On Wednesday, April 18, 2018, in Contra Costa County Superior Court, in the case of Estate of Wong, The Demiris Law Firm, P.C. was able to successfully defend a settlement agreement and obtain orders to enforce the judgment admitting a contested will to probate. The intensely litigated will contest involved multiple family members, law firms, churches, and a charitable organization. Attorney Konstantine "Kosta" Demiris was able to prevail for his client in the inheritance dispute.
Walters v. Boosinger
Two key issues: There is a statute of limitations on quiet title claims; and joint tenancy doesn’t get severed merely by filing a lawsuit.
In this case a girlfriend and boyfriend Valerie Boosinger and Randy Walters owned real property together. A 2003 deed named Boosinger and Walters as joint tenants to the real property. In April of 2013, Walters sued Boosinger alleging he was 2/3 owner and asking to buy-out Boosinger’s share of the property or for a court ordered partition. Thereafter, Walters died.
Walters’s son substituted in and continued the suit as administrator of his father’s estate, but Boosinger argued that the joint tenancy ended as a matter of law at the death of Walters and that Boosinger therefore owned 100% of the real property. Boosinger demurred at the trial court level and won arguing that Walters had no standing (post-death) to bring forth a partition claim. The court granted Walters’s son leave to file an amended complaint and he did.
Walters’s son’s first amended complaint brought forth claims for quiet title and partition. In his complaint he acknowledged that the 2003 deed grants ownership of the Property from "[Randy], an Unmarried Man as to an undivided 2/3 interest, and [Boosinger], a Single Woman as to an Undivided 1/3 interest as tenants in common," to "[Randy], an Unmarried Man and [Boosinger], a Single Woman as Joint Tenants." (Italics added.)
Even with such language in the deed Walters’s son argued the real property was not held in joint tenancy. He contended, amongst other things, that his dad never intended to create a joint tenancy.
In the alternative, Walters’s son alleged even if there was a joint tenancy it was severed upon Walters filing suit and Boosinger’s filing an answer.
Another demurer was filed by Boosinger alleging the statute of limitations as a defense under the premise that the underlying quiet action was premised on fraud and the applicable time period passed since the date of the act to the date of the suit.
On appeal the trial court ruling was sustained the lower court’s ruling. The Court of Appeals held there was a statute of limitations regarding the contention that the deed was invalid on its face. The Court of Appeals also held that the quiet title claim was not valid in so far as it alleged the joint tenancy was severed by way of the lawsuit and answer.
Many trustees are aware that there are statutory requirements to provide beneficiaries with annual accountings unless the trust instrument states otherwise. However, many trust accountings fail to provide proper designations for how assets are allocated and also fail to account for principal and income, instead just clumping everything together in the accounting.
However, principal and income designations often do matter and can be critical. Take for example the situation of a standard A/B trust after the death of a spouse. In most cases the trust is split into an “A” trust (“Survivor’s Trust”) and a “B” trust (“Bypass Trust”). The “B” trust is normally irrevocable whereas the “A” trust is revocable by the surviving spouse. Also, the “A” trust can often be spent however the surviving spouse wishes whereas the “B” trust may not.
In many cases an unknowing surviving spouse just spends trust money without properly allocating assets to the “A” and “B” trusts or separating the assets between the two trusts. So take the hypothetical where there is a $1 million trust all in a single bank account bearing interest at 1% annually and it is to be split between an “A” trust and “B” trust with $500,000 in each at the death of the first spouse. Let’s also say this is a second marriage and each spouse has three children from their first marriage. Each subtrust will generate $5,000/year in annual income. The surviving spouse in this hypothetical is entitled to income from the irrevocable “B” trust of $5,000 a year. However, for purposes of this hypothetical the surviving spouse is not allowed to invade the principal of the “B” trust until the “A” trust is exhausted. What this means is that if the surviving spouse needs $50,000/year to survive, then the surviving spouse must first spend such funds from the “A” trust. What will happen is that the “B” trust will stay at $500,000, but the “A” trust will become smaller and smaller over time. If the two subtrusts are not properly accounted for then it is possible that both subtrusts are reduced by $20,000 in principal each. This “mistake” would result in the beneficiaries of the “A” trust getting $20,000 more than they should and the beneficiaries of the “B” trust getting $20,000 less.
