Opinion
NOT TO BE PUBLISHED
Superior Court County of San Luis Obispo Los Angeles County No. PR060125, Teresa Estrada-Mullaney, Judge
T. Randolph Catanese and Douglas R. Hume; Catanese & Wells, a Law Corporation, for Appellants.
Martha R. Farwell, for Respondents.
YEGAN, J.
John Stephenson and James Stephenson, beneficiaries of a trust created in 2002, appeal from a judgment reforming a trust created in 1990. Daniel Carnahan and Mary Jane MacKillop, respondents, are beneficiaries of the 1990 trust. The reformation resulted in the transfer of real property from the 2002 trust to the 1990 trust. Appellants contend: (1) an action to reform the 1990 trust was time-barred; (2) the probate court exceeded its jurisdiction in reforming the 1990 trust because in their pleadings respondents did not ask the court to reform or interpret that trust; and (3) the probate court erred by reforming the 1990 trust. We reject the first two contentions. However, the third contention has merit. Accordingly, we reverse.
Factual and Procedural Background
Norman Winn (Norman) and Edna Winn (Edna) were married in 1957. Edna had four children by a prior marriage: Patricia L. Russell, (Patricia), Ronald Carnahan, and respondents Mary Jane MacKillop (Mary) and Daniel Carnahan (Daniel). Ronald Carnahan died in 1990. Patricia, who had two children, died in 1999. Norman had one son – Gary Winn – who died. Gary Winn had one child: Cory Winn. Cory Winn was raised in foster care and did not have contact with Norman until 2003.
In 1990 Norman and Edna executed a declaration of trust creating the Norman C. Winn Family Trust. The declaration is on a preprinted form with blanks to be filled in by the trustors, who are also referred to in the document as "the Grantors." The form was provided by True Trust Service. The trust was initially funded with Norman's and Edna's residence in Altadena (the Altadena property). Prior to the conveyance of the Altadena property to the trust, Norman and Edna held title to the property as joint tenants.
The 1990 trust designates Norman and Edna as cotrustees. Daniel and Mary are designated as successor cotrustees. The "primary purpose" of the trust "is to provide for the reasonable care, comfort, support and maintenance of the Grantor(s)." The net income from the trust property "shall be paid in monthly or other convenient installments to or for the benefit of the Grantor(s)." Article VI is the only provision pertaining to the disposition of trust property after the death of the first trustor to die. Article VI provides: "At the death of the first of the undersigned..., after payment of currently due debts, expenses and costs of last illness and funeral out of the descendant's [sic] estate, the surviving undersigned Grantor and Trustee shall have the unrestricted power at any time to invade the principal of this trust." Article VII provides that, upon the death of the surviving trustor, "[a]ll Trust principal, with all accumulated income thereof," shall be distributed in equal shares to Mary, Daniel, and Patricia. If any of these beneficiaries is not living, the beneficiary's share shall be distributed to his or her children. Article XII pertains to the trustors' power to amend or revoke the trust or to withdraw trust assets. It provides: "During the lifetime of the Trustor, Trustor shall have the following powers: [¶] A. To amend or revoke any of the terms of this Trust. [¶] B. To add assets to the corpus of the Trust. [¶] C. To withdraw any assets of the Trust."
Concurrently with the execution of the 1990 trust, Norman and Edna executed reciprocal pour-over wills and attached them as Exhibits A and B to the trust. Each will provides that, upon the death of the testator, the residue of the testator's estate "shall be added to [the] trust... and be administered and distributed according to the terms of that trust and any amendments properly made to it."
In 1995 Norman executed a document entitled, "The Amended Norman C. Winn Family Trust Dated June 28, 1995." The document states that it "replaces [the] original [1990] Trust in its entirety." Norman signed the document for Edna as her "Attorney in fact." (Ex. 6, p. 21) Edna was unable to sign because of Alzheimer's disease. The 1995 trust consists of 20 pages, but 16 pages are missing.
