Trusts and Estates
Godoy v. Linzner
Cite as B330725
Filed November 13, 2024
Second District, Div. Seven
By: Nicholas W. Yang
Hanson Bridgett LLP
https://www.hansonbridgett.com
Headnote: Testamentary Transfer – Unreasonable Restraint on Alienation
Summary: The prohibition against unreasonable restraints on alienation under Civil Code section 711 applies to real property transferred through testamentary instruments.
In 2018, settlor amended and restated her trust naming her three children as beneficiaries. Upon settlor’s death, the trust provided that each child was to receive, inter alia, a one-third fee simple interest in the long-time family residence. In a 2019 handwritten amendment, settlor decreed that the children could sell their respective shares only to each other and for an amount well below the market value, citing her desire to keep the home in the family. After settlor passed, two of the children petitioned the court for an order declaring the 2019 amendment void for imposing an unreasonable restraint on alienation. The probate court granted the petition. The third child who was the successor trustee appealed.
The appellate court affirmed. Civil Code section 711 states “[c]onditions restraining alienation, when repugnant to the interest created, are void.” Except for certain recognized exceptions such as a spendthrift trust, the appellate court held that the prohibition of restraints on alienation, as codified in Section 711, applies regardless of the method in which a fee simple interest is conveyed because a restraining condition is antithetical to the created fee simple interest and its inherent right of free alienation. While the appellate court did note that Section 711 only invalidates unreasonable restraints on alienation, it concluded that settlor’s imposed restrictions that a child may only sell their respective share to the other children and for no more than $100,000 when the market value of each child’s one-third share was between $350,000 to $433,333 would be considered unreasonable per established case law.