In re: the Cooper Living Trust;
Alameda County Superior Court Case No. RP 13699706
Date Decision Rendered: July 21, 2015
Date Decision Became Final: September 21, 2015
After nearly two years of litigation, Konstantine “Kosta” Demiris obtained a trial verdict denying the relief requested by Suzi and Joseph Cooper against his client, trustee/beneficiary Stefano Cooper to 1) invalidate the First Amendment to the Cooper Living Trust (“Trust”) as a result of alleged undue influence to return nearly $1 million in current assets and 2) for an additional $255,000 to be returned by Stefano as trustee for improper distributions and allocations. The Court instead ordered that $66k – a fraction of the demand made - be returned to the subtrust that named the three siblings as equal beneficiaries.
Claim of Undue Influence to Invalidate Subtrust
In fall of 2013, Suzi Cooper and Joseph Cooper sued their brother Stefano Cooper on the 119th day after receiving a 120-day notification by trustee from him as required by law under Probate Code section 16061.7 concerning the Trust becoming irrevocable. Of great import was the fact the Survivor’s subtrust portion of the trust (the mother’s portion) became irrevocable upon the mother’s death and changed the beneficiary designations from all siblings as equal beneficiaries to name Stefano as the 100% beneficiary. This change occurred about a month before the mother of the beneficiaries and co-settlor of the Trust died. She had been suffering from cancer. The change resulted in about $750,000 of assets at date of allocation being allocated to Stefano instead of equally to the siblings as the trust had previously required. The change also named Stefano as trustee of the subtrust, which previously named the siblings in succession and had no mention of Stefano as successor trustee. By the trial date in summer of 2015, the subtrust assets had nearly doubled in value to $1.5 million.
Claim of Improper Distributions and Allocations of Trust Funds
Suzi and Joseph also sued their brother for improper distributions and allocations made by their mother 5-years after the date of their father’s 2008 death in 2013. The assets consisted of real property appraised at around $750k and various accounts of about the same value for a total of about $1.5 million in 2008 and somewhat the same in 2013 (although the real property’s present value has skyrocketed with the housing bubble to nearly double). The mother did not make allocations at date of death, but instead did so after hiring her attorney to change the Trust. She allocated the home to her subtrust and the assets to the bypass trust. She used the bypass trust’s liquid assets to pay for her health, education, support, and maintenance or (“HEMS”) needs during her life after her husband’s death, which lasted for about 5-years and resulted in about $255,000 being spent. The mother (an Italian immigrant with a 3rd grade level of education, who was a housewife of a successful American and who had no idea about trust administrations) never accounted to the beneficiaries although she had a technical duty to render annual accountings for the bypass trust under the terms of the Trust. Upon review of the allocations made it appeared about $133k was improperly allocated to one subtrust (Stefano), which required about $66.5k being returned to the other subtrust (all three siblings).
After substantial discovery involving subpoenas of medical records and financial records; written interrogatories, requests for admission, and for production of documents; and depositions of the estate planning attorney, the mother’s neighbors and friends; and perhaps most importantly - the depositions of the siblings - the claim for undue influence to invalidate the amendment to the Trust was affirmatively dismissed by the siblings. However, the siblings continued in pursuit of the return of $255,000 to their subtrust arguing their mother failed to account for those funds and should be held liable through Stefano for her technical breach of trust and the matter went to trial. Although a confidential mediated offer that was reasonable was made to the siblings and left open they refused to accept it. Kosta Demiris notified opposing counsel that he believed, at most, the Court would award the siblings $66k, the actual number that appeared to be the difference in proper allocations under the Trust. Konstantine Demiris communicated a simple cost-benefit analysis to the opposing parties, which showed that trial on such a matter made no sense and should be resolved informally, but the siblings were intent on “having their day in court.”
The Court, in its written trial decision denied the $255,000 claim and instead issued an order for the return of $66k to the bypass trust (Stefano is a 1/3 beneficiary of that subtrust) as a result of a technical miscalculation on the part of the mother in making the allocations – the expected decision - a fraction of the siblings’ demand.
The decision became final on September 21, 2015 (September 19, 2015 is technically 60-days but falls on a Saturday sending the final date to the following Monday), 60-days after the Court’s order was issued and notice of the decision was sent to the parties.