January 16, 2015
Ambiguous Terms in a Trust - Extrinsic Evidence
Occasionally a person will write a trust with an ambiguous distribution clause. That is, the clause is open to reasonable multiple interpretations. The determination of the rightful beneficiary is obviously paramount because no distribution can be made until the right beneficiary is determined. Absent a settlement agreement, you cannot just split the inheritance between the two beneficiaries.
California law says that in such a situation, extrinsic evidence can be introduced to construe the ambiguous clause. Ike v Doolittle (1998) 61 CA4th 51. Extrinsic evidence is documentation found outside the instrument in question used to determine intent or construction of the instrument. For example, this could be written statements made by the person in the past.
The following example is how an ambiguous clause in a trust could be resolved.
Alf Melmac was an avid surfer who dreamed of catching that perfect wave. All of Alf's free time was dedicated to surfing along the long and beautiful California coast. Alf was quite wealthy so he decided to write a trust after hearing about the drawbacks of probate. Alf was also quite philanthropic and decided to bequeath his entire estate to his favorite surfing spot.
The problem was that Alf used the term "Surf City, U.S.A." when designating the sole beneficiary of his trust (he wrote the trust himself). In particular, two cities in California lay claim to such a nickname, Santa Cruz and Huntington Beach.
In light of the ambiguity, extrinsic evidence was needed to ascertain which "Surf City, U.S.A." was the rightful beneficiary of Alf's estate, Santa Cruz, CA or Huntington Beach, CA. Amongst Alf's personal effects were journals talking about his many surfing experiences while in Santa Cruz. He also mentioned running in Santa Cruz's annual Wharf to Wharf fun run held on the last Sunday in July. While he had surfed Huntington Beach, he had surfed Santa Cruz far more times. Thus, Alf's estate was distributed to Santa Cruz, CA instead of Huntington Beach, CA.
A real life example of a person writing an ambiguous distribution clause occurred in Estate of Black (1962) 211 Cal.App.2d 75. In that case, Coral Williams of Los Gatos, CA wrote a holographic will with the following clause:
"To The University of Southern California known as The U.C.L.A. My entire Estate for Educational purposes.”
Naturally the case was litigated between the two schools, i.e. the University of Southern California and the University of California, Los Angeles.