Fisch, Spiegler, Ginsburg & Ladner v. Appel

Opinion

KREMER, P. J.

Fisch, Spiegler, Ginsburg & Ladner, a professional legal corporation (Fisch) appeals an order declaring valid the homestead exemption of Daniel and Marlene Appel (the Appels). Title to the subject property was in a revocable living trust, an estate planning device whose popularity has increased in recent years. (Drafting Cal. Revocable Living Trusts (Cont.Ed.Bar 2d ed. 1984) p. ix.) We determine the Appels qualify for the homestead exemption even though the trust held title and therefore affirm the trial court’s order.

[1812]

Factual and Procedural Background

The Appels are trustees of the Appel revocable family trust dated April 19, 1989 (trust). Fisch drafted the trust instrument. In 1989, in reliance on legal advice from Fisch, the Appels quitclaimed the home in which they resided to the trust.

On June 20, 1990, upon Fisch’s advice, the Appels as trustees recorded a declaration of homestead on the property. On September 4, 1991, Fisch obtained a judgment against the trust and Daniel Appel. The judgment was entered the next day.

On January 3, 1992, Fisch filed an application for an order for sale of the home. As of the date of the application, the balance due on the judgment was $317,562.66. The property was encumbered by a senior lien in favor of Wells Fargo Bank in the amount of $668,023.92. The Appels were in default on payments to Wells Fargo, facing foreclosure, and in the process of selling the property. The full assessed market value of the home was $802,200.49.

In the court below, Fisch argued the trust, as owner of the property, was not entitled to a homestead exemption because it was not a natural person. The Appels argued they were entitled to a $75,000 homestead exemption inasmuch as they had filed the homestead declaration as trustees, possessed a beneficial interest in the trust, and occupied the property as their principal residence.

On February 14, 1992, the trial court ruled the Appels as trustees held a valid $75,000 homestead exemption and ordered the property sold subject to the exemption. According to the Appels, the property was sold and the net proceeds of $63,608.65 are being held in trust pending this appeal.