When is a Section 850 Necessary?

Paulino Ponce died. His youngest daughter alleged that her brothers stole "an estimated $103,000 from Ponce's pockets and personal safe within hours of his death." When the successor trustee filed a petition to confirm distribution, Mota objected and argued that the distribution to her (allegedly) thieving brothers should be reduced by the amount of their prior take.

The trial court ruled that Mota was not entitled to an offset of her brothers’ distribution, because she had filed a section 850 petition. The appellate court overturned that decision and explained that a section 850 petition returns property to the estate. Since Mota was not seeking an order that her brothers return money to the estate, a section 850 petition was unnecessary:


As discussed above, the court concluded Mota was not entitled to an offset against Villalobos because she had not filed a section 850 petition. Mota contends the court’s order creates an irreconcilable conflict between section 17200, which pertains to “internal affairs of the trust,” and 17200.1, which governs “transfers” of trust property. According to Mota, the court’s order would require all disputes concerning trust property to be adjudicated pursuant to section 850, even those pertaining to internal trust affairs. We need not determine whether the statutes conflict, because we conclude section 17200.1 does not govern Mota’s pursuit of an offset.

Section 850 is found within part 19 of division two of the Probate Code, which deals with the “Conveyance or Transfer of Property Claimed to Belong to Decedent or Other Person.” (§§ 850-859.) Under section 850, a trustee or any interested person “may file a petition requesting that the court make an order under this part: [¶] . . . [¶] Where the trustee has a claim to real or personal property, title to or possession of which is held by another.” (§ 850, subd. (a)(3)(B).)3 Section 17200.1 broadens the application of section 850. It provides in full: “All proceedings concerning the transfer of property of the trust shall be conducted pursuant to the provisions of Part 19 (commencing with Section 850) of Division 2.” (§ 17200.1.)

Pursuant to section 17200.1, a trustee or interested person must file a section 850 petition when the “proceedings concern[ ] the transfer of property.” (§ 17200.1.) Because Mota’s objections to the Distribution Petition do not concern “the transfer of property,” she need not file a section 850 petition. Mota contends Villalobos, Paulino, and Marcos stole $103,000 from the Trust and used it to pay their attorney fees and those of two other beneficiaries. Mota does not seek a “transfer of property” from these beneficiaries — she merely seeks a reduction in the amount of money they will receive during the final distribution of the trust estate assets.

If Mota had sought a court order returning the $103,000 to her (or to the trust estate), she would have been obligated to file a section 850 petition. (See, e.g., Estate of Myers (2006) 139 Cal.App.4th 434, 440 [creditor of decedent’s estate had standing to bring section 850 petition seeking an order requiring purchaser of decedent’s property to disgorge profits he obtained from the resale of the property]; Iskenderian v. Iskenderian (2006) 144 Cal.App.4th 1162, 1165 [plaintiff properly filed section 850 petition to adjudicate ownership of a trademark where plaintiff contended she, not the trust, owned the property].) Mota did not seek an order transferring the money to her, or to the trust estate. As a result, the court wrongly concluded she could not pursue an offset claim without first filing a petition pursuant to section 850.

Section 850, subdivisions (a)(1) and (a)(2), also provide a procedure for specific enforcement of written contracts to convey real property or transfer personal property made during the decedent’s lifetime.

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