Facts
- Ron Morelli created the Ron Morelli Revocable Living Trust.
- The trust provided that, upon Morelli’s death, his interest in the trust property would be divided equally among four named beneficiaries: his father, James Morelli; his mother, Tillie Severa; and two friends, Rory Penticost and Leah Meagher.
- The trust also provided that all trust property not specifically and validly disposed of by the prior distribution clause would pass to Children’s Hospital & Research Center Foundation (Children’s Hospital).
- Tillie Severa predeceased Morelli.
- Morelli’s sister, Cynthia Ironside, also predeceased Morelli.
- Ironside had two children, Jessica Knowles and Jeremy Anderson, who were Morelli’s nieces.
- After Morelli’s death, Children’s Hospital claimed Severa’s one-quarter share failed and passed to the hospital under the trust’s “not specifically and validly disposed of” clause, arguing that this language showed intent to avoid California’s antilapse statute.
- Knowles and Anderson contended that California Probate Code section 21110 (antilapse) applied because Severa was kindred of the settlor and left lineal descendants, so Severa’s share should pass to them.
- The probate court ruled for Children’s Hospital, concluding the trust language showed a sufficiently clear intent to avoid the antilapse statute, and awarded Severa’s share to Children’s Hospital.
- Knowles and Anderson appealed.
Issues
- Whether the trust provision giving Children’s Hospital “all trust property not otherwise specifically and validly disposed of” expressed a sufficiently clear contrary intent or substitute disposition to prevent application of Probate Code section 21110 to the gift made to Morelli’s predeceased mother.
Decision
- Reversed.
- The Court of Appeal held that the trust’s “not otherwise specifically and validly disposed of” clause did not state a reasonably clear intent to displace the antilapse statute.
- Because Severa was kindred of the settlor and predeceased him leaving lineal descendants, Probate Code section 21110 applied and Severa’s share passed to her descendants (Knowles and Anderson), not to Children’s Hospital.
- The matter was remanded for further proceedings consistent with the opinion.
Legal Principles
- A donative instrument is interpreted to carry out the transferor’s intent as expressed in the text of the instrument, read as a whole. (See Prob. Code, § 21102.)
- When a named transferee fails to survive, the transferee’s gift generally fails unless the instrument or statute provides otherwise. (See Prob. Code, § 21109.)
- California’s antilapse statute (Prob. Code, § 21110) creates a substitute gift for the issue of a predeceased transferee when the transferee is kindred of the transferor and leaves lineal descendants.
- The antilapse statute does not apply if the instrument expresses a contrary intent or provides a substitute disposition; the contrary intent must be shown with reasonable certainty and cannot rest on ambiguity or implication.
- A general residuary-type clause that disposes of property “not otherwise specifically and validly disposed of” does not, without additional language (such as an express reference to failed or lapsed gifts or a survivorship condition), clearly direct that a kindred transferee’s failed gift bypass section 21110.
- A residuary clause can serve a meaningful role even when section 21110 saves a kindred beneficiary’s share, because the residuary clause can operate as the alternative disposition for non-kindred beneficiaries’ shares if they fail (where section 21110 would not apply).
Conclusion
The Court of Appeal held that the trust’s generic clause giving Children’s Hospital all property “not otherwise specifically and validly disposed of” did not clearly negate Probate Code section 21110, so the predeceased mother’s one-quarter share passed by antilapse to her lineal descendants (the settlor’s nieces), and the probate court’s award to the charity was reversed.