paying interest on the loan. She did not ask him why he borrowed the money but he did say he was looking into moving to an independent living facility. Casper asked whether she would want to buy the house, but Walters declined because of the other siblings involved and the fact she did not have the money to maintain a house of that size. Casper told her, “All I’m going to have you do is pay off the loan.” When Walters hesitated, Casper told her the total loan was “around 120.” She never followed through on his offer and could not recall precisely when they had the discussion, although she estimated it took place between April and July of 2004. Walters also remembered the conversation took place in the living room of his home and she and Casper were the only two people present. Although Walters did not buy an interest in the home, she did ask for the opportunity to buy her old bedroom furniture should he wish to part with it. She ultimately came into possession of the furniture but did not pay anything for it. During that same conversation with Casper, he expressed his wish that Pedersen have his Lincoln car.
Walters acknowledged signing some amended/supplemental escrow instructions dated December 28, 2004. The instructions were to carry out the sale of Casper’s house. Walters said she signed them under protest because First American Title did not “give me the legal instrument that they were processing this with.” A settlement statement indicated she and her brother were each entitled to $28,827.77 from the sale of the property. Walters did receive that sum and believed her brother also received a similar sum.
With respect to the Washington Mutual and Kern Schools accounts, Walters believed the funds in those accounts should be included as assets of the trust “[d]ue to the fact that they were taken against the house and it was paid against the house.” She maintained the money should be divided among the four stepsiblings. According to Walters, Casper said he took out a loan on the house and was using the money to live on but did not state an amount. He implied the money was deposited at Home Savings or a successor institution. He never mentioned that he had several accounts with Napier and Pedersen. He never really said anything about the disposition of the house, but in Walters’s view, it was covered by the trust.
When asked about the history of the house, Walters said she remembered that one Jack Jost built the residence for Edith and Casper. Walters remembered moving into it in about 1965, when she was 17. She also remembered her mother had owned a house on Telegraph Avenue. That house was sold and the proceeds used to furnish the new house on Silver Drive. Walters said her mother worked at several jobs in those years. She worked for Bakersfield College, Zalco Labs, and also worked for Casper’s business, a pumping business known as C.S. McDonald, Inc. The latter firm eventually served Tenneco on an exclusive basis.
D. Ruling of the trial court
On August 7, 2008, the court filed a detailed minute order finding in favor of plaintiffs. The court noted in pertinent part:
“Trust Funds
“When Edith and [Decedent] Casper McDonald created the Trust... they made specific provisions under Article Fourth (Rights Reserved by the Trustors) for how it could be amended after the death of either of them. In addition to the Trustors’ signatures as Trustors and Trustees, their respective children signed off on the Trust as Successor Trustees.
“Edith predeceased Decedent, Decedent thereafter opened up a line of credit with Washington Mutual Bank using the Trust real property as collateral.... He later converted that account into a joint account with his daughters, Gail Pedersen and Valerie Napier.... This joint account had a survivor’s clause that provided ‘upon death of one or more of us, the funds in this account become the property of the survivor(s).’....
“At Section 1, Article Fourth, the Trust states: ‘The Trustors, by written instrument filed with the Trustees, may jointly revoke this trust in whole or in part.’ Further, at Section 2, the Trust provides: ‘Following the death of either Trustor, the surviving Trustor, by written instrument filed with the Trustees, may revoke any part of the trust agreement as to an undivided one-half interest therein.’ [Emphasis added.] Thus, the Court concludes, it was not intended that a Trustee, including the either [sic] of the original Trustors, might unilaterally amend or modify the Trust except as expressly provided for under Article Fourth. [Citations omitted.]
“Moreover, the Court finds that the joint bank account including Decedent and the Objectors [Napier and Pedersen] contravenes the expressed method for modifying the Trust. Those funds are therefore an asset of the Trust because of how they originated, notwithstanding the joint tenancy bank account created with them.
“B. [¶] “Attorney’s Fees
“Turning to the issue regarding attorney fees, Objectors did not act to benefit the Trust. By excluding the subject money from the accounting, they clearly demonstrated that they did not believe it was part of the Trust. Hence, the Trust would be out $120,000, but for the instant petition. Consequently, it can only be concluded that Objectors insisting that the joint bank account with Decedent was a proper amendment to the Trust inured to their own interests. This directly conflicts with the Settlors’ [Trustors’] intent at the time they created the Trust. [Citations omitted.]
“4. [¶] “Ruling
“The Trust was not amended by the actions taken by Decedent via the joint bank account with the Objectors. Those funds are Trust assets. Moreover, the actions taken by the Petitioner to get an accounting, which was incomplete when initially submitted, were in the interest of the Trust. Objectors delayed the administration of the Trust. Therefore, they will bear their own attorney fees. Petitioner is awarded attorney fees and costs related to the instant petition.”
DISCUSSION
I. INTERPRETATION OF THE TERM “TRUSTEES” FOR PURPOSES OF COMPLIANCE WITH TRUST REVOCATION PROVISIONS
Defendants contend the trial court erroneously concluded that the term “trustees” referred to all the signatories of the trust agreement for purposes of construing the revocation provisions.
The trust agreement stated in pertinent part:
“ARTICLE FOURTH
“RIGHTS RESERVED BY TRUSTORS [¶]... [¶]
“Section 2. Following the death of either Trustor, the surviving Trustor, by written instrument filed with the Trustees, may revoke any part or portion of the trust agreement as to an undivided one-half interest therein.”
The trust agreement also stated:
“ARTICLE FIFTH
“POWERS OF THE TRUSTEES [¶]... [¶]
“Section 9. The term ‘trustees’ and ‘trustee’ shall be synonymous and all provisions regarding this Living Trust shall apply equally to the term ‘trustees’ and ‘trustee’. No bond shall be required of any trustee named herein.”
As noted above, the trial court found that when Edith and Casper created the trust, they made specific provisions under Article Fourth for amendment of the agreement after the death of either of them. Upon the death of one trustor, the agreement provided the surviving trustor could revoke any part of the trust agreement as to an undivided one-half interest “by written instrument filed with the Trustees.” From this language, the court concluded that an original trustor could not unilaterally amend or modify the trust except as expressly provided for under Article Fourth, i.e., by giving notice to himself/herself and to the successor trustees. In the view of the trial court, Casper’s creation of the joint bank account contravened the expressed method for modifying the trust and the funds deposited in that account remained assets of the trust.
On appeal, defendants maintain that Casper was the only trustee at the time he initiated the home equity line of credit and deposited funds into the joint accounts. Defendants contend the trial court erred by holding Casper was required to give himself and the successor trustees written notice of the intent to revoke. They argue: “Were we to follow Respondents’ and the trial courts’ rationale, it would require that any trustor who desires to revoke an intervivos trust could only effectuate such a revocation upon giving notice to all of the named successor trustees. Such a result would be absurd.”
A. Rules of Interpretation
The interpretation of a written declaration of trust presents a question of law unless the interpretation turns on the competence or credibility of extrinsic evidence or a conflict in such evidence. A reviewing court is not bound by the lower court’s interpretation but must independently construe the instrument at issue. In construing a trust instrument, the intent of the trustor prevails. That intent must be ascertained from the whole of the trust instrument, not just separate parts of it. (Scharlin v. Superior Court (1992) 9 Cal.App.4th 162, 168.)
In interpreting a trust document, it is proper for the trial court in the first instance, and the appellate court on de novo review, to consider the circumstances under which the document was made. In that way, the court may be placed in the position of the trustor whose language it is interpreting and can determine whether the terms of the document are clear and definite, or ambiguous in some respect. (Wells Fargo Bank v. Marshall (1993) 20 Cal.App.4th 447, 452-453.)
The guiding principle in construing a trust document is ascertaining the intention of the trustor as expressed in the instrument. (Prob. Code, § 21102, subd. (a); Estate of Russell (1968) 69 Cal.2d 200, 205.) As one court put it: “‘Not, What did he intend to say? but, What did he intend by what he did say? must be the test.’” (Kropp v. Sterling Sav. & Loan Assn. (1970) 9 Cal.App.3d 1033, 1045, quoting from Title Ins. & Trust Co. v. Duffill (1923) 191 Cal. 629, 642.) Where ambiguity or confusion exists in a trust agreement, the court may modify or reform the trust agreement to accomplish the purposes of the trustor as expressed in the trust agreement. (Ike v. Doolittle (1998) 61 Cal.App.4th 51, 79-91.)
When construing a document such as a trust, the court may consider the circumstances surrounding its execution to ascertain the meaning of the language used in the document. (Estate of Russell (1968) 69 Cal.2d 200, 208-209; Wells Fargo Bank v. Marshall, supra, 20 Cal.App.4th at p. 453.) While extrinsic evidence is admissible to aid in the interpretation of the document, it may not be used to give it a meaning of which it is not reasonably susceptible. (Estate of Russell, supra, 69 Cal.2d at p. 211; Wells Fargo Bank v. Marshall, supra, 20 Cal.App.4th at p. 453.) When interpreting trusts, each case depends upon its own peculiar facts; precedents are of little value. (Wells Fargo Bank v. Marshall, supra, 20 Cal.App.4th at p. 453.)
The Probate Code also provides for rules of construction of trust instruments. By statute, the intent of the trustor, as expressed in the instrument, controls its legal effect. (Prob. Code, § 21102, subd. (a).) In addition, the Probate Code provides that the individual parts of the instrument are to be read in relation to each other so that the document may be construed as a consistent whole. (Prob. Code, § 21121.) Further, the document should receive an interpretation which will give every expression some effect. (Prob. Code, § 21120.)
B. Revocation of Trust
A trust that is revocable by the settlor may be revoked in whole or in part by a number of statutorily specified methods. (Prob. Code, § 15401, subd. (a).) When a trust instrument was executed before July 1, 1987, as here, the manner of revocation is governed by prior law and not by current Probate Code section 15401. (Prob. Code, § 15401, subd. (d).) Civil Code section 2280, the predecessor statute to Probate Code section 15401, stated in relevant part:
“Unless expressly made irrevocable by the instrument creating the trust, every voluntary trust shall be revocable by the trustor by writing filed with the trustee. When a voluntary trust is revoked by the trustor, the trustee shall transfer to the trustor its full title to the trust estate....” (Stats. 1931, ch. 950, § 1.)
Former Probate Code section 2280 was intended to liberalize the power of revocation in California but did not operate as a nullification of a trustor’s plainly expressed preference for a mode of revocation. (Rosenauer v. Title Ins. & Trust Co. (1973) 30 Cal.App.3d 300, 304.) Any writing, including a verified complaint, that clearly manifests an intention of the trustor to revoke is a sufficient writing under former Civil Code section 2280. (Fleishman v. Blechman (1957) 148 Cal.App.2d 88, 95.)
Defendants contend Casper was vested with the power to revoke Trust A as to his undivided one-half community interest under the express terms of the trust as well as under statutory law. Napier’s accounting of July 24, 2007, reflected property on hand, additional property received, and receipts totaling $330,299.95. The same accounting reflected a total disbursement of $179,143.78 to pay the real estate line of credit loan balance, interest, and other fees to Washington Mutual. While the amounts disbursed to Washington Mutual exceeded one-half of the $330,299.95, Section 3 of Article Fifth of the trust did not limit the powers of the trustees to borrow and pledge to an undivided one-half interest in the trust estate. Moreover, Section 3.B. of Article Third expressly provided that the trustee could use the full corpus of Trust “A” to support and maintain Casper in his usual, normal and customary manner of living in the event the net income was insufficient.
Plaintiffs concede Casper had a right of revocation but maintain he failed to follow the specific procedures set forth in the trust agreement. Plaintiffs contend the McDonald trust required a written instrument filed with the trustees—including successor trustees—in order to revoke as to any property in the trust and “[n]o written instrument satisfying the requirements of the trust was produced.”
C. Role of Trustee and Successor Trustee
A trust is a fiduciary relationship with respect to property in which the person holding legal title to the property, the trustee, has an equitable obligation to manage the property for the benefit of another the beneficiary. (Estate of Shaw (1926) 198 Cal. 352, 360; Askew v. Reserve Funding, Ltd. (1979) 94 Cal.App.3d 402, 407; Rest.2d Trusts, § 2.) A trustee must always act solely in the beneficiaries’ interest. (Prob. Code, § 16002, subd. (a); Estate of Feraud (1979) 92 Cal.App.3d 717, 723.) If the trustee violates any duty owed to the beneficiaries, the trustee is liable for breach of trust. (Prob. Code, § 16400.)
In the instant case, Walters argued in her opening brief at trial:
“[T]here are no facts, whether in depositions of Gail and Valerie or Ede-Ann to indicate that Casper ever had a written instrument amending the trust, whether as to one half or otherwise, nor did he ever file it with the ‘trustees’. He therefore did not properly follow the specific amendment portion of the trust agreement which he had made while his wife was still alive.... Since the word ‘trustees’ was used, not just trustee, it is also clear that those all listed as trustees, and who signed thus knowing about the trust agreement, must all be notified. Actually none were notified, and Casper certainly could not be considered plural as notifying himself.”
A trustee’s powers include those set forth in the trust instrument, conferred by statute, and needed to satisfy the standards of care for the reasonable person and prudent investor in managing the trust. Such powers are not personal to any particular trustee. Rather, they are inherent in the office of trustee. A new trustee succeeds to all the rights, duties, and responsibilities of his or her predecessors. Powers conferred upon a trustee can properly be exercised by successor trustees, unless the terms of the trust specify otherwise. These rules apply to powers essential to the effective administration of a trust. (Moeller v. Superior Court (1997) 16 Cal.4th 1124, 1129, 1131.)
Article Sixth, Section 1 of the instant trust specified that Casper and Edith were trustees of the trust during their lifetime or until such time as either or both resigned or became incapacitated. In the event of the death, resignation, or incapacity of either original trustee, then the other would be entitled to act as trustee with all of the rights and powers set forth in the trust agreement. Article Sixth, Section 2 directed that defendants and plaintiffs serve as successor trustees of the trust. However, Article Sixth, Section 3 set specific guidelines for service as a successor trustee. That service was conditioned upon “the death, resignation or incapacity of both CASPER S. McDONALD and EDITH G. McDONALD.”
At the time Casper took out the home equity line of credit, he was the sole trustee pursuant to Article Sixth, Section 1 of the trust agreement and nothing in the record suggests that powers of the trustee had devolved to a successor because of a resignation or incapacity. Thus, Casper was not obligated by the trust agreement to give notice to the successor trustees of his home equity transaction and any implied conclusion to the contrary must be deemed error by the trial court. Although the trial court noted the trust revocation provision of Article Fourth, Section 2 referenced the plural “Trustees,” Article Fifth, Section 9 stated: “The term ‘trustees’ and ‘trustee’ shall be deemed synonymous and all provisions regarding this Living Trust shall apply equally to the term ‘trustees’ and ‘trustee.’”
The trial court erroneously concluded that successor trustees were entitled to notice for purposes of a surviving original trustor’s compliance with trust revocation procedures.
II. EVIDENCE OF INTENTION TO REVOKE THE TRUST
Defendants contend Casper’s actions and writings in establishing the home equity line of credit were sufficient to demonstrate an intent to revoke the trust as to his community one-half interest.
The trial court held the joint bank account in the names of Casper, Napier, and Pedersen contravened the express method for modifying the trust. Therefore, the court held the account balance to be an asset of the trust. As noted above, California courts have long held that any writing clearly manifesting a trustor’s intention to revoke is a sufficient writing under former Civil Code section 2280. (Fleishman v. Blechman, supra, 148 Cal.App.2d at p. 95.) The recent case of Gardenhire v. Superior Court (2005) 127 Cal.App.4th 882 is instructive. In Gardenhire, Anne Pulizevich created a trust naming herself, Barilovic, and Gardenhire as trustees in the event Pulizevich became incapacitated or died. Some years later, Pulizevich executed a will that expressly revoked all prior wills but did not mention the trust. The trust and the will handled a parcel of Pulizevich’s real property in different ways and, upon her death, alternate trustee Gardenhire filed a motion to resolve competing claims by the beneficiaries of the trust and the beneficiaries of the will. A beneficiary under the will maintained the will revoked the trust and the will should prevail. Gardenhire unsuccessfully opposed the beneficiary’s position, filed a petition for writ of mandate, and the Sixth Appellate District upheld the trial court. Pulizevich’s trust provided in pertinent part:
“‘While living, the Trustor may at any time and from time to time by written notice signed by the Trustor and delivered to the Trustee: [¶]... C. Revoke in whole or in party any trust or trusts created by or to be created pursuant to this Declaration.’”
In denying Gardenhire’s petition for writ relief, the Sixth Appellate District aptly noted:
“We agree with the trial court that because Pulizevich did not limit or qualify the term ‘written notice,’ she authorized revocation via any writing that unambiguously manifested her intent to revoke, including a will. We find significant support for such broad latitude in the fact that she named herself the trustee. The trust allowed Pulizevich to revoke simply by giving herself written notice of her intent to do so. Since she could not be mistaken about her own intent no matter how she chose to manifest it in writing, the broad, unqualified language of the trust reasonably implies that she did not intend to restrict the form of written notice or the nature of the documents used to provide it. Rather, any writing that unambiguously manifested her intent would do.” (Gardenhire v. Superior Court, supra, 127 Cal.App.4th at p. 888.)
Similarly, in the instant case, the trust allowed Casper to revoke simply by giving himself written notice of his intent to do so. Since he could not be mistaken about his own intent, the broad language of the trust reasonably implied that he did not intend to restrict the form of written notice or the nature of the documents used to provide it. As in Gardenhire, any writing that unambiguously manifested his intent would do. Here, Casper manifested his intent to revoke by arranging for a home equity line of credit secured by the home, taking proceeds from that line of credit, and depositing those proceeds in joint accounts with his daughters as co-titleholders. The trust agreement clearly granted the power to revoke as to an undivided one-half interest following the death of an original trustor. The banking documents, including the recorded Washington Mutual equity line of credit deed of trust, satisfied the trust agreement’s broad requirement of a “written instrument filed with the Trustees.” Under former Civil Code section 2280, the documents were sufficient to revoke the trust as to the proceeds of the secured home equity line of credit and the ruling of the trial court must be reversed.
DISPOSITION
The October 29, 2008, order after hearing and the December 2, 2008, order for attorney fees and costs are reversed and the matter is remanded to the trial court for further proceedings consistent with this opinion. Appellants shall recover costs on appeal.
WE CONCUR: Dawson, Acting P.J., Hill, J.
“With respect to a trust, the grant or denial of the following orders is appealable:
“(a) Any final order under Chapter 3 (commencing with Section 17200) of Part 5 of Division 9, except the following:
“(1) Compelling the trustee to submit an account or report acts as trustee.”
In the instant case, defendants appealed from the minute order of August 7, 2008, rather than the formal final orders of October 29, 2008, and December 2, 2008. A notice of appeal filed, as here, after judgment is rendered but before it is entered is valid and is treated as filed immediately after entry of judgment. (Cal. Rules of Court, rule 8.104(e)(1).)