Edna died in May 1996. In May 2002 Norman married Bonnie Stephenson (Bonnie). Norman was 82 and Bonnie was 67 years old. In July 2002 Norman and Bonnie executed what purported to be a "complete amendment" and replacement of the 1995 trust. Although the name of the 2002 trust remained the same (The Norman C. Winn Family Trust), the 2002 trust instrument created a new and different trust. The document designates Norman and Bonnie as the settlors, cotrustees, and primary beneficiaries. Bonnie's three children – appellants and Robert Stephenson – are designated as successor trustees. Upon the death of Norman and Bonnie, Daniel is to receive $15,000 and Mary is to receive $25,000. The residue of the trust estate is to be distributed in equal shares to Bonnie's three children.
The 2002 trust incorporates by reference "SCHEDULE 'A,' " which lists the assets of the trust. The Altadena property is listed under the heading, "REAL ESTATE." Schedule A was signed by Norman and Bonnie. It states that all of the listed property "is conveyed and transferred" to the 2002 trust.
Norman died in March 2005. In April 2006 Robert Stephenson filed a petition to probate Norman's 2003 pour-over will bequeathing his estate to the 2002 trust. The will appointed Bonnie as executor of Norman's estate and Robert Stephenson as successor executor. Stephenson declared that Bonnie "has dementia and is unable to act" as executor.
In June 2007 respondents filed a first amended petition requesting various forms of relief. One form of relief was reformation of the 2002 trust. Respondents alleged that Schedule A of the 2002 trust had mistakenly listed the Altadena property as an asset of that trust. Respondents requested that the 2002 trust be reformed to "reflect [Norman's] true intention," which was to leave the Altadena property to Edna's children. Respondents did not request reformation of the 1990 trust.
Statement of Decision
Following a court trial, the probate court wrote a 35-page statement of decision. The court determined that the 1995 trust was unenforceable "because the portions of that purported Trust produced at trial were incomplete and lack a designation of beneficiaries."
As to the 1990 trust, the court concluded that Article XII "is patently ambiguous, and is the result of a mutual mistake." Because of the ambiguity, the court considered extrinsic evidence of the intent underlying the 1990 trust. Based on the extrinsic evidence as well as the 1990 trust instrument and accompanying pour-over wills, the court found that Edna clearly "intended her property to go to her children, the Trust's beneficiaries." The court rejected appellants' contention that the 1990 trust should be interpreted as giving the surviving trustor discretion to dispose of the entire trust principal. The court declared that appellants' interpretation "would defeat Edna's intent to leave her property to her children." The court "therefore excercise[d] its equitable power to amend the 1990 Trust to follow... Edna's and Norman's intentions."
The court left intact the title of Article XII: "RESERVED POWERS OF THE TRUSTOR(S) [GRANTOR(S)]." It modified the substance of Article XII by adding the following underlined language: "During the joint lifetime of the Trustor(s), Trustor(s) shall have the following powers: [¶] A. To jointly amend or revoke any of the terms of this Trust. [¶] B. To add assets to the corpus of the Trust. [¶] C. To withdraw any assets of the Trust." The court also added a new paragraph to Article XII: "After the death of the first Trustor, the surviving Trustor may, on his or her own, withdraw (or revoke the trust as to) his or her separate property, and his or her own 1/2 interest in the community property."
As to the 2002 trust, the court found that respondents had failed to carry their burden of proving that it "was a product of mistake or undue influence." The court concluded: "[T]he 2002 Trust is valid as between Norman and Bonnie, but it contains only Norman's property. [Citation.] Edna's [separate] property and her 1/2 of the community property as of the date of her death remain in the reformed 1990 Trust, to be distributed to her children."
The court determined that respondents, "as Trustees of the 1990 Trust, are entitled to the Altadena property, and the rent generated from that property, beginning in September 2005." The court ordered appellants to pay respondents "$70,400 for rent from September 2005 through the end of April, 2008, and an additional $2,200 per month, plus interest at the legal rate of 10% from the date of entry of this Order until this money is paid."