Keep in mind that not all trusts are the same and the above is merely a hypothetical example. If you feel that your trust was not properly allocated or that distributions of income and principal were not done properly, then feel free to contact the attorneys at Demiris & Moore for a free consultation.
FirstMerit Bank N.A. v. Diana L. Reese
CA Fourth Appellate District, Division Two
Filed November 19, 2015
In this recent case, the California Court of Appeals held that a creditor cannot sue to obtain an order assigning a beneficiary’s right to inherit from a trust to the creditor when the beneficiary does not consent to such an assignment. In the case at hand, the creditor was owed money (about $150,000) from the Defendant. The Defendant was alleged to be the beneficiary of a trust that provided distributions of principal and income of $11,000/month from one trust and monthly distributions of principal and income of $10,498.78. It does not appear the Defendant ever executed an assignment of her interest. The trust was a spendthrift trust.
The creditor wished to tap into the trust distributions and have the trust assign the distributions directly to the creditor. However, the Court of Appeals held that under CA law an assignment order must include an order that assigns a right to payment outright and not simply directing a judgment debtor to make payment of funds that the judgment debtor may receive from a third party (trust). Those funds are already able to be levied upon pursuant to a writ of possession, one they fall into the hands of the judgment debtor. Simply put, although the Defendant owes money – the creditor can only collect from the Defendant and not from the trust (spendthrift). Plaintiff tried to get around this by arguing that it is permitted to seek an order requiring Defendant to turn over funds already distributed to her. The Court of Appeals pointed out such argument misses the point: once the trustees have distributed the funds they are not subject to an assignment order, but can “be levied upon pursuant to a writ of possession once they fall into the hands of the judgment debtor.”
The Contra Costa County Barristers Section is sponsoring an
Introduction to Probate 101
Tuesday, December 8, 2015; 5:30 pm – 7:00 pm
The location for the event will be at the CCCBA Office's - 5th floor conference room
2300 Clayton Rd
Concord CA 94520
The event is being provided by Contra Costa County Bar Association ("CCCBA").
Konstantine "Kosta" Demiris from Demiris and Moore in Walnut Creek will be one of the featured speakers at the event along with Matthew B. Talbot. Kosta Demiris is the President of the CCCBA Barristers Section and Member of the Elder Law Board. Mr. Talbot is a board member of the Barristers Section.
The event is open to everyone include non-members of the Contra Costa County Bar Association. See the link below for more information and to sign up.
New Law Creates a Non-Probate Revocable Transfer Upon Death Deed and Statutory Form
The Revocable Transfer Upon Death Deed bill was approved by the Governor of California on September 21, 2015. The purpose of the new law is to allow for non-probate transfers of property through this revocable deed. That way, a person who does not wish to establish a trust or hold property in joint tenancy with his/her beneficiaries can simply name a beneficiary under the new deed to avoid probate and still have the protections of revocation. The deed is meant to benefit citizens by saving them money in avoiding the need to probate real property.
The law will last until 2021 – just six years. By January 1, 2020 – the Law Review Commission is due to make recommendations to the Legislature on the effectiveness of this law. A copy of the bill can be found below:
If you click on the link and scroll down you will find a Probate Code section 5642 form (with a common questions on using the form section); there's also a form for revoking the deed.
In the Conservatorship of the Person and Estate of Lester Moore
Friend v. Salzwedel
William Salzwedel, a California licensed attorney, had his attorney fees/trustee fees and costs surcharged by $96,077.14. In the decision, the Second Appellate District Court of Appeals upheld the trial court’s ruling, which held that Mr. Salzwedel put his own financial interests ahead of the interests of his client, an elderly person suffering from dementia.
