On January 7, 2020, the Second District Court of Appeal issued a published opinion upholding the trial court’s ruling in favor of Reicker Pfau client Benita Sachs in her capacity as successor trustee to the “Sachs Trust” created by her late father, Dr. David Sachs. In ruling on the Probate Code section 17200 Petition that Benita filed on behalf of the Sachs Trust, Santa Barbara Superior Court Judge Colleen Sterne concluded that: (1) Dr. Sachs’ other child, Avram Sachs, had received $451,027 more than his sister in life-time distributions from his father; and (2) the final Sachs Trust distribution should be adjusted to account for this disparity.
During his lifetime, Dr. Sachs made periodic payments to Benita and Avram. Dr. Sachs tracked these payments over almost three decades in a running ledger on a collection of papers that he referred to as the “Permanent Record.” When Dr. Sachs would give his children money, he often did so under the express understanding that the payment would be reflected on the Permanent Record. Dr. Sachs was open with his children and his close friends about this practice, but the documents governing the Sachs Trust, which broadly speaking provided for equal distribution between Benita and Avram, did not mention the Permanent Record.
After experiencing cognitive decline in June 2013, Dr. Sachs hired a bookkeeper to manage his finances. He authorized the bookkeeper to continue dispersing funds as needed, but was adamant that she keep a record of such dispersals to allow for corresponding deductions from his children’s respective inheritances. After Benita assumed the role of successor trustee, Avram continued to request trust dispersals from his sister and repeatedly assured her that these payments would go on his Permanent Record, just as payments had in the past. Towards the end of Dr. Sachs’ life and after his death, however, Avram disavowed the Permanent Record.
This case turned on the interpretation of Probate Code section 21135, which governs the circumstances under which payments made during a decedent’s lifetime may be debited from the recipient’s inheritance. Relevant to this case are the following subsections that allow for deduction when: (a)(2) the transferor declares in a contemporaneous writing that the gift is in satisfaction of an at-death transfer; or (a)(3) the transferee acknowledges in writing that the gift is in satisfaction of an at-death transfer.
The appellate court found the facts in the record satisfied either standard. First, it concluded that the Permanent Record satisfied 21135(a)(2)’s requirement for a contemporaneous writing signed by the transferor. In reaching this conclusion, the court rejected Avram’s argument that the writing must contain language explicitly parroting the statute. Second, the court found that Avram’s express acknowledgments of the Permanent Record’s existence and implied acknowledgments of its purpose satisfied 21135(a)(3)’s requirement of a written acknowledgment by the transferee.
Finally, the court found that the trial court could have properly looked to extrinsic evidence to determine Dr. Sachs’ intent. That evidence, which included the testimony of Dr. Sachs’ bookkeeper, son-in-law, and two of his closest friends, corroborated the Sachs Trust’s understanding of Dr. Sachs’ intention to equalize any disparities in payments under the Permanent Record that persisted at his death.