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The Dead Trust Beneficiary's Gift | California Anti-Lapse Statute

CA Deceased Beneficiary Gift Anti-Lapse Clause.jpgGrandma and Grandpa have a trust. Their trust provides that at their first death, the trust assets will remain in trust for the benefit of the survivor. At the survivor's death, all trust assets are to be distributed in equal shares to their three children, Steve, Frank and Eve.

Grandma and Grandpa are co-trustees of the trust during their lifetime. The survivor becomes the sole trustee after the first death of the couple. Salandro, the couple's accountant, becomes the trustee at the death of the survivor.

Grandpa dies in 2014. Grandma administers the trust during her lifetime. Frank, Grandma and Grandpa's oldest son, dies in 2017. Frank's two daughters, Prudence and Charity, survive him.

Grandma dies in 2019. Salandro becomes the trustee and administers the trust. Salandro informs the family members that he is going to distribute the trust assets in equal parts to Steve and Eve - Grandpa and Grandma's only surviving children.

Prudence and Charity, Frank's two surviving daughters and Grandma and Grandpa's grandchildren, tell Salandro that his plan doesn't sound fair. Salandro won't listen - he says his plan is his plan. Salandro says that because Frank died before Grandma, neither he nor his children could receive anything from Grandpa and Grandma's trust.

Prudence and Charity seek counsel. What do we advise? We ask to see the trust. We see that the trust does not require Steve, Frank or Eve to survive their parents to receive their beneficial interests. In the words of California's "anti-lapse" statute the trust "instrument (does not express) a contrary intention or a substitute disposition." (Probate Code Section 21110, subd. (b).)

Grandma and Grandpa could have required their children to survive them. Grandma and Grandpa's trust does not have a survival condition. There is no clear expression of intent. This would change things depending on the language of the trust.

The fact that Grandma didn't change the trust after Frank died doesn't matter. The anti-lapse statute doesn't penalize the dead beneficiary for the trustor's failure to act. This inaction cannot be used as any evidence of the trustor's intent.

The rule is simple in this case. Prudence and Charity take Frank's share. Salandro, the successor trustee, is wrong.

If Salandro fails to act in accord with the law, he can be challenged in Probate Court.

California's anti-lapse law reflects common sense. The object of Grandpa and Grandma's bounty is their children, and by extension their grandchildren descended from their children. It would be simple enough to impose a survival clause. They did not. The anti-lapse statute prevails.

Hackard Law regularly addresses anti-lapse issues in trust and estate litigation. We focus on substantial cases where we think that we can make a significant difference and there is a wrongdoer who can be made financially accountable for their wrongdoing or breach of duty.

Our geographic focus includes Los Angeles, Orange, Santa Clara, San Mateo, Alameda, Contra Costa and Sacramento. Call us at 916 313-3030 if you would like us to hear your story.

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