The recent decision in Kucker v. Kucker focused on a narrow issue. Is a general assignment of assets valid for transfer of stock into an estate planning trust? The court answered in the affirmative, but not before confronting the statute of frauds. And not before stating an important distinction regarding real property.
The facts were as follows. “On June 29, 2009, at the age of 84 years, [Mona Berkowitz] signed a declaration creating a revocable inter vivos trust. On the same date, [Mrs. Berkowitz] signed a general property assignment stating, “I . . . hereby assign, transfer and convey to Mona S. Berkowitz, Trustee of the [the Trust], all of my right, title and interest in all property owned by me, both real and personal and wherever located.”
Mrs. Berkowitz “died in November 2009. In February 2010, appellants filed a petition to confirm that 3,017 shares of stock in Medco Health Solutions, Inc., (Medco) were an asset of the Trust.”
Here is where the dispute arose. “Medco was not mentioned in the assignment of stock signed by the Trustor on October 29, 2009. Appellants declared that the Medco shares were not held in the Trust’s brokerage account at the time of the Trustor’s death.”
The beneficiaries of the estate planning trust sought a declaration that the Medco stock was an asset of the trust. The trial court held that “Probate Code section 15207 must be read in conjunction with Civil Code section 1624(a)(7). In those instances where the settler intends to transfer assets in excess of $100,000, a writing specifically describing the property is required. Accordingly, the petition confirming assets in the trust is denied.”
This ruling was reversed on appeal. The appellate court first dealt with the statute of frauds issue, holding that, “Civil Code section 1624, subdivision (a)(7), cannot be construed as applying to the transfer of shares of stock to a Trust. The plain meaning of the words of the statute manifests a legislative intent to limit the statute’s application to agreements to loan money or extend credit made by persons in the business of loaning money or extending credit.”
Then the court turned to the effect of the assignment. As to land, a general assignment is not effective. “The General Assignment was ineffective to transfer the Trustor’s real property to the Trust. To satisfy the statute of frauds, the General Assignment was required to describe the real property so that it could be identified.”
According to the court, this restriction does not apply to shares of stock. “The issue here concerns the Trustor’s transfer of shares of stock, not real property. The statute of frauds does not apply to such a transfer. (Civ. Code, § 1624.) There is no California authority invalidating a transfer of shares of stock to a trust because a general assignment of personal property did not identify the shares. Nor should there be.”
Held the court, “it was unnecessary for the General Assignment to identify the Medco stock. The practice guide says that such a general assignment of personal property is a commonly used estate planning tool.”
So, the general assignment saves the day for the transfer of stock into an estate planning trust.
Kucker v. Kucker (Jan. 26, 2011) 2011 DJDAR 1477