Judge: Kerry Bensinger, Case: 20STCV19153, Date: 2023-03-27 Tentative Ruling

Case Number: 20STCV19153    Hearing Date: March 27, 2023    Dept: 27

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

            On January 26, 2023, the Court reviewed and approved in part the Petition for Approval of Compromise of Claim or Action or Disposition of Proceeds of Judgment for Person with a Disability.[1]  Plaintiff and Claimant, Shirlene Bjorling is a 56 years and incapacitated adult.  Claimant, by and through her Guardian Ad Litem, Gary Bjorling (“Petitioner”), agreed to settle her claims against Defendant Robyn Reed in exchange for $1,250,000.00.  The Court previously approved $144,256.13 for medical expenses, $125,000.00 for attorney’s fees, and $38,868.09 for nonmedical expenses, leaving a balance of $941,875.78 for Claimant, which Claimant requests to be deposited in a trust, previously identified as the “Shirlene Bjorling Settlement Trust”, attached to the present Petition as Attachment 18(b)(7). 

          At the January 26, 2023, hearing, the Court concluded the proposed trust had to be reviewed by the Court’s Probate Department prior to approval of the compromise.  The Petition was continued to today’s date to allow the Probate Department sufficient time to review the Settlement Trust. 

After review, the Court finds as follows:

I.            CRC Rule 7.903(c) and LASC Rule 4.116 Requirements

The main requirements for court created or funded trusts are set forth at California Rules of Court (CRC), Rule 7.903(c) and LASC Rule 4.116(b).  The proposed trust instrument meets those requirements. 

II.          A Settlement Trust for an Incapacitated Adult is Inappropriate

Petitioner seeks to distribute the settlement proceeds to an irrevocable settlement trust.  Petitioner seeks to distribute to a minor’s settlement trust.  (See Petition, section 18b(7), checked by petitioner, which states that the proceeds will be transferred to a trustee for a trust “for the minor.”)  Plaintiff is 56 years old and not a minor.  The disconnect here is caused by Petitioner’s attempt to do something that is not contemplated by the law – the creation and funding of a settlement trust for an incapacitated adult. 

Where there is no conservatorship of the estate as alleged in this petition at Section 18b(7), Probate Code section 3611 provides the list of possibilities for placing the settlement funds of an incapacitated minor.  The relevant options are either for distribution to a conservator of the estate (subsection (a)), deposit to a blocked account or annuity (subsection (b)), deposit to a special needs trust (subsection (c)), release of the funds on flexible for amounts under $20,000 and under $5,000 (subsections (d) and (e)), or deposit to a minor’s settlement trust (subsection (g).  The limitation in subsection (g) to a minor’s settlement trust, as opposed to a trust for an incapacitated adult, is apparent from its language (emphasis added):

(g) That the remaining balance of the money and other property be paid or delivered to the trustee of a trust which is created by, or approved of, in the order or judgment referred to in Section 3600. This trust shall be revocable by the minor upon attaining the age of 18 years, and shall contain other terms and conditions, including, but not limited to, terms and conditions concerning trustee's accounts and trustee's bond, as the court determines to be necessary to protect the minor’s interests.

Looked at another way, subsection (g) requires that the trust is revocable when plaintiff becomes an adult, whereas here, Petitioner seeks to make the trust irrevocable for the remainder of plaintiff’s adult life. 

There is no provision similar to subsection (g) described above that provides for an incapacitate adult’s settlement trust.  Moreover, what Petitioner seeks to accomplish – the creation and funding of a trust on behalf of an incapacitated adult – would be difficult even within a conservatorship case.  (See Probate Code sections 2580 et. seq.)  To do so, Petitioner would need to satisfy numerous requirements, such as: a showing the trust would be in the best interest of the conservatee, providing broad notice to family and interested persons, obtaining findings that the conservatee is unopposed to the action or if opposed that the conservatee lacks capacity for the action, providing information to the court to determine a broad array of circumstances when determining whether to allow the action (trust) including the existence and nature of any existing estate planning, and ultimately obtaining a ruling from the conservatorships court that would allow the creation and funding of the trust.  Petitioner has not provided any of that information or requeswted that the Court make such findings.  And to do so here would be improper, anyway, because there is no conservatorship. 

Possible Solutions/Alternatives to the Trust:

Conservatorship:  An interested person may petition for a conservatorship of the estate for Claimant.  Once appointed, that conservator could receive the settlement proceeds from this case as cash, without need for creation of the requested trust.  That conservator could then seek to establish a trust for Claimant/conservatee as he or she sees fit pursuant to the statutory scheme described above. 

Single Premium Deferred Annuity:  Another option would be to use the entire settlement proceeds to purchase a single premium deferred annuity that would pay to Claimant over time (Probate Code section 3611, subsection (b).) 

III.     Bond

Depending on the vehicle selected and approved, the Court may require a bond. 

IV.     Attorney Randolph Sharon

Petitioner requests authority to pay $4,500 to attorney Randolph Sharon for drafting of the proposed trust instrument and related portions of the petition.  Normally, such fee requests are approved for compromise petitions involving special needs trusts or minor’s settlement trusts.  The benefit of this work is in doubt here, however, given that the subject trust cannot be used to receive the settlement proceeds.  Nonetheless, the Court will consider the request if and when the matter is appropriately positioned for resolution.

V.           CONCLUSION

The Court will hear from the parties. 

The Court intends to CONTINUE the matter to June 5, 2023 at 1:30 p.m. in Department 27 of Spring Street Courthouse to allow counsel the opportunity to investigate the preferred method to account for the payment of the balance of the funds.  Petitioner is to submit a revised Petition consistent with this ruling no later than May 5, 2023, to allow the selected version of the Petition to be reviewed by the Probate Court.  

Per California Rules of Court, Rule 7.952, Petitioner and Claimant must appear at the hearing, unless the Court finds good cause to excuse their appearance.  The Court finds that Claimant’s appearance is not necessary, but will require Petitioner to appear.

Petitioner is ordered to give notice.

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.

Dated this 27th day of March 2023