The court decided that the 2002 trust "retains all of the other assets Norman placed into it, including bank accounts and annuities." The court declared: "This equitably and pragmatically returns to the 1990 Trust Edna's separate property and 1/2 of the value of her community property, as of the date of her death. [¶]... Because of the paucity of valuation and tracing evidence adduced at trial, this is the most reasonable approximation of each side's entitlements that the Court can make."
Statute of Limitations
Appellants contend that an action to reform the 1990 trust was time-barred by Code of Civil Procedure section 366.2. Pursuant to that section, appellants argue that such an action was required to be filed within one year after Edna's death in May 1996. Section 366.2, subdivision (a), provides: "If a person against whom an action may be brought on a liability of the person, whether arising in contract, tort, or otherwise, and whether accrued or not accrued, dies before the expiration of the applicable limitations period, and the cause of action survives, an action may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply."
Section 366.2 has no bearing on the instant case. The section is a "general statute of limitations for all claims against a decedent." (Wagner v. Wagner (2008) 162 Cal.App.4th 249, 255.) An action to reform a trust to conform to the deceased trustor's intent does not involve a claim against the decedent. " ' "The overall intent of the Legislature in enacting Code of Civil Procedure former section 353 [(now § 366.2)] was to protect decedents' estates from creditors' stale claims. [Citations.]" ' " (Ibid.)
Respondents argue that "[t]he appropriate statute of limitations for this case is found under Probate Code [section] 16460 [subdivisions] (a)(1) and (2), as cited by the trial court." But subdivisions (a)(1) and (2) expressly apply only to "a claim against the trustee for breach of trust." An action to reform the 1990 trust does not constitute such a claim.
Pursuant to Getty v. Getty (1986) 187 Cal.App.3d 1159, 1168-1169, Code of Civil Procedure section 338, subdivision (d), is the applicable statute of limitations. Section 338, subdivision (d), imposes a three-year statute of limitations for "[a]n action for relief on the ground of fraud or mistake." The statute provides: "The cause of action... is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake." In Getty the court concluded that the three-year statute of limitations on a beneficiary's action to reform a trust "began to run on the earliest date that [the beneficiary] can be charged with facts constituting the mistake." (Getty v. Getty, supra, 187 Cal.App.3d at p. 1169.) The beneficiary was charged with knowledge as of 1940. "Therefore, the period within which to seek reformation of the trust instrument expired in 1943." (Ibid.)
Appellants have not argued that an action for reformation of the 1990 trust was barred under the three-year statute of limitations of Code of Civil Procedure section 338, subdivision (d). Nor have they referred us to any evidence that would support such a time bar. Daniel testified that he did not see the 1990 trust instrument until after Norman's death in March 2005. Accordingly, the reformation claim was not time-barred.
Excess of Jurisdiction
Appellants contend that the probate court exceeded its jurisdiction in reforming the 1990 trust because in their pleadings respondents did not ask the court to reform or interpret that trust. Appellants argue: "None of the underlying pleadings raised an issue or caused a triable issue of fact to exist regarding the 1990 Trust."
"The jurisdiction of the court to grant any particular relief depends not on the prayer but on the issues - that is, on the scope of the complaint and the issues made or which might have been made under it - and any relief consistent with the issues raised may be granted regardless of the prayer. [Citations.]" (Wright v. Rogers (1959) 172 Cal.App.2d 349, 367-368.) The issue of the interpretation of the 1990 trust was raised in respondents' first amended petition. The opening paragraph of the petition alleges that respondents are "Successor Trustees by the terms of the Norman C. Winn Trust dated September, 1990" and that they are seeking "to ascertain beneficiaries under a valid trust and determine the distribution of trust assets." The next paragraph alleges that the Altadena property is "held in the Decedent's 1990 trust." Moreover, the petition's prayer for relief includes a request for "immediate protection" of trust assets "[p]ending judicial determination of NORMAN'S... authority to amend the 1990 trust...." In addition, the prayer for relief requests "an order appointing [respondents] to be Successor Trustees of the 1990/1995 Restated Trust... and requiring the transfer of all assets determined to be properly owned by said trust to [respondents], Trustees." The court's reformation of the 1990 trust effectuated this requested relief. Accordingly, the court did not act in excess of its jurisdiction.
