The settlor’s inter vivos trust provided that at her death, her daughter would become trustee and that all the trust assets were to be distributed to the daughter. If the daughter died before final distribution of the trust assets, undistributed income and principal would be distributed to daughter’s fiancé who was also the successor trustee. If all the beneficiaries die before final distribution, the undistributed property passes to the heirs of the trustees. When the settlor died, the daughter recorded an affidavit attesting to the death of the settlor/trustee but never distributed any of the trust property to herself before her death five years later. Her fiancé then recorded an affidavit attesting to the daughter’s death and executed a quitclaim deed transferring the trust property, the settlor’s home, to himself. The settlor’s son filed suit claiming the trust property as his sister’s heir and appealed the adverse ruling of the trial court.
The intermediate California appellate court affirmed in Weinberger v. Morris, 115 Cal. Rptr. 3d 860 (Cal. Ct. App. 2010). The court held that the fiancé was the sole beneficiary of the trust. The trust did not terminate until final distribution of the trust assets and since the public policy favoring prompt distribution of an estate does not apply to trusts, the son has no grounds on which to argue that his sister was the sole trustee and beneficiary at the time of the settlor’s death and thus owner of the home through application of the merger doctrine.
Special thanks to William P. LaPiana (Rita and Joseph Solomon Professor of Wills , Trusts,and Estates, New York Law School) for bringing this to my attention.
