Friday, September 5, 2008
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Court of Appeal Upholds Revocation of Masry Family Trust
Justices Say Prominent Lawyer Did Not Have to Tell Wife
By KENNETH OFGANG, Staff Writer
A provision requiring the approval of both trustors in order to revoke a trust will not be presumed exclusive, even if the parties are married, the Court of Appeal for this district ruled yesterday.
Rejecting objections by the widow of prominent tort litigator Edward Masry that the ruling will allow spouses to take advantage of one another, Presiding Justice Arthur Gilbert wrote for Div. Six that the governing statute is clear and that the Legislature can amend it if it chooses.
Masry died in 2005 at the age of 73. He was senior partner in the law firm of Masry and Vititoe, a former mayor of Thousand Oaks, and known to movie audiences as the character played by Albert Finney in “Erin Brockovich.”
The film portrayed the efforts of Masry and his paralegal/investigator, Brockovich, to obtain compensation for the 600 residents of Hinckley, a small community in San Bernardino County where Pacific Gas & Electric Co. tanks allegedly leaked carcinogenic poisons into groundwater supplies. The claims were settled for $333 million.
Marital Property
Masry and his wife, Joette Masry, created the Edward and Joette Masry Family Trust, which included all of the property they acquired during their marriage, in 2004. Each was a trustor and trustee, and the trust included a provision by which each of them reserved “the right and power to revoke this Trust, in whole or in part, from time to time during their joint lifetimes, by written direction delivered to the other Trustor and to the Trustee.”
Shortly before he died, however, Masry—unbeknownst to his wife—executed a “Notice of Revocation of Interest in Trust and Resignation as Trustee” and transferred his assets from the family trust to the new Edward L. Masry Trust, with two of his adult children, Louis Masry and attorney Louanne Masry Weeks, as successor co-trustees.
Upon learning of the new trust two weeks after being widowed, Joette Masry petitioned the Ventura Superior Court to declare the revocation of the family trust invalid for lack of notice to her during Edward Masry’s lifetime. Ventura Superior Court Judge Kent Kellegrew denied the petition on the ground that the method of revocation set forth in the will was non-exclusive and that the method by which Masry revoked the trust was effective under the governing statute.
Methods of Revocation
That statute is Probate Code Sec. 15401(a)(2). It provides that when a trust is revocable, revocation may be accomplished by any method set forth in the trust, or by the statutory method of delivering a written notice, other than in a will, to the trustee during the settlor’s lifetime, unless the trust document specifies that the method provided therein is exclusive.
Kellegrew held that the method set forth in the document was not exclusive, and that by delivering the revocation to himself as trustee, Masry complied with the statute and effectively revoked the family trust.
Gilbert, writing for the Court of Appeal, agreed with the trial judge. For the method of revocation set forth in a trust document to be exclusive, he wrote, there must be unambiguous language to that effect, and the language in the Masrys’ document was not.
The presiding justice acknowledged public policy issues as to the fairness of allowing one spouse to revoke a trust without notice to the other.
“It is true that had Joette been given notice of the revocation as provided in the Family Trust, she could have tried to persuade Edward to change his mind or could have made changes in the disposition of her community share of the trust property,” Gilbert wrote. But California law, he pointed out, allows one spouse to dispose of his or her share of community property without the consent of the other.
Separate Proceeding
Gilbert went on to reject the argument, filed in a separate proceeding that became part of the appeal, that Louis Masry and Louanne MasryWeeks had violated the no-contest clause of the Edward L. Masry Trust by suing Masry and Vititoe for an accounting, an action they later dismissed.
The plaintiffs were not contesting the trust, Gilbert said, but carrying out their responsibilities to gather the assets of the trust, including Edward Masry’s interest in the law firm.
Attorneys on appeal were Peter B. Gelblum, Jeffrey K. Eisen, Nahla B. Rajan, and Jacey L. Hayes of Mitchell Silberberg & Knupp for Joette Masry, and John M. Rochefort, Michael D. Bradbury, Todd Benoff, and Alan D. Hearty of Weston, Benshoof, Rochefort, Rubalcava & MacCuish for Louis Masry and Louanne MasryWeeks.
The case is Masry v. Masry, 08 S.O.S. 5383.
Copyright 2008, Metropolitan News Company