Reformation
"Civil Code section 3399 recognizes the equitable common law power of a trial court to reform a trust agreement based on mistake, but not to create a new trust agreement under the theory of reformation. [Citation.]" (Ike v. Doolittle (1998) 61 Cal.App.4th 51, 84.) Civil Code section 3399 provides: "When, through fraud or a mutual mistake of the parties, or a mistake of one party, which the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised on the application of a party aggrieved, so as to express that intention, so far as it can be done without prejudice to rights acquired by third persons, in good faith, and for value."
Pursuant to Civil Code section 3399, "a reformation action lies when a written instrument does not accurately reflect the oral understanding which gave rise to it." (Getty v. Getty, supra, 187 Cal.App.3d at p. 1178.) "The sole purpose of the reformation doctrine is to correct a written instrument in order to effectuate a common intention of the parties which was incorrectly reduced to writing. [Citation.]" (Ibid.) "In order to be entitled to reformation, a party must present clear and convincing evidence that the agreement as written does not express the true intention of the parties and that there was a mutual mistake. [Citations.]" (Dictor v. David & Simon, Inc. (2003) 106 Cal.App.4th 238, 253.)
In Ike v. Doolittle, supra, 61 Cal.App.4th at page 83, the appellate court concluded that a trial court has "equitable power, founded in common law... to modify [a] Trust provided (1) a 'peculiar' or 'exceptional' circumstance [makes] modification necessary to accomplish the purpose of the trustors, and (2) there [is] some expression in the trust instrument of the purpose of the trustors.... [A] drafting error in a trust instrument which renders ambiguous an expression contained therein regarding the administrative or distributive intentions of the trustor(s) constitutes a 'peculiar' or 'exceptional' circumstance... which may justify an equitable modification of a trust instrument to accomplish the purpose of the trustor(s)."
The 1990 Trust Is Not Ambiguous as to the Power of the Surviving Trustor
"[E]xtrinsic evidence of the circumstances under which a will [or trust] is made... may be considered by the court in ascertaining what the testator [or trustor] meant by the words used in the will [or trust]. If in the light of such extrinsic evidence, the provisions of the will [or trust] are reasonably susceptible of two or more meanings claimed to have been intended by the testator [or trustor], 'an uncertainty arises upon the face of a will [or trust]' [citation] and extrinsic evidence relevant to prove any of such meanings is admissible [citation].... If, on the other hand, in the light of such extrinsic evidence, the provisions of the will [or trust] are not reasonably susceptible of two or more meanings, there is no uncertainty arising upon the face of the will [or trust] [citations] and any proffered evidence attempting to show an intention different from that expressed by the words therein, giving them the only meaning to which they are reasonably susceptible, is inadmissible. In the latter case the provisions of the will [or trust] are to be interpreted according to such meaning." (In re Estate of Russell (1968) 69 Cal.2d 200, 211; see also Ike v. Doolittle, supra, 61 Cal.App.4th at pp. 73-74.) "On appellate review, the trial court's threshold determination of ambiguity is a question of law [citation] and is thus subject to our independent review [citation]." (Appleton v. Waessil (1994) 27 Cal.App.4th 551, 554-555.)
Viewed in isolation from the other trust provisions, article XII of the 1990 trust is patently ambiguous. The article provides: "During the lifetime of the Trustor, Trustor shall have the following powers: [¶] A. To amend or revoke any of the terms of this Trust. [¶] B. To add assets to the corpus of the Trust. [¶] C. To withdraw any assets of the Trust." An ambiguity arises because "Trustor" could mean either trustor acting alone during his or her lifetime or both trustors acting together during their joint lifetimes. Throughout the trust instrument the singular and plural forms of "trustee," "trustor," and "grantor" are used interchangeably. For example, article I provides: "The above-named husband and wife shall be the Grantors and Trustees of this trust agreement. This document, together with the Grantor's minutes, constitutes the full agreement between the Grantor and Trustee and beneficiaries." (Italics added.) The ambiguity is exacerbated by the use of both the singular and plural forms in the title of article XII: "RESERVED POWERS OF THE TRUSTOR(S) [GRANTOR(S)]."
