San Diego Estate Planning Lawyer Blog
In estate planning, trusts are a common device used to transfer property from a settlor to a beneficiary. Not all trusts are explicit or in writing, however. California recognizes resulting trusts, which exist when a person takes title to property that is intended for the use or benefit of another. The person holding title has a duty, inferred from the parties’ intent, to transfer the property to the beneficiary.
If this sounds confusing, a recent California probate case may help explain. This case is discussed here for illustration only and should not be construed as legal advice or a binding statement of California law on the subject of resulting trusts.
Estate of Aniceto Reyes Alva
Aniceto Alva purchased a residence in Oxnard with his first wife, who died in the early 1990s. Alva married his second wife, Cristina, in 1994, and they continued to live in the Oxnard residence. Alva died without a will in 2009.
Alva had one surviving child from his first marriage, Rogelio Alva. In the late 1980s, Alva and his first wife added an apartment to the Oxnard residence, where Rogelio and his family lived. Rogelio Alva paid off the loan his parents took out to build the apartment, with the oral understanding Rogelio and his wife would own the unit outright once all the payments were made. That occurred in 2002.
When Aniceto Alva tried to back out of the deal, Rogelio Alva threatened to move his family to Arizona. To prevent this, Aniceto offered to “gift” his son (and his wife Judy) the entire residence outright. In exchange, Rogelio Alva would be responsible for paying off a new $80,000 home equity loan. Aniceto Alva would also be allowed to remain in the house until his death, and his second wife Cristina could remain for a few months afterward.
Cristina Alva was apparently unaware of this arrangement. After her husband’s death, she filed a probate proceeding to contest Rogelio Alva’s claim that he now owned the house. Rogelio and his wife filed their own petition asking the court to order Cristina to sign the deed over to them.
The probate court found Aniceto Alva created a resulting trust through his oral agreements with Rogelio. The fact that Aniceto neglected to inform his wife of the deal was irrelevant. In this scenario, Cristina Alva had a duty as trustee to transfer the property to Rogelio Alva and his wife as the rightful owners. The California Court of Appeals agreed with the probate court’s decision: “Substantial evidence supports the trial court’s determination that Rogelio and Judy’s acceptance of Aniceto’s offer created an enforceable agreement as to the entire property, and that a resulting trust occurred when title was transferred to Cristina instead of to them. ”
Planning Together
While courts may recognize resulting trusts arising from oral agreements, the Alva case does not represent an ideal estate planning situation. To avoid confusion-and litigation-it’s always best for spouses to keep one another informed about their estate planning activities. Ideally, spouses should work together with a qualified California estate planning attorney who can advise them as to the best course of action. Contact the Law Office of Scott C. Soady in San Diego today if you have any questions.