Mr. Salzwedel was hired by Lester Moore, an elderly man who was subject to a conservatorship petition against him. Mr. Moore was found by his doctor’s to have impaired capacity (he was previously determined by his treating physicians to suffer from dementia and lacked the ability to handle his affairs). During the conservatorship proceedings Mr. Salzwedel then amended Mr. Moore’s estate plan by having Mr. Moore modify his trust to name Mr. Salzwedel as the temporary successor trustee; obtained Mr. Moore’s resignation as trustee; and created a durable power of attorney appointing Mr. Salzwedel as Mr. Moore’s agent under the power of attorney also known as his attorney-in-fact. Mr. Moore’s new estate planning disinherited his family in favor of what the Court determined to be one of Mr. Salzwedel’s “allies.” During his tenure as trustee, Mr. Salzwedel billed at his attorney rate. His total fees were $148,015.11.
The billing matters were brought before the Court by Mr. Salzwedel who filed a petition to settle his accounting that were objected to by the temporary conservator. The trial court ruled before the evidentiary hearing that the fees ($148,015.11) were disapproved absent a showing that the services benefitted Mr. Moore in the amounts charged and a showing that Mr. Moore had the capacity to contract for and approve the fees when the services were rendered. Mr. Salzwedel used a “spare-no-expense strategy,” which the Court of Appeals stated calls for close scrutiny on questions of reasonableness, proportionality, and trust benefit and that where the trust is not benefited by the litigation or does not stand to be benefitted if the trustee succeeds, there is no basis for the recovery of expenses out of the trust assets.
Of the fees, $70,044.99 were attorney fees/trustee fees, $25,015.13 were medical expert fees (part for a “celebrity psychiatrist” who didn’t even render a written report or testify), and $1,017.02 were costs.
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.
On August 20, 2015, Konstantine "Kosta" Demiris was invited by Eliza Gryko to speak at the Contra Costa County Bar Association ("CCCBA") Law Student Mixer at John F. Kennedy University College of Law in Pleasant Hill, CA. Eliza Gryko is the co-section leader of the CCCBA's Student Section, in addition to being a registered nurse, professionally licensed California fiduciary, and 2016 JD candidate.
The topics discussed were networking and mentoring. Kosta's speech focused on how networking and mentoring are necessary elements in the development of a lawyer. He used real-life examples involving sports and, amongst other things, Steve Urkel and Laura Winslow. Kosta discussed the need for law students who are aspiring lawyers to adapt to the legal world and reach out to fellow students, lawyers, and other professionals in all arenas. He stressed the need to sacrifice and be willing to give, even when there doesn't appear to be any immediate reward in sight.
Kosta's speech was part autobiographical, discussing his travails from working as a deputy county counsel and practicing an array of legal areas, to finding his niche and becoming a recognized member of the Contra Costa County legal community; a business partner of a Bay Area litigation firm handling will, trust, conservatorship and general civil litigation; and his service on various prestigious boards including the Elder Law Section, as President of the Barristers Section, and as a delegate representing the CCCBA in the Conference of California Bar Associations.
Kosta discussed his fortune to work along some of the great attorneys and Judges in Contra Costa County, well-respected members of the community, and hard-working people who have helped him by sharing something incredibly valuable and priceless - their own personal experiences. Kosta's speech concluded with an acknowledgment of the wisdom of the famous Greek storyteller, fabulist, and slave, Aesop, who many revere today and hold in high esteem. Kosta's speech followed that of Cole Peters, Esq., a personal injury and worker's compensation attorney who shared his personal experiences in transitioning from being a law student to a lawyer in private practice.
Sacramento County Superior Court Case # 34-2013-00152632-PR-PW-FRC in re: the Estate of Barbara J. Heston
Walnut Creek estate lawyer and probate litigation lawyer Konstantine “Kosta” Demiris, represented Kevin Heston the executor named in Barbara J. Heston’s 1996 holographic will (the original holographic will was lost) in petition for probate of the lost holographic will. Kevin’s brother, Paul Heston filed an objection to the validity of the will. Paul contended that a 2010 typewritten will was the controlling will (or in legal parlance, the controlling “testamentary instrument”).
Following extensive discovery and depositions that strongly established the 2010 typewritten will was not valid, Paul conceded the point (he waited until three-weeks before trial to do so). Paul stipulated to the validity of the holographic will and admitted the 2010 will was invalid, which was made an order of the Court. On January 5, 2015, Kevin was duly appointed by order of the Court as executor of his mother’s estate under the holographic will.