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In re Ishida-Waiakamilo Legacy Trust

Supreme Court of Hawaii

June 15, 2017

IN THE MATTER OF THE ISHIDA-WAIAKAMILO LEGACY TRUST DATED JUNE 27, 2006 AND IN THE MATTER OF THE ISHIDA-WINANT LEGACY TRUST DATED JUNE 27, 2006

         CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-13-0000449, CAAP-13-0000450; T. NOS. 12-1-0080 and 12-1-0081)

          Margery S. Bronster, Rex Y. Fujichaku, and Angela K.H. Jacso for petitioners

          Michael A. Lilly and Valerie M. Kato for respondents

          RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.

          OPINION

          RECKTENWALD, C.J.

         This case arises from the administration of two irrevocable trusts established by Richard and Rachel Ishida: the Ishida-Waiakamilo Legacy Trust (Waiakamilo Trust), and the Ishida-Winant Legacy Trust (Winant Trust) (collectively, "the Trusts"). The Trusts name as beneficiaries the Ishidas' daughters Jeri S. Wilson (Jeri) and Juney M. Ishida (Juney), and their granddaughter Kauialohaokalani R. Wilson (Kaui), but they expressly exclude the Ishidas' third daughter, Richardeen Kimura (Deenie). Six years after the creation of the Trusts, the Ishidas filed petitions in Probate Court of the First Circuit (probate court) requesting rescission of both Trusts. The Ishidas alleged that they never intended to make the Trusts irrevocable, and that Jeri had wrongfully transferred ownership of property from the Waiakamilo Trust to herself. Jeri and Juney opposed the petitions.

         The probate court found that the transfer of property to Jeri had violated the terms of the Waiakamilo Trust, ordering the property returned to the Trust; it declined to rescind or reform the Trusts. The Ishidas appealed to the Intermediate Court of Appeals (ICA), which affirmed the probate court's denial of their petitions.

         The Ishidas' Application for Writ of Certiorari presents two issues to this court: 1) whether that the probate court's failure to return the Waiakamilo Trust property to the Ishidas was an abuse of discretion in light of alleged wrongdoing by Jeri, and 2) whether the ICA improperly discounted the evidentiary value of the Ishidas' petitions, which were verified pursuant to Hawai'i Probate Rules (HPR) Rule 5(a).

         First, we hold that the probate court did not err in denying the Ishidas' requested relief, as the matter was within the court's equitable discretion. Second, we affirm the ICA's holding that the probate court was not required to accept the Ishidas' petitions at face value, and in doing so we clarify the status of HPR Rule 5(a) statements in relation to other types of testimonial evidence.

         I. Background

         The Ishidas hired an attorney to draft documents creating the Trusts, which they executed on June 27, 2006. The Ishidas settled each Trust with a single residential and/or commercial property. Jeri and Juney were named as trustee for the Waiakamilo Trust and Winant Trust, respectively. The Waiakamilo Trust designates Jeri as beneficiary, with full ownership of the Trust's property passing to Jeri's daughter Kaui upon Jeri's death. The Winant Trust provides that its property will be distributed to Juney as beneficiary upon the death of the Ishidas, with full ownership passing to Kