In Carne v. Worthington, et al., decedent Kenneth Liebler (“Liebler”) executed the Liebler Revocable Declaration of Trust dated February 27, 1985 (“1985 Trust”), which identified Liebler as the trustor and sole trustee. Included in the 1985 Trust estate was Liebler’s residence, located on Via Regla (“Property”). The 1985 Trust provided that the Property was to be “reserved for the use” of Liebler’s former live-in companion, Defendant Nancy Worthington (“Worthington”), and named Liebler’s grandson, Defendant Dillon Hasting (“Hasting”) as a beneficiary. Liebler’s daughter, Plaintiff Melanie Carne (“Carne”), was initially listed as a beneficiary, but was removed by amendment in 1992.
In 2009, Liebler, in his individual capacity, executed the Kenneth Liebler Irrevocable Trust dated December 21, 2009 (“2009 Trust”). The 2009 Trust purported to transfer “the property listed in Schedule A to the trust, and list[ed] the [Property] in Schedule A.” Liebler did not execute a separate grant deed, transferring the Property into the 2009 Trust. The 2009 Trust’s property was to be distributed, per stirpes, to Liebler’s descendants, including Carne. Carne was identified as a successor trustee.
Liebler died on October 3, 2012, and Carne accepted her position as successor trustee shortly thereafter. In 2014, Carne filed a petition in San Diego County Superior Court to confirm the 2009 Trust’s assets, including the Property. Hasting opposed the petition on two (2) grounds: (1) that Liebler did not legally transfer the Property into the 2009 Trust because he failed to execute a separate deed effectuating the transfer; and (2) that Liebler, in his individual capacity, could not have legally transferred the Property into the 2009 Trust, because the 1985 Trust owned the Property, not Liebler himself. The 2009 Trust contained no language indicating that Liebler was acting as the trustee of the 1985 Trust at the time of the transfer.
Relying on the Restatement Third of Trusts, and pursuant to Probate Code sections 15200 and 15206, the Fourth District Court of Appeal held that Liebler was not required to execute a separate deed to effectively transfer the Property into the 2009 Trust. Rather, the Court found that a “writing signed by the settlor, or a trust agreement signed by the settlor and trustee, manifesting the settlor’s present intention thereby to transfer specified property (such as all property listed on an attached schedule),” is sufficient. The Court held that the 2009 Trust satisfied these requirements, and therefore, it properly effectuated a transfer of the Property from the 1985 Trust to the 2009 Trust, and that no separate deed was required. The “2009 Trust itself constituted a valid conveyance of the [Property] to the 2009 Trust.”
With respect to the fact that Liebler executed the 2009 Trust in his individual capacity, and not expressly in his capacity as the trustee of the 1985 Trust, the Court noted that it has been “held that where a trustee signs a contract of sale or deed without reference to his or her representative capacity, the contract or deed is enforceable against the trust,” and that a revocable inter vivos trust does not prevent creditors of the settlors – who are often also the trustees and sole beneficiaries during their lifetimes – from reaching trust property. Therefore, because the 1985 Trust was a revocable inter vivos trust, and because Liebler owned the Property as the sole trustee of the 1985 Trust, Liebler had the power during his lifetime to transfer the Property owned by the 1985 Trust, without expressly doing so in his capacity as trustee.
Nick D. Fine, Associate, email@example.com