Leonardini v. Wells Fargo Bank & Union Trust Co.

California Court of Appeal Apr 30, 1947 No. Civ. No. 13286Published

Before: Goodell

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Holding. The court held that a trustee's compensation for extraordinary services performed during the initial year of trust administration may be apportioned between income and corpus, and that the trial court did not abuse its discretion in determining the reasonableness of the fees.

Issues

Whether a trustee's compensation for services during the first year of administration must be paid solely from income or may be apportioned between income and corpus.
Whether the trial court abused its discretion in determining the amount of compensation allowed to the trustee and its attorneys.

Disposition. affirmed

Quotations verified verbatim against the opinion

“It is not questioned that in the absence of contrary testamentary directions the ordinary and current expenses of a trust, including the trustees’ compensation, should be paid out of income and that extraordinary and unusual charges should be paid from the corpus of the estate.”

GOODELL, J. The respondent trustee filed in the superior court its first account and report in each of two trusts created by the will of Robert F. Lopez, deceased, covering the period from December 29, 1944, to December 29, 1945. In the orders settling the accounts the court allowed compensation to the trustee and its attorneys for their services during said first year of administration and charged one-half thereof against the corpus and one-half against the income, of the respective trusts. From those orders this appeal was taken.

Robert F. Lopez died in 1936. The provisions of his will creating the two trusts were incorporated into a decree of partial distribution entered on December 29, 1944.

The Lopez estate consisted almost entirely of a contingent interest in a trust known as the Evans trust, administered in the State of New York, the beneficiary of which was Mary Evans, a sister of Robert. Mary Evans died on July 15, 1944, whereupon testator’s contingent interest ripened into an actual interest. By his will the testator created the Leonardini trust, consisting of the residue of his own small estate and a one-quarter share of his contingent interest in the Evans trust. Appellant is the life beneficiary thereof, and on her death the corpus goes to her son. The Leonardini trust is valued at approximately $300,000 according to the statement on appeal.

By his will the testator also created the Kirby trust, the corpus whereof is a one-sixteenth share of decedent’s contingent interest in the same Evans trust. Claribel H. Kirby is the life beneficiary, and on her death the corpus goes to appellant or in case of her death to her son. The Kirby trust is valued at approximately $75,000 according to the statement on appeal.

In the Leonardini trust the court allowed $1,105.30 for the trustee’s services during the initial year of its administration and $250 for its attorneys. In the Kirby trust the allowances were $318.07 to the trustee and $50 to its attorneys for the same period.

The appellant’s contentions are “1. That the trustee may not impair the principal of the trust estate by paying therefrom compensation for itself and its attorneys but must pay such out of the income, and, 2. That the amount of compensation allowed the trustee is excessive and unreasonable. ...”

[401]The testamentary provision creating each trust provides:

Leonardini v. Wells Fargo Bank & Union Trust Co.

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