Judge: Kerry Bensinger, Case: 20STCV02815, Date: 2023-08-04 Tentative Ruling

Case Number: 20STCV02815    Hearing Date: September 21, 2023    Dept: 27

Tentative Ruling

Judge Kerry Bensinger, Department 27

HEARING DATE:     September 21, 2023               TRIAL DATE:  Vacated

CASE:                                Patricia Knox v. Rosalind Wesey, et al.

CASE NO.:                 20STCV02815

PETITION TO CONFIRM COMPROMISE WITH SPECIAL NEEDS TRUST

MOVING PARTY:               Petitioner Danny Barnes

RESPONDING PARTY:     No opposition

            Claimant, Patricia Ann Knox, a person with a disability, by and through her guardian ad litem, Petitioner, Danny Barnes, has agreed to settle her claims against Defendants Rosalind and Akindeji Wesey in exchange for $300,000.  If approved, $15,549.38 will be used for medical expenses, $120,000 will be used for attorney’s fees, $67,886.36 will be used for other expenses, leaving a balance of $112,113.64, to be paid or transferred to the trustee of a special needs trust established under Probate Code section 3604 for the benefit of the Claimant.

            After the Probate Department reviewed the Petition, the Court issued a ruling on August 4, 2023.  The Court could not approve the Petition because Petitioner sought to establish a “pooled” special needs trust but provided only the joinder agreement and illegible “screenshots” of other documents.  The Court continued the Petition and ordered Petitioner to file the master agreement, joinder agreement, and all relevant documents, as well as legible copies of any document relevant to the creation of the proposed trust.

            On August 7, 2023, Petitioner lodged the proposed trust instrument and related documents. 

            Upon review, the Court finds the settlement to be fair and reasonable, as is the request for attorney’s fees.  The Court further finds Petitioner has substantiated the request to use $67,886.36 of the settlement to pay for other expenses. 

            As required by Probate Code section 3604, subdivision (b), the Court also makes the following findings:

            1. Claimant has a disability that substantially impairs her ability to provide for her own care or custody and constitutes a substantial handicap.

            2. Claimant is likely to have special needs that will not be met without the trust.

            3.  The money to be paid to the trust does not exceed the amount that appears reasonably necessary to meet Claimant’s special needs.

However, the Petition cannot be approved for the following reasons:

·         The proposed trust instrument does not meet the requirements of CRC rule 7.903(c)(6): Petitioner is directed to submit a new proposed Joinder Agreement that complies with CRC 7.903(c)(6) which require the trustee to file accounts and reports for court approval in the manner and frequency required by Probate Code sections 1060 et seq. and 2620 et seq.

·         The proposed trust instrument does not contain the following term as required by LASC rule 4.116(b)(4): The trustee may not borrow money, lend money, give security, lease, convey, or exchange any property of the estate without prior authorization of the court. (Prob. Code, § 2550.)

·         The proposed Joinder Agreement contains a deficient term providing that upon the trust beneficiary’s death, any assets remaining in the trust account after payback of the state(s) shall be paid to a named individual.  This is improper estate planning for an incapacitated adult.  A proper trust term would state that any remaining trust assets, after payback to the state(s), should be paid to the trust beneficiary’s “heirs at law.”

·         A bond is required for a trustee unless the trustee is a corporate fiduciary.  (California Rules of Court, Rule 7.903(c)(5), Probate Code section 2320.)  Here, the proposed initial trustee is the non-profit organization that created the pooled SNT, Legacy Enhancement.  Petitioner requests $0 in bond.  However, Legacy Enhancement does not meet the definition of a corporate fiduciary.  As such, a proper bond calculation based upon the assets to be funded into the trust, plus anticipated annual income from investments and any annuity, plus an additional amount required for the costs of any recovery on the bond, would be $130,000.

·         Petitioner has not filed proof of service demonstrating that the required three state agencies were notified of this hearing.

·         The proposed order, filed 5/18/23, is deficient for the following reasons:

-  Trust terms are not included as required under Probate Code section 3604(a).

-  Continued court jurisdiction has not been conferred as required under Probate Code section 3604(a).

- The proposed order is deficient because it fails to require that the first trust accounting take place in one year nor does it set a 14 month calendar due date.

- The proposed order is deficient because it does not require the filing of a Notice of Commencement of Proceedings for a Court Supervised Trust on LASC Form PRO 044 within 60 days.

- The proposed order is deficient because it does not set an OSC in this department in approximately 60 days to ensure funding of settlement, submission of bond if required, purchase of annuity if relevant, and filing of LASC Form PRO 044 to open trust supervision action in probate.

            Accordingly, the Petition is CONTINUED to October 27, 2023 at 1:30 p.m.  Petitioner is to file a revised Trust Instrument, Joinder Agreement, proposed order, and proof of service of this Petition consistent with this order no later than 5 court days before the rescheduled hearing.

Moving party to give notice. 

Dated:   September 21, 2023                                   ___________________________________

                                                                                    Kerry Bensinger

                                                                                    Judge of the Superior Court

            Parties who intend to submit on this tentative must send an email to the Court at SSCDEPT27@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org.  Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter.  Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue.  If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.