But article XII cannot be viewed in isolation from the other trust provisions. "All parts of an instrument are to be construed in relation to each other and so as, if possible, to form a consistent whole. If the meaning of any part of an instrument is ambiguous or doubtful, it may be explained by any reference to or recital of that part in another part of the instrument." (Prob. Code, § 21121; see also Ike v. Doolittle, supra,61 Cal.App.4th at p. 73 [" 'In construing a trust instrument, the intent of the trustor prevails and it must be ascertained from the whole of the trust instrument, not just separate parts of it' "].)
All further statutory references are to the Probate Code.
Viewing the 1990 trust instrument as a whole, any ambiguity in article XII as to the power of the surviving trustor is clarified by article VI, which is entitled: "DISPOSITION AFTER DEATH OF THE FIRST OF THE UNDERSIGNED." Article VI provides: "[A]fter payment of currently due debts, expenses and costs of last illness and funeral out of the descendent's [sic] estate, the surviving undersigned Grantor and Trustee shall have the unrestricted power at any time to invade the principal of this trust." On its face, this provision gives the surviving trustor discretion to dispose of the entire trust principal, not just that portion of the principal allocable to the surviving trustor's separate property and one-half share of the community property. Indeed, the terms "community" and "separate" are never mentioned anywhere in the trust instrument.
Our interpretation of "principal" as meaning the entire principal of the trust is supported by the introductory clause of article VI: "[A]fter payment of currently due debts, expenses and costs of last illness and funeral out of the descendent's [sic] estate." (Italics added.) "[D]escendent's estate" presumably means that portion of the trust estate contributed by the decedent: his or her separate property and one-half share of the community property. The subsequent clause – the surviving trustor "shall have the unrestricted power at any time to invade the principal of this trust" – does not distinguish between the decedent's estate and the survivor's estate, i.e. that portion of the trust estate contributed by the surviving trustor. The inclusion of the "decedent's estate" limitation in the introductory clause and omission of any similar limitation in the subsequent clause indicates that the omission was intentional. (See United States Fid. & Guar. Co. v Annunziata (1986) 67 N.Y.2d 229, 233 [492 N.E.2d 1206, 1208, 501 N.Y.S.2d 790, 792] [inclusion of provision in one clause of contract and omission of similar provision in another clause of the same contract "must be assumed to have been intentional under accepted canons of contract construction"].) If the trustors had intended that the surviving trustor would have the "unrestricted power at any time to invade" only that portion of trust principal allocable to the survivor's estate, they would have said so.
Respondents note that the 1990 trust's primary purpose "is to provide for the reasonable care, comfort, support and maintenance of the Grantor(s)." In view of this purpose, they argue that "[t]he reasonable support of Grantor, Norman Winn, is the only purpose for which the 'unrestricted invasion of principal' can be applied." We disagree. Article VI imposes no standard limiting the exercise of the surviving trustor's power to invade principal. If the trustors had intended this power to be exercisable only to the extent necessary to provide for the surviving trustor's reasonable support, they would have said so. They said so in a different context in article V, part A, which provides for the distribution to the "Grantor(s)" of the net income of the trust property. Article V, part A, states: "If said Grantor(s) at any time shall be, in the sole judgment and discretion of the non-incapacitated Trustee, unable for any reason personally to receive and/or expend or use such income, the non-incapacitated Trustee may, so long as such condition shall continue to exist, expend the net income and so much of the principal for the care, comfort and support and maintenance of the incapacitated Grantor as is in the discretion of the Trustee necessary for such purpose and necessary to maintain the incapacitated Grantor in the same manner and the same status as (s)he is accustomed." (Italics added.) The inclusion of the "care, comfort and support and maintenance" standard in article V, part A, indicates that its omission from article VI was intentional. (See United States Fid. & Guar. Co. v Annunziata, supra, 67 N.Y.2d at p. 233 [492 N.E.2d at p. 1208, 501 N.Y.S.2d at p. 792].)
