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In re Irrevocable Trust Agreement of 1979

Supreme Court of Nevada

August 7, 2014

IN THE MATTER OF THE IRREVOCABLE TRUST AGREEMENT OF 1979. CHARRON C. MONZO, AS BENEFICIARY OF THE CHARRON C. MONZO REAL ESTATE TRUST AGREEMENT OF 2005, Petitioner,
v.
THE EIGHTH JUDICIAL DISTRICT COURT OF THE STATE OF NEVADA, IN AND FOR THE COUNTY OF CLARK; AND THE HONORABLE GLORIA STURMAN, DISTRICT JUDGE, Respondents, and DAISY MONZO, Real Party in Interest

Page 882

Original petition for a writ of mandamus or prohibition challenging a district court order granting partial summary judgment.

Petition granted.

Bailus Cook & Kelesis, Ltd., and Marc P. Cook and Kathleen T. Janssen, Las Vegas, for Petitioner.

Snell & Wilmer, LLP, and Patrick G. Byrne, Las Vegas; Gordon Silver and Bradley J. Richardson and Puneet K. Garg, Las Vegas, for Real Party in Interest.

Hardesty, J. We concur: Gibbons, C.J., Parraguirre, J., Cherry, J., Pickering, J., Douglas, J., Saitta, J.

OPINION

Page 883

BEFORE THE COURT EN BANC.

HARDESTY, J.:

Real party in interest Daisy Monzo executed a deed gifting a condominium that she owned to an irrevocable trust for the benefit of her daughter, petitioner Charron C. Monzo. Daisy later rescinded that transfer based on alleged unilateral mistakes in the execution of the deed conveying the property to the trust. We are asked to determine whether unilateral mistakes, if proven, will allow the donor to rescind or reform an errant gift. We hold that a donor may obtain relief from an erroneous gift if he or she proves by clear and convincing evidence that the donor's intent was mistaken and was not in accord with the donative transfer. Further, remedies available to correct such mistakes, which include rescission or reformation of the deed transferring the property, depend on the nature of the unilateral mistake in question.

FACTS AND PROCEDURAL HISTORY

Daisy and her three adult daughters, Charron, Charlene, and Michelle, established three irrevocable inter vivos real estate trusts, each benefiting a daughter, and into each of which a one-third interest in properties located in Arizona and New York was transferred. Daisy was the sole original trustee of each of the trusts. Michelle lived in the Arizona property and Charlene lived in the New York property. These properties were each valued at approximately $500,000. Charron lived with Daisy in a Las Vegas condominium owned by Daisy that is valued at over $2 million, but that had not been transferred into any of the trusts.

When Charron and Daisy considered transferring the Las Vegas condo into a trust for Charron's use, Charron introduced Daisy to Las Vegas attorney Michael Rasmussen who met with them several times about the proposed transfer. During these meetings, they discussed whether Daisy would retain control over the Las Vegas condo if it was transferred into a trust, whether Daisy needed to transfer the condo to avoid having it escheat to the state upon her death, and how the condo should be transferred and titled if it were to be placed into a trust. Despite the ongoing consultations with Rasmussen over the transfer of the condo, Daisy never provided Rasmussen with any of her prior estate planning documents or authorized him to contact her other attorneys.

Rasmussen prepared a deed, which Daisy signed, gifting a 100-percent interest in the Las Vegas condo from Daisy to Charron's trust. But Rasmussen later learned that, when transferring real property into her family trusts, Daisy typically transferred a one-third interest in the subject properties to each daughter's trust, rather than the 100-percent interest in the condo that she had transferred to Charron's trust. Rasmussen prepared a correction deed to rectify this situation, but Daisy refused to sign that deed. Instead, three months after Daisy signed the deed transferring the Las Vegas condo into Charron's trust, Daisy signed another deed, prepared by a different attorney, transferring the condo back into her own name.

After Daisy rescinded the prior gift, Charron filed a petition in the district court seeking accountings of the various family trusts and an order requiring Daisy to transfer the Las Vegas condo back to Charron's trust. The accounting actions were consolidated and the Las Vegas condo issue was addressed separately. Daisy filed counterclaims against Charron based on the original transfer of the Las Vegas condo into Charron's trust for, among other things, fraudulent misrepresentation, elder abuse, breach of contract, conversion, undue influence, and

Page 884

mistake. Daisy also moved the district court for partial summary judgment, seeking rescission of the initial gift deed based on at least three mistakes that Daisy allegedly made in transferring the condo into Charron's trust. First, Daisy asserted that she mistakenly believed that the deed would transfer the condo into a trust that she controlled while granting her estate planning flexibility. Second, she argued that she mistakenly thought that transferring the property was necessary to avoid having it escheat to the state upon her death. And third, she contended that she mistakenly believed that, consistent with prior estate planning practices, the deed would transfer a one-third interest in the property to each daughter's trust, rather than conveying the full interest to Charron's trust. Charron filed a countermotion for partial summary judgment on Daisy's counterclaims and, in the alternative, for reformation of the deed ...


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