Estate of Ivey

In Estate of Ivey (1994) 22 Cal.App.4th 873, the trial court, relying upon Code of Civil Procedure section 128.5, charged a beneficiary's share in a spendthrift trust for expenses and attorney fees incurred by the trustee and other beneficiaries in opposing the beneficiary's frivolous and bad faith objections to the trustee's accounting. (22 Cal.App.4th at pp. 882-883.) Although the trust had a spendthrift provision, the trial court reasoned that it would be inequitable to the other income beneficiaries to have the trust bear the expenses. On appeal, we first upheld the trial court's authority to render the order because the principle that "a probate court has equitable power to charge one beneficiary's share of a trust for frivolous litigation against the trust is supported by treatises." (Estate of Ivey, supra, 22 Cal.App.4th at p. 883.) Next, we rejected appellant's claim that the trust's spendthrift provision undercut the trial court's ability to make the contested order. We explained: "The award of sanctions here, although based on Code of Civil Procedure section 128.5, was made in the context of a probate proceeding involving administration of this very trust. It was appellant's bad faith conduct toward the administration of this trust which caused unnecessary expenses to be incurred. Under the court's equitable supervision of the trust, the court may order the sanctions payable from appellant's share." (Id. at p. 885.) The Court reasoned that to apply the protections of the spendthrift provision "would inequitably require that respondents bear most of the cost of appellant's conduct toward the trust. Although decedent intended to protect the beneficiaries from folly toward other creditors by including a spendthrift provision, he undoubtedly did not intend that one beneficiary, through wilful, frivolous, and bad faith conduct toward the trust, could with near impunity require the other income beneficiaries to deplete the distributable trust income on unnecessary legal expenses. In other words, to allow appellant an economic advantage to pursue frivolous litigation necessarily reduces the trust income available to the other beneficiaries. It is inconceivable that the settlor contemplated or would tolerate such a bizarre and unjust result." (Id. at p. 886.)