Respondents contend that article VI should not be interpreted as giving the surviving trustor discretion to dispose of the entire trust principal because such an interpretation would grant "Norman a general power of appointment." Respondents argue that the trustors could not have intended to grant such a power to the surviving trustor. But Article VI clearly creates a general power of appointment. "Simply put, a power of appointment is a power to dispose of property. The power can be as broad or as limited as its creator desires." (1 Cal. Will Drafting (Cont.Ed.Bar 3d ed. Nov. 2008 update) § 16.1, pp. 524-525.) "A power of appointment is 'general' only to the extent that it is exercisable in favor of the donee, the donee's estate, the donee's creditors, or creditors of the donee's estate, whether or not it is exercisable in favor of others." (§ 611, subd. (a).) " 'Donee' means the person to whom a power of appointment is given or in whose favor a power of appointment is reserved." (§ 610, subd. (d).) "A power to consume, invade, or appropriate property for the benefit of a person in discharge of the donee's obligation of support that is limited by an ascertainable standard relating to the person's health, education, support, or maintenance is not a general power of appointment." (§ 611, subd. (b), italics added.) Here, the surviving trustor's power to invade trust principal was not limited by any standard. Accordingly, Norman was granted a general power of appointment over the trust principal.
Respondents contend that an interpretation giving the surviving trustor discretion to dispose of the entire trust principal would conflict with "the trustee's duty of loyalty to the remaindermen." But pursuant to sections 15803 and 15800, the trustee's duty of loyalty was to the surviving trustor, not to the remaindermen, because the surviving trustor had the rights of a person holding the power to revoke the trust. Section 15803 provides: "The holder of a presently exercisable general power of appointment or power to withdraw property from the trust has the rights of a person holding the power to revoke the trust that are provided by Sections 15800 to 15802, inclusive, to the extent of the holder's power over the trust property." Section 15800 provides that, "[e]xcept to the extent that the trust instrument otherwise provides..., during the time that a trust is revocable and the person holding the power to revoke the trust is competent: [¶] (a) The person holding the power to revoke, and not the beneficiary, has the rights afforded beneficiaries under this division. [¶] (b) The duties of the trustee are owed to the person holding the power to revoke." Furthermore, the 1990 trust states that "the rights of the remainderm[e]n shall be subordinate" to the rights of the "Grantor(s)," in whose favor the trust instrument shall be "liberally construed."
In its statement of decision, the probate court concluded that, pursuant to section 16081 as it read in 1990, article VI should not be construed as giving the surviving trustor discretion to dispose of the entire trust principal. In 1990 section 16081 provided: "(a) Subject to the additional requirements of subdivision (b), if a trust instrument confers 'absolute,' 'sole,' or 'uncontrolled' discretion on a trustee, the trustee shall act in accordance with fiduciary principles and shall not act in bad faith or in disregard of the purposes of the trust. [¶] (b) "Notwithstanding the settlor's use of terms like 'absolute,' sole,' or 'uncontrolled,' a person who is a beneficiary of a trust and who, either individually or as trustee or costrustee, holds a power to take or distribute income or principal to or for the benefit of himself or herself pursuant to a standard, shall exercise that power reasonably and in accordance with the standard. In any case in which the standard governing the exercise of the power does not clearly indicate that a broader power is intended, the holder of the power may exercise it in his or her favor only for his or her health, education, support, or maintenance." (Stats. 1986, c. 820, § 40.)
Section 16081 as it read in 1990 does not affect our interpretation of article VI. Our interpretation does not impinge upon the trustee's fiduciary duties. As we have explained above, the trustee's duties are owed to the surviving trustor, not to the remaindermen. Moreover, subdivision (b) of section 16081 is inapplicable because the surviving trustor's power to invade trust principal under article VI is not subject to any standard governing its exercise.
