Keane – Trust

A demurrer can be used only to challenge defects that appear within the “four corners” of the pleading – which includes the pleading, any exhibits attached, and matters of which the court is permitted to take judicial notice. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)

On demurrer, a complaint must be liberally construed. (Code Civ. Proc. § 452; Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 601.) All material facts properly pleaded, and reasonable inferences, must be accepted as true. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)

A pleading is adequate if it contains a reasonably precise statement of the ultimate facts, in ordinary and concise language, and with sufficient detail to acquaint a defendant with the nature, source and extent of the claim. The degree of detail required depends on the extent to which the defendant in fairness needs such detail which can be conveniently provided by the plaintiff. Under normal circumstances, there is no need for specificity in pleading evidentiary facts. However, bare conclusions of law are insufficient. (Code Civ. Proc. §§ 425.10(a), 459; Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 549-550; Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126; Doheny Park Terrace HOA v. Truck Ins. Exchange (2005) 132 Cal.App.4th 1076, 1098-1099; Berger v. California Insurance Guarantee Assn (2005) 128 Cal.App.4th 989, 1006.)

Here, the 850 Petition seeks an order confirming that the Muriel Siebert & Co. Investment Account Number CXT- 557037 (the “Siebert Account”) belongs to the Robert M. Keane Living Trust (the “Trust”) even though the Minors are designated as pay-on-death beneficiaries thereof. The Minors allege that the 850 Petition fails to state facts sufficient to constitute a cause of action under Probate Code section 850.

The 850 Petition alleges that the settlor and decedent Robert M. Keane (“Decedent”) created the Trust on 10/24/23. A copy of the Trust is attached as Exhibit “B” to the 850 Petition.

Article V of the Trust governs distributions to beneficiaries upon Decedent’s death. Subsection (B) of Article V of the Trust states as follows:

(B) Lifetime and Residuary Beneficiaries 1. The Trustee shall apply the net income from all investments which form a part of the Trust Estate, particularly all investments currently held by Siebert Account #CXT- 557037, for the benefit of grantor’s former spouse, WANVIMOL KEANE during her life. The net income from the Trust shall be distributed to or for the benefit of such beneficiary at such times and in such manner as, in the Trustee’s sole discretion, will be in the best interests of said beneficiary. Any undistributed income shall be retained as part of the Trust Estate.

After the Decedent passed away, Petitioner learned that Decedent had designated the Minors as pay-on-death beneficiaries of the Siebert Account on 5/5/19, more than four years before he created the Trust. (ROA 2, Pet., ¶ 4.) The 850 Petition alleges that Decedent had no knowledge, recollection, or belief that the Siebert Account had any named beneficiaries and that he clearly communicated such belief to his estate planning attorney and to Petitioner. (Id.) Petitioner alleges that based on the language of Article V.(B), which designates Wanvimol Keane as a lifetime beneficiary of the income from the Siebert Account, as well as the Decedent’s alleged lack of memory concerning the pay-on-death beneficiaries, the Decedent intended for the Siebert Account to be an asset of the Trust.

In their Demurrer, the Minors point to Schedule A of the Trust, which states in relevant part as follows: “All assets of every type or description belonging to Grantor, other than qualified retirement assets and other assets having named beneficiaries, are hereby transferred to the Trust.” (Underline in original.) The Minors contend that the language of Schedule A and Article V.(B) taken together indicate that the Decedent intended only the net income from the Siebert Account to belong to the Trust, not the account itself. (ROA 32, Demurrer, 7:11-12.) However, such a distribution, even if intended by Decedent, could not be effectuated by the joint use of a trust and a designation of a transfer-on-death beneficiary.

An account with a transfer-on-death beneficiary passes entirely by contract to the designated beneficiaries upon the death of the account holder. No part of the account ever becomes part of the account holder’s estate. Instead, the financial institution holding the account transfers the

investments into a newly created account in the designated beneficiary’s name. The account holder cannot dictate what a beneficiary thereafter does with the newly acquired account. Thus, the Trust cannot control the income from the Siebert Account once the Siebert Account is transferred to the Minors. The only way to effectuate the distribution that the Minors contend the Decedent intended to make would be through the Trust.

In short, the Trust provides that Wanvimol Keane is to receive income from the Siebert Account after the Decedent’s death, which instruction is contrary to the transfer-on-death designation.

In their Demurrer, the Minors contend that Petitioner did not “provide any extrinsic evidence” to support their allegation that the Decedent intended for the Siebert Account to be an asset of the Trust. The Minors further point out that Petitioner did not provide any documents or writings to support the allegations. However, there is no requirement to produce evidence at the pleading stage. Nor is there a requirement for the 850 Petition to be pled with specificity.

The Petition alleges that the language of Article V.(B) reflects the Decedent’s intent to make the Siebert Account a Trust asset; it further alleges that the Decedent understood and clearly communicated to Petitioner and his estate planning attorney that there was no designated beneficiary of the Siebert Account. Such facts are sufficient to state a cause of action under Probate Code section 850. (See Placencia v. Strazicich (2019) 42 Cal.App.5th 730, 734-735 [express intent in estate plan can overcome nonprobate character of asset]; Araiza v. Younkin (2010) 188 Cal.App.4th 1120, 1126 [clear and convincing evidence of a different intent expressed in a trust may defeat designation of account beneficiary].)

The court makes no finding here as to the Decedent’s intent with regard to the Siebert Account, and no part of this ruling should be used to argue for against any interpretation of the Trust. The court finds only that the allegations in the 850 Petition are sufficient at the pleading stage to overcome demurrer.

The demurrer is OVERRULED.

Counsel for Petitioner is ordered to serve notice of ruling on this Demurrer.

The Minors shall file a written response or objection to the 850 Petition within 10 days of service of the notice of ruling, extended for method of service.