{"id":387,"date":"2010-10-24T16:20:37","date_gmt":"2010-10-24T23:20:37","guid":{"rendered":"http:\/\/fiduciarydutiesblog.com\/?p=387"},"modified":"2010-10-24T16:20:37","modified_gmt":"2010-10-24T23:20:37","slug":"araiza-v-younkin-disposition-of-bank-account-under-trust-law-is-fundamentally-different-from-result-under-law-of-wills","status":"publish","type":"post","link":"https:\/\/fresnolawyerblog.com\/?p=387","title":{"rendered":"Araiza v. Younkin – Disposition of Bank Account Under Trust Law is Fundamentally Different from Result Under Law of Wills"},"content":{"rendered":"

The recent decision in Araiza v. Younkin<\/strong> (Sept. 30, 2010) 188 Cal.App.4th involved the disposition of a bank account following the death of the parent.\u00a0 Under the law of wills, the beneficiary named on the account would have taken the funds, regardless of contrary language in the will.<\/p>\n

Ah, but the mysterious law of estate planning trusts.\u00a0 Instead of providing a decision that is consistent with probate law, the court broke rank and gave a contrary decision based on its interpretation of the trust agreement.<\/p>\n

Folks, this is dumb.\u00a0 The artificial dichotomy between the law of wills and the law of trusts, at least when the trust is simply a will substitute, must change.\u00a0 We need conformity in the law, so the rules and outcomes are in conformity.<\/strong><\/p>\n

Here is the decision.\u00a0 \u201cIn 2001, Mrs. Howery opened a checking account and a savings account at the Bank of America. Although she named [Lori Younkin] as the beneficiary of the savings account, Howery was the only person authorized to withdraw funds from it.\u201d<\/p>\n

To my analysis, this is a contract-based question.\u00a0 Lori Younkin is the named beneficiary on the bank account, and should take the funds at death.<\/p>\n

\u201cIn August 2005, Mrs. Howery established the Lucia Howery Living Trust . . . The Schedule listed \u2018Savings accounts\u2019 as among the categories of personal property delivered to the trust.\u201d<\/p>\n

Mrs. Howery died on April 29, 2009. The Trust Agreement provided that Mrs. Howery gave the Bank of America account to Gabriella Reeves.<\/p>\n

On appeal, Lori Younkin contended that \u201cshe was the sole owner of the savings account because Mrs. Howery named her as the beneficiary and never changed that designation in a manner authorized by Probate Code section 5303.\u201d<\/p>\n

\"Burano,<\/a><\/p>\n

That is a great argument under the law of wills.\u00a0 But this court was determined to muddy the waters, by creating an artificial distinction involving estate planning trusts.<\/p>\n

Explained the court, \u201cThe type of savings account Howery established is referred to in the Probate Code as a \u2018Totten trust\u2019 account. The term Totten trust describes a bank account opened by a depositor in his or her own name as trustee for another person where the depositor reserves the power to withdraw the funds during his or her lifetime. If the depositor has not revoked the trust then, upon his or her death, any balance left in the account is payable to the beneficiary.\u201d<\/p>\n

Bingo.\u00a0 End of analysis.\u00a0 \u201cSubdivision (b) lists the methods by which the terms of a multiple-party account may be modified. It provides: \u2018Once established, the terms of a multiple-party account can be changed only by any of the following methods: [\u00b6] (1) Closing the account and reopening it under different terms. [\u00b6] (2) Presenting to the financial institution a modification agreement that is signed by all parties with a present right of withdrawal.\u2019\u201d<\/p>\n

Not so fast.\u00a0 \u201cThis narrow reading of the statue, however, fails to harmonize it with section 5302. Section 5302, subdivision (c)(2) provides that sums remaining on deposit in a Totten trust after the death of the sole trustee belong to the person named as beneficiary, \u2018unless there is clear and convincing evidence of a different intent.\u2019\u201d<\/p>\n

\u201cHere, although the signature card for the savings account named appellant as the beneficiary, there is clear and convincing evidence that Mrs. Howery had a \u2018different intent\u2019 at the time of her death. She established a living trust that expressly stated her intention to give the savings account to Gabriella Reeves. The trial court properly relied on the living trust to find that Mrs. Howery intended to change the beneficiary of the her Totten trust from appellant to Gabriella Reeves. Because the change was made by a living trust rather than by a will, it is not invalidated by section 5302, subdivision (e)<\/strong>.\u201d<\/p>\n

According to this court, a change in beneficiary designation for a Totten trust cannot be made by Will, but it\u2019s ok to make such a change by way of an estate planning trust.\u00a0 There is no substantive difference in result between a will and an estate planning trust.\u00a0 Both serve the same purpose.\u00a0 The procedural\u00a0 difference is that a Will involves probate, while an estate planning trust is handled in private, without court supervision.\u00a0 The court provided a careless analysis.<\/p>\n

Araiza v. Younkin<\/strong> (Sept. 30, 2010) 188 Cal.App.4th 1120, 2010 Daily Journal D.A.R. 15,225<\/p>\n","protected":false},"excerpt":{"rendered":"

The recent decision in Araiza v. Younkin (Sept. 30, 2010) 188 Cal.App.4th involved the disposition of a bank account following the death of the parent.\u00a0 Under the law of wills, the beneficiary named on the account would have taken the funds, regardless of contrary language in the will. Ah, but the mysterious law of estate […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,5],"tags":[],"class_list":["post-387","post","type-post","status-publish","format-standard","hentry","category-case-law","category-developments"],"_links":{"self":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts\/387"}],"collection":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=387"}],"version-history":[{"count":0,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts\/387\/revisions"}],"wp:attachment":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=387"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=387"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=387"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}