California First National Bank v. Carr

California Court of Appeal Nov 22, 1935 No. Civ. 10653Published

Before: Crail

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Holding. The court held that a trial court may properly order the expenses of administering a trust to be paid out of the corpus of the estate when the will creates an annuity that is not expressly limited to income.

Issues

Whether the expenses of administering a trust must be paid from income when the will creates an annuity for a beneficiary.
Whether a trial court has the authority to order trust administration expenses to be paid from the corpus of the estate.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The court found and ordered that Mrs. Carr was entitled to be paid all of the income from the trust estate up to $150 per month, and that the costs and expenses of managing the trust should be paid out of the corpus of the estate.”

“The trustee cites no authority which holds that expenses of administration of a trust may not be paid from the corpus of a trust where the decree of distribution creates an annuity; and we know of none.”

GRAIL, P. J.

This is an appeal by the trustee from an order of the trial court upon the hearing of its third annual report. The estate, totaling $85,782.67, was distributed to the trustee under the terms of a will, the relevant parts of which are set up in the trustee’s brief and which, after boiling down, we set out herein: “6th. I direct my trustees to convért all of my property into cash and reinvest the same in first mortgage liens or other securities that will net at least 6 per cent. The trustees are to collect and receive the income of said trust fund and pay the same over as it occurs and is collected to the beneficiaries for whom it is set apart during

[337]

their natural lives. 9th. I bequeath to my friend, Mrs. Julia A. Carr, $1,800 per year during her life, the same to be paid in monthly instalments, if possible, at the rate of $150 per month. 10th. The balance of the income of said trust fund I bequeath to my brother, George W. Oliver, the same to be paid as it occurs and is collected. 11th. The trust fund must be kept intact during the life of my brother and my friend, Mrs. Carr, and the survivor is to receive the

full income

of said fund during his or her life. 12th. At the death of my brother and Mrs. Carr the estate is to be distributed as follows”, etc.

The third annual account of the trustee reported payments out of the income of $535.66 to the trustee as trustee’s fees; $75.83 as attorney’s fees, and to Mrs. Carr $19.99, which was the balance of the income remaining after payment of the above items and other items. Mrs. Carr filed objections to this account. The court found and ordered that Mrs. Carr was entitled to be paid all of the income from the trust estate up to $150 per month, and that the costs and expenses of managing the trust should be paid out of the

corpus

of the estate. The trustee appeals from that part of the order of the court requiring the trustee to pay the expenses of administering the trust estate out of the

corpus

thereof. Mrs. Carr does not appeal, and her rights, if any, to an additional order are not before us for review.

California First National Bank v. Carr

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GRAIL, P. J.

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