California postnuptial in Manson v. Shepherd

By MaritalMediation Staff on September 8, 2010

A California court of appeals document in the Manson v. Shepherd case was recently published. The case concerns a postnuptial agreement, a trust, and disagreement between wife and daughter over financial transactions. Here’s more from Leagle.com:

Maynard and Carol married on June 14, 1978. Their estate planning included a postnuptial agreement, dated May 25, 1995, that provided that all of their assets would be held as separate property. The postnuptial agreement also provided that all property acquired by them, with the exception of gifts and inheritances, would be held as two-thirds Maynard’s separate property and one-third Carol’s separate property.

Maynard and Carol’s estate planning also included the Trust. At the time the Trust was created by a written declaration of trust on June 1, 1995, Maynard and Carol were the trustors and trustees. The Trust was subsequently amended by the first amendment to the Trust, dated May 19, 2000, and the second amendment to the Trust, dated February 3, 2005.

Of significance in the present case is the Trust provision requiring that property transferred to the Trust would, absent written specification to the contrary, be considered two-thirds the separate property of Maynard and one-third the separate property of Carol. Also significant is the Trust provision requiring that, upon the death of the predeceasing trustor, the Trust estate would be divided into three trusts, designated Trust A, Trust B, and Trust C.

Accordingly, if Maynard predeceased Carol, the Trust provided that Trust C (the survivor’s trust) would consist of Carol’s separate property included in the Trust estate, plus their primary residence. Trust B (the bypass trust) and Trust A (the marital trust), would consist of Maynard’s separate property assets included in the Trust estate. Maynard died on May 3, 2005. At the time of the proceedings at issue here, Trusts A, B, and C had not been funded.

Following Maynard’s death, Carol became the sole trustee and sole income beneficiary[ 3 ] of the Trust and of the three subtrusts, Trusts A, B, and C. Additionally, the Trust provides that Carol is entitled to as much of the principal of Trust C, the survivor’s trust, as she may request. She may also access the principal of Trusts A and B if, in her capacity of trustee, she deems her net income from Trusts A and B to be insufficient to maintain her accustomed standard of living.

Trusts A and B became irrevocable upon Maynard’s death. The remainder beneficiaries of the Trust, to whom the assets of Trusts A and B are to be distributed upon Carol’s death, include, among others, Maynard’s four daughters from a prior marriage: Cindy Denise Shepherd, Marcy Victoria Kohler, Monica Joy Melrose, and Parise Sylvia Manson Pak (hereafter, collectively the respondents)…

Respondents filed objections to the petition on July 16, 2008. Their chief objection was to the allocation of 82 percent of the $3 million Wave Crest distribution to income. Respondents stated that they were “informed and believe that all or most of the Three Million Dollar ($3,000,000) dividend was derived from the sale of the High Street property, a principal asset, and thus the dividend constitutes a return of capital and a partial liquidation of the corporation. As such, it should have been allocated entirely to principal or at a much greater percentage.”

Learn more about postnuptial agreements.

Tags: postmarital agreement, postnup, postnuptial agreement