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Wells Fargo Bank v. Marshall, 20 Cal.App.4th 447, 24 Cal.Rptr.2d 507

Facts

Arthur Leonard Marshall created a trust that specified distributions to his ex-wife, son, and his son's wife, if she was living at the time of the trustor's death. After the trustor's death, the trustee petitioned the court to interpret the trust, particularly regarding whether Donna, the second wife of the trustor's son, was entitled to income from the trust. The court ruled that Alisa, the granddaughter, should receive the trust assets, leading to Donna's appeal.

In August 1970 the trustor wrote the prospective trustee of a trust, Bank of America, a one-page letter listing the provisions he wanted to have in a trust agreement to be drawn up by the bank.

Issue

Whether Donna Marshall, the surviving second wife of John Samuel Marshall, is entitled to life income from the trust and reimbursement for attorney fees incurred on appeal.

Whether Donna Marshall, the surviving second wife of John Samuel Marshall, is entitled to life income from the trust and reimbursement for attorney fees incurred on appeal.

Rule

The intent of the trustor prevails in interpreting a trust instrument, and the court must consider the entire trust document and the circumstances under which it was created to ascertain the trustor's intent.

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.

Analysis

The court analyzed the ambiguous language of the trust regarding the surviving wife and determined that the trustor likely intended to provide for whatever woman John Samuel Marshall was married to at the time of his death. The court found that the language 'if such wife was living at the time of the Trustor's death' was added to address potential issues with the rule against perpetuities, and thus, Donna, as the wife at the time of John's death, was entitled to the income.

The most reasonable interpretation of the trust language is that the woman married to and living with Sam at his death was intended to be the life income beneficiary, and Donna meets that description.

Conclusion

The court reversed the probate court's order denying Donna income from the trust and attorney fees on appeal, while affirming the order allowing payment of attorney fees for Alisa's guardian ad litem.

The order construing the trust instrument is reversed with directions to the probate court to enter a new order declaring Donna Marshall to be a beneficiary entitled to income under the trust.

Who won?

Donna Marshall prevailed in part, as the court recognized her entitlement to life income from the trust and reimbursement for attorney fees, based on the trustor's intent.

We agree with Donna that the evident intent of the trustor was that she, as the surviving wife of Sam, should obtain a life income from the trust.

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