Topic: Wills and Probate
Trust did not terminate under ‘merger doctrine’ since intent of settler was for trust to continue until final distribution of trust property occurred.
A California Court of Appeal affirmed the lower court’s decision in ROBERT WEINBERGER v. JAMES G. MORRIS et al. The trial court found that the merger doctrine did not apply in this case and that the Defendant had distributed the real property as the rightful trustee of the Plaintiff’s mother’s Trust. The appellate court agreed.
On October 12, 1996 Sue Weinberger (Mrs. Weinberger) executed a declaration of trust, which created the “Sue Weinberger Trust”. On the same day, she executed a quitclaim deed which transferred her home on Atoll Avenue into the Trust. The Trust provided that Mrs. Weinberger was the initial trustee and Sheila Weinberger (her daughter) was successor trustee, followed by Lee Davis (Sheila’s fiancee). The Trust also provided that after Mrs. Weinberger’s death, the trustee was to “pay all its expenses, and that all trust assets, save the personal effects which [Mrs.] Weinberger requested distributed in separate written instructions, were to go to Sheila.” It also provided that if Sheila died prior to receiving and distributing everything in the trust, the undistributed principal and income would go to Davis. Another part of the Trust provided that Mrs. Weinberger’s son Robert was intentionally omitted from the trust.
Mrs. Weinberger died in May 1997; Sheila recorded an Affidavit Death of Trustee/Trustor the following December. Sheila never transferred the Atoll Avenue property out of the Trust and to herself as the beneficiary. Sheila died in September 2002. In November 2005, Davis recorded an Affidavit Death of Trustee, which disclosed that Sheila, a successor trustee of the Trust, had died. At the same time, Davis executed a quitclaim deed that transferred the Atoll Avenue property out of the Trust and to himself, which was recorded in December 2005.
In June 2006, Robert Weinberger filed this suit (Morris is Davis’ attorney), claiming that he was the rightful owner of the Atoll Avenue property because the Trust only named Davis as a “contingent beneficiary” which would only allow the property to pass to him in the event that Sheila died before her mother. Robert also alleged that the property passed to Sheila when her mother died, and then when Sheila died, the property passed to Robert because he was her heir.
In February 2009, the trial court entered its decision, which named Lee Davis as the beneficiary of the Trust. In April 2009, Robert filed an appeal.
The trial court decided that Robert’s argument implicates the “merger doctrine” which in summary states:
“when the sole trustee of a trust and the sole beneficiary of the trust become one-and-the-same person, the duties of the person, in his or her role as trustee, and the interests of the person, in his or her role as beneficiary, ‘merge,’ meaning that the trust terminates as a matter of law, and the trust’s assets irrevocably vest in the beneficiary”
The trial court also found that this doctrine did not apply. They found that the Sue Weinberger Trust “continued until there was a final distribution of the assets of the Trust.” Because the real property remained in the Trust when Sheila died, Lee Davis rightly distributed it to himself, acting as the trustee of the Trust. The appellate court agreed with this decision, and further contended that “this reading is also consistent with the fundamental purpose of the Trust, which expressly provides that Mrs. Weinberger had ‘intentionally omitted to provide for her son…Robert’.”
Quotes and information gathered from The Daily Recorder, Vol. 103, No. 188, September 29, 2010 Daily Appellate Report.