Bitter Bequest : Heirs, Charities Battle Over Funds Freed After 20 Years

Call it the Rip Van Winkle trust.

It sat for 20 years, waiting for legal complexities to be resolved, and grew from $178,000 to nearly $900,000.

Now that growth has triggered a bitter fight among four charities--including the Salvation Army and Guide Dogs for the Blind--and the relatives of Corinne Reisinger, the Marin County woman whose will established the trust.

The charities say all of the money is theirs. The relatives counter that part of the money belongs to them and that the charities are only entitled to the $160,000 Reisinger specifically left them, plus some interest.

Reisinger’s relatives--three of whom live in Long Beach--went to court in January and won a decision supporting their position. The charities say they will appeal, prompting Jeffrey E. Ehlenbach, the San Rafael lawyer representing Reisinger’s relatives to quip: “Guide Dogs bite the hand that feeds them.”

Reisinger’s will, written in the late 1960s, specified that the Salvation Army, Guide Dogs for the Blind, the Masonic Homes of California’s home for the aged and the Masonic Homes’ home for children each receive $40,000.

A fifth charity, the Marin Hospital District, was left $80,000, making the total legacy to the charities $240,000.

An official of the hospital district, which had once considered joining the other charities in the appeal, said the $80,000 plus interest is enough money for the district. Nancy P. McCarthy, a district board member, called any appeal by the charities a “money grab.”

In a letter to the board before it decided not to join the appeal, McCarthy, an attorney, wrote: “I am just dying to know how many people in Marin would continue giving to the (hospital district) . . . if they were aware that we are fighting the relatives of other devisees in order to obtain money from an estate . . . far in excess of the amount specified in the will.”

But Sheldon H. Wolfe, the San Francisco attorney representing Guide Dogs for the Blind, said the charities’ position is not “a grab of any kind. This case comes down to a very simple, narrow question of law: Simply, when are the rights of beneficiaries of a trust determined?”

The charities say such rights are determined when the trust ends as directed in a will--1974 in this case. The relatives, however, argue that those rights are only determined when the trust’s assets are distributed to the beneficiaries.

Reisinger’s will provided that any money left after the charities received their gifts was to be equally divided among the five children of her nephew, Ivan P. Wheaton Jr. of Long Beach.

Reisinger died in 1971, and her husband died three years later.

The trust’s assets in 1974, however, were only about $178,000. Nothing would have been left for the great-nieces and a great-nephew had the money been distributed then.

And there lies the rub, the key point at the core of the charities’ argument that all the trust’s assets belong to them.

Because there was not enough money to give the charities their $240,000, “the charities became the owners of the entire assets in the trust,” said San Francisco attorney Kim T. Schoknecht, who represents the Salvation Army.

A major asset in the trust--land in the Marin County community of Tiburon--was tied up in lawsuits in 1974. That undeveloped land was “gold,” Schoknecht said, adding that “Tiburon is to San Francisco what Beverly Hills is to L.A.”

The charities did not take their money or their interest in the land after Reisinger’s husband died. Had they done so, they would have become defendants in the lawsuits surrounding the property.

Instead, a judge gave Bank of America, the trustee, permission to hang on to the trust until the suits were resolved.

Twenty years passed.

Bank of America sold its trust accounts to Wells Fargo, and the lawsuits over the Tiburon land have long since been resolved. In October, Wells Fargo decided to distribute the Reisinger trust assets to the beneficiaries.

The trust has more than enough money to pay the charities their $240,000, plus about $172,000 in interest, and leave about $481,000 to be divided among the relatives.

But the charities argued that the bank has merely been taking care of their money for the last 20 years. The relatives objected and sought a court ruling.

Marin County Superior Court Commissioner Mary T. Grove agreed with the family in January, saying Reisinger wanted “to leave a specific amount to the charities and the rest to the relatives.”

