$280,209 Verdict - Trusts and Probate Law
On November 24, 2008 Richard A. Cox was appointed as Trustee of the Russell Family Trust which consisted of a marital trust and decedent's trust. Mr. Cox was a professional fiduciary and acted as Trustee in a number of other trusts. On March 9, 2009 defendant Cox withdrew $89,075.25 from The Russell Decedent's Trust and deposited the money into his Bank of America account that he used to run his company, Fiduciary Investments, Incorporated. Fiduciary Investments, Inc.'s assets consisted of a small cash reserve (under $500), and real property in Portola, California. After withdrawing the $89,075.25 from the Russell Trust account, defendant issued stock in his company, Fiduciary Investments, Inc. to The Russell Decedent's Trust. Over the next four-day period, defendant used $70,572 to pay off other trusts that he had invested in Fiduciary Investments, Incorporated. He paid those other trusts off at full value or at carry value, despite the fact that the real estate assets in Fiduciary Investments, Inc. had been declining for several years. After paying off these other trusts, he also used the plaintiffs' money to pay himself $8,469. The remaining $10,000 was used by defendant to run Fiduciary Investments, Inc. On July 6, 2009 defendant withdrew another $11,682 from The Russell Trust and deposited the money into his company's Bank of America account. He paid $5,175 to plaintiff trust and $5,175 to another trust that he managed. In 2010 he paid back to plaintiff trust $1,725, calling it a dividend. On August 25, 2011 defendant dissolved Fiduciary Investments, Inc. and transferred a 50% interest in the Portola real estate to himself as Trustee of The Russell Decedent's Trust. Defendant redeemed the shares of Fiduciary Investments, Inc. which were owned by the Russell Decedent's Trust with the conveyance of this one-half interest in the real property. The current fair market value of the property is $55,000 according to trial testimony, and the 50% interest transferred to the Russell Decedent's trust is worth $27,500. In the 2009 accounting for The Russell Decedent's Trust, and again in 2010, defendant listed the value of Fiduciary Investments, Inc., which consisted of the real property in Portola, at $100,757.25. He did not have the properties appraised but relied upon letters from the real estate agent who sold him the properties; even this agent indicated that the value of the properties was declining. Prior to the commencement of the Petition for Suspension and Removal, defendant did not disclose to the beneficiaries or to the court that Fiduciary Investments, Inc. was his own wholly managed and operated real estate business. Plaintiff's Contentions: That defendant's actions should result in removal of trustee by the Court for breaching the duty of loyalty; conflict of interest; disclosure; Uniform Prudent Investment Act; and self-dealing. Probate Code Sections 15642(b)16002, 16004, 16045 . Plaintiff asked that defendant be found in contempt of court for failure to turn over trust documents. Plaintiff asked that the court set aside settlement of accounts due to fraud; asked for punitive damages. Defendant's Contentions: Defendant denied wrongdoing and contended that no damages were suffered. Defendant denied charge of contempt for failure to turn over trust documents. Injuries and Other Damages Surcharge damages of $93,857. Plaintiff asked forfeiture of trustee compensation of $116,915, plus attorney fees and costs.
Verdict - Trusts and Probate Law
On March 7, 2005, Steven Zamlich ("Steve") and his wife Geertje met with their attorney to create a trust that was simple, and served the purpose of taking care of each other on the death of the first spouse to die, and that gave each other the power to revoke or amend the trust upon the death of the first spouse to die. The trust created a bypass trust for the benefit of Steven's children from a prior marriage. Plaintiff Lisa DeCarlo, one of Steven's children, claimed that this bypass trust should have been irrevocable, and not subject to the surviving spouse's power to revoke. On April 20, 2005, they executed the Zamlich Family Trust. Stephen Zamlich died on February 28, 2014. All property of the Trustors is community property. On October 28, 2014, Petitioner Lisa DeCarlo filed her Petition to "modify trust instrument, to interpret trust instrument, for removal of trustee." Ms. DeCarlo claimed that the attorney for the Trustors made a drafting error in the Trust instrument and requested that the court "reform" the trust instrument to create an irrevocable bypass trust for the benefit of Steven's children and that the surviving spouse would not be entitled to any principal from the bypass trust. Ms. DeCarlo also sought removal of Geertje Zamlich as Trustee and sought attorney fees and costs. Plaintiff's Contentions: Ms. DeCarlo claimed that Article 2 of the Zamlich Family Trust providing the surviving spouse with the power to change any beneficiary, amend any provision, and revoke the Trust in whole or in part must be an attorney drafting error. She produced testimony of witnesses who claimed that Stephen Zamlich told them that he would "take care of" his kids on his death. Defendant's Contentions: In order to prove reformation, Lisa DeCarlo must prove by clear and convincing evidence the alleged "true" intent of the Settlors, and that the estate planning attorney made a mistake when he reduced that intent to writing. Ms. DeCarlo failed to produce sufficient evidence let alone clear and convincing evidence. Ms. DeCarlo's evidence of the alleged "true" intent of the Settlor was nothing more than statements of nine or possibly ten witnesses who stated that Stephen Zamlich told them that he planned to "take care of" his kids on his death. Ms. DeCarlo could point to no specific fact to support her claim that the drafting attorney made an error in carrying out Stephen's intent. On the contrary, the facts establish that Stephen's intent was to grant the surviving spouse with the power to amend or revoke the trust. The facts demonstrated that Stephen wanted his spouse to have the power of revocation. Stephen's purpose was to create a plan that provided each spouse with the power of revocation and a default dispositive provision that could be revoked or amended by the surviving spouse. Stephen was fully cognizant of the fact that his children could be disinherited or not, depending on Geertje's judgment, and that is exactly what he wanted.