Biological child born out of wedlock is beneficiary where trust unambiguously defines ‘issue’ as unadopted lineal descendants.
A California Court of Appeal overturned the Supreme Court’s decision in the case of CITIZENS BUSINESS BANK v. JONATHAN CARRANO. Appellant claimed that he was entitled to distribution from the estate of his recently deceased grandparents and father, even though Plaintiff argued that he was a “child born out of the wedlock” and that the trust was ambiguous as to his situation. The appellate court found that the trust was unambiguous and that Appellant was indeed entitled to such disbursement.
Charles & Serena Papaz created the Papaz Family Trust on August 2, 1966. They had only one child, Christopher. Christopher fathered three children out of wedlock, including Jonathan Carrano, the subject of this appeal. It was undisputed that Jonathan was Christopher’s biological son, who was born in August 1985.
In 1988, the Papaz’ amended their trust (the Eighth Amendment) to say that Christopher’s “issue” would receive the trust assets in the event Christopher did not survive his parents. “Issue” was defined in this amendment as:
“As used in this trust, the term ‘issue’ shall refer to lineal descendants of all degrees and the terms ‘child,’ ‘children’ and ‘issue’ shall include persons adopted in the Trustors’ bloodline and shall exclude persons adopted out of the Trustors’ bloodline.”
In 1991, the Papaz’ amended their trust a ninth time, again to redefine the term “issue” to expressly include “persons adopted into the Trustors’ bloodline” and “persons adopted out of the Trustors’ bloodline.”
Christopher died on June 22, 2007, followed shortly thereafter by his father on July 8, 2007. Serena pre-deceased them both on November 11, 1996.
In February 2008, Trustee Citizens Business Bank filed a petition for an order to ascertain beneficiaries and to determine entitlement to distribution for the Papaz Family Trust. In a March 9, 2009 order, the trial court found that “Jonathan is not considered a child of Christopher.” They decided that the trust wasn’t “specific concerning the rights of someone in Jonathan’s circumstances.”
Jonathan appealed this decision on April 3, 2009, arguing that the term “issue” in the trust was unambiguous. The appellate court agreed. They decided that “the term ‘issue’ was clearly, simply and specifically defined by Serena and Charles.” They remanded the matter for entry of a new order instructing the trustee to distribute the trust assets to Jonathan Carrano as the issue of Christopher Papaz within the meaning of the trust.
Quotes and information gathered from The Daily Recorder, Vol. 103, No. 217, November 9, 2010 Daily Appellate Report.