Thus, there is no facial ambiguity as to the surviving trustor's power to invade trust principal. Nevertheless, extrinsic evidence of the circumstances surrounding the execution of the 1990 trust was admissible to determine whether the trust instrument contained a latent ambiguity. "A latent ambiguity is one which is not apparent on the face of the will [or trust] but is disclosed by some fact collateral to it. [Citations.]" (In re Estate of Russell, supra, 69 Cal.2d 200, 207.) "In order to determine initially whether the terms of any written instrument are clear, definite and free from ambiguity the court must examine the instrument in the light of the circumstances surrounding its execution so as to ascertain what the parties meant by the words used. Only then can it be determined whether the seemingly clear language of the instrument is in fact ambiguous.... The exclusion of parol evidence regarding such circumstances merely because the words do not appear ambiguous to the reader can easily lead to the attribution to a written instrument of a meaning that was never intended.' [Citation.]" (Id., at pp. 208-209.)
Neither the parties in their briefs nor the probate court in its statement of decision has cited any extrinsic evidence showing the existence of a latent ambiguity concerning the surviving trustor's power to invade trust principal. There is no extrinsic evidence of the circumstances surrounding the execution of the 1990 trust. All we know is that someone filled in the blanks of a preprinted form provided by True Trust Service. Nor is there any extrinsic evidence as to Edna's intent. In its statement of decision, the probate court notes that it "did not permit [Daniel] to testify regarding his Mother's alleged statements to him regarding her intentions with reference to her Will and the 1990 Trust, in large part because of his self-interest with respect to that testimony." As to Norman's intent, the probate court and respondents rely on Norman's statements that he wanted the Altadena property to go to Daniel and did not want it to be transferred to the 2002 trust. But these statements concern the circumstances surrounding the execution of the 2002 trust, not the 1990 trust. They are relevant to respondents' contention that the Altadena property was mistakenly included in Schedule A's list of the assets of the 2002 trust. The probate court decided this issue adversely to respondents.
According to respondents, "the Trial Court determined that Norman had actually reviewed [Schedule A] at a later time, after signing it, and impliedly approved it, even though listing of the Altadena home contradicted his statements to witnesses... that the house would go to 'his son, the policeman [Daniel]'...."
Accordingly, exercising our independent review, we conclude that the 1990 trust is not reasonably susceptible of two or more meanings as to the power of the surviving trustor to invade trust principal. Article VI means what it says: the surviving trustor has "the unrestricted power at any time to invade the principal of this trust," including the Altadena property. This means that the surviving trustor can sell the property and dispose of the proceeds. In the alternative, the surviving trustor can transfer the property to a new and different trust, which is what happened here. Unlike the situation in Ike v. Doolittle, supra, 61 Cal.App.4th 51, 74, in the instant case there is no evidence of a "drafting error" that rendered the trustors' expression of their intent ambiguous. The probate court, therefore, erroneously reformed the 1990 trust to provide that the surviving trustor's "unrestricted power" to invade trust principal shall apply only to the extent of the surviving trustor's separate property and one-half share of the community property.
In Ike v. Doolittle the attorney who drafted the trust testified that, as a result of his drafting errors, the trust did not accomplish what the trustors had intended. (Ike v. Doolittle, supra, 61 Cal.App.4th at pp. 67-68.) The appellate court concluded: "Here, the expression of the trustors' intent in sections 1 and 2 of article nine was rendered ambiguous by [the drafter's] admitted multiple drafting errors. However, the extrinsic evidence, including [the drafter's] testimony, resolves the ambiguity...." (Id., at p. 78.)
Principles of fairness and equity cannot be used to defeat the express provisions of article VI of the 1990 trust. We are bound by the rule that "[t]he intention of the transferor as expressed in the instrument controls the legal effect of the dispositions made in the instrument." (§ 21102, subd. (a), italics added.) "This case illustrates the danger of using preprinted [trusts]." (Estate of Dye (2001) 92 Cal.App.4th 966, 970.)
Disposition
The judgment is reversed. The probate court is directed to enter a new and different judgment confirming that the Altadena property shall remain in the 2002 trust to be held and distributed pursuant to the terms of that trust. Appellants shall recover their costs on appeal.
We concur, GILBERT, P.J., PERREN, J.