The four charities plan to appeal Grove’s decision because “this is not a case where if you snooze, you lose,” Salvation Army attorney Schoknecht said.

The charities, he said, only allowed the assets to remain with the bank for the sake of convenience until the suits over the land in Tiburon could be settled.

But Reisinger’s intent is crucial, relatives say.

“It’s so obvious what Corinne wanted to do with the money,” said one of the great-nieces, Karen Zeich of Joliet, Ill. “I think it’s unconscionable that the charities want it all.”

Commissioner Grove said in an interview that she also believes Reisinger’s “clear intent was that money go to relatives. This case could have gone either way and could still go either way. I just interpreted what I considered the will of the testator to be.

“It seems strange that because there wasn’t enough to give (the charities) the full amount in 1974, they (would) wind up getting much more.”

Great-niece Gayle Guzman of Long Beach called the charities’ appeal “aggressive pursuit and bad public relations.”

She said that she, her three sisters and her brother are “all just working folks. We’re not rich charities. We had to go out and hire a lawyer. The court rules in our favor and the charities appeal. People won’t want to leave money to them.”

Reisinger, who lived in Belvedere, inherited her money from her father, a New York photographer who successfully invested in the stock market, relatives said.

She had one brother whose only child, a son, had five children: Guzman, 45, a first-grade teacher in Paramount; Zeich, 49, a juvenile counselor; Kristen Price, 47, a secretary at the Long Beach Press Telegram; Kurt Wheaton, 36, owner of a Long Beach guitar store, and Susan Wells, 32, a homemaker in Bend, Ore. Each would inherit about $96,000 if Grove’s decision is upheld.

Ehlenbach, the relatives’ attorney, said he has “no argument that if there had been a distribution of the trust’s assets in 1975, the Wheaton children would get nothing. The will said, ‘On the death of my husband, distribute.’ ”

Bank of America could have distributed the property with nothing left for the children, Ehlenbach said, “but they didn’t.”

That being the case, he said, nothing that has occurred in the last 20 years entitles the charities to more than the amounts left them in the will.

“Corinne was generous,” Guzman said. “She put (the charities) before us. Those were generous amounts in 1966 when she wrote the will. We feel they’re using her generosity to pay lawyers to get the rest.”

Marin Hospital District board member McCarthy said she was outraged that her board was even considering pursuing the appeal.

“We tell people to do your tax planning around us,” McCarthy said. “We’ll help you write your will. And here we are going after this money on a legal technicality. That is bad faith.

“Using well-paid, high-powered attorneys to fight relatives is unseemly. It has a chilling effect on people who want to give money to charity.”

Varnum Paul, an attorney who represents Masonic Homes of California, said McCarthy and Reisinger’s relatives are, in effect, telling the charities: “If there is any question about it, you ought to give up your rights because you’re a charity and you’ll look in the eyes of the public as though you’re greedy.

“My response is that there is not a bit of greed at all. It’s a question of determining what the rights of the respective parties are.”

Schoknecht said the Salvation Army “obviously doesn’t want a reputation as being an overly aggressive charity that fights tooth and nail for every nickel. They realize that if every time donors name the Salvation Army, they’ve got a guaranteed will contest, donors are going to stop writing wills leaving money to the Army.”

But if the Salvation Army “rolls over and plays dead every time a disgruntled relative believes he or she didn’t get what they were entitled to, the donors are going to say: ‘I’m not going to leave money to the Army if they’re just going to turn around and give it to my drunk brother-in-law anyway.’ ”

Whenever Guide Dogs for the Blind has encountered a problem with a will, Wolfe said, its attitude has nearly always been: “Let it ride. Let’s just forget about it because we don’t want to be out there looking like a bunch of money-grubbers.”

With the Reisinger trust, he said, there is a “matter of principle on a very narrow legal issue. The only thing at issue is should we be entitled to that money because at the time the trust terminated, there was only enough money to not quite pay the charities, and nothing for the family?”