Monday, March 2, 2015
C.A. Says Settlor’s Needs Take Precedence Over Cat Protection
Justices Approve Order for Sale of House, Over Objections of Beneficiary Charged With Caring for Trustor’s Pets
By KENNETH OFGANG, Staff Writer
The Court of Appeal for this district has upheld a trial judge’s ruling overriding an elderly woman’s trust provision for the care of her cats, concluding that the woman’s own needs must take precedence.
Div. Five Thursday affirmed Los Angeles Superior Court Judge James Steele’s ruling of last year allowing Jeffrey Siegel, who is Betty Jean Brown’s conservator and the successor trustee under a trust she created in 2005, to sell her former residence. Steele, who has since retired from the court, granted Siegel’s petition over the objection of Elisabeth Fife, who was to receive the house, located on Edgecliffe Drive in Los Angeles, along with $50,000 for the care of Brown’s 12 cats, upon Brown’s death, according to an amendment to the trust.
Brown is the primary beneficiary of the trust, and lived at the Edgecliffe house from 1999 to 2011. She filed a voluntary conservatorship petition in 2012, as a result of which Siegel was appointed conservator and placed her in an assisted living facility, Kingsley Manor.
The trustee subsequently petitioned the probate court to allow him to sell the Edgecliffe house. He explained that the house was in serious disrepair, and produced a contractor’s estimate that it would need $225,000 in repairs.
It had been appraised at $685,000, and the trustee said he had a buyer willing to pay $560,000 for the house in its current condition. The sale was necessary, Siegel said, because Brown had depleted her cash and was running a huge deficit, with less than $3,000 a month in income coming in and expenses of $11,000 a month, including the cost of living at Kingsley Manor.
Fife, testifying in opposition to the petition, explained that she lived across the street from the Edgecliffe house, and began helping Brown with errands in 2007. She said the house was “in deplorable condition” and was not a proper environment for Brown or the cats, and that she agreed to care for the cats in her own home.
Fife argued that the sale was unnecessary, that the trust had sufficient reserves to support Brown for two years, and that as a specific gift, the house could not be sold before the residue of the trust was exhausted, citing Probate Code §21402(a).
Brown, Fife said in her papers, “made clear that the welfare of her cats was very important to her and she provided that $50,000 of her trust estate should be kept in trust for ‘the care of the cats and the upkeep of the Edgecliffe house where the cats will live until the last cat has died from natural causes.’” The sale proposal should be rejected, she said, because it “not only deprives Elisabeth Fife of the prospective right to receive the [Edgecliffe property]…but also defeats [Brown]’s plan that the person to whom she wants the [Edgecliffe property] to go will have that property available for the cats to live out their days there.”
The trustee responded that if the Kingsley Manor expenses, which were in arrears, were not paid, Brown would have to be moved back to the Edgecliffe house, without the 24-hour care that her condition required. Fife, he added, could still receive a general pecuniary gift after Brown’s death under §21134(a).
Steele, saying Brown needed money to live on, opened up the sale to additional bidders, accepted a bid of $650,000, and ordered the house sold. The sale has been stayed pending appeal, but the Court of Appeal Thursday ordered the stay lifted when its decision becomes final, so any further stay would have to come from the state Supreme Court.
Presiding Justice Paul A. Turner, writing for the court, cited a number of authorities holding that a trustee may abate or reduce devises to pay trust obligations, and rejected Fife’s contention that §21402(a) bars the sale. The statute sets out a priority order in which shares of trust beneficiaries abate, beginning with property not disposed by the trust instrument, followed by residuary gifts, general gifts to non-relatives, general gifts to relatives, specific gifts to non-relatives, and specific gifts to relatives.
Noting that Brown’s trust instrument makes her the primary beneficiary, gives the trustee “sole and absolute discretion” to use the trust principal for her benefit, and provides for distribution of trust assets to Fife and others only after her death, Turner agreed that the trustee could sell the house in order to perform his duty to provide for Brown’s care during her lifetime.
Given the trust’s express requirement that Brown’s needs take precedence over all remaining interests, and “the precarious nature of the trust estate,” including the need to maintain the real properties and the infeasibility of repairing the Edgecliffe property, the petition was properly granted, the presiding justice said.
Turner emphasized that in approving the sale, the court was not expressing an opinion as to the priorities for payment of any trust money that might remain after Brown’s death. Fife, he said, can still seek a distribution of any such funds, an issue left “in the good hands of the probate court.”
Attorneys on appeal were Tyna Thall Orren, Paul F. Cohen, and Leslie Barnett for the trustee and Phillip K. Fife for the objector.
The case is Siegel v. Fife, 15 S.O.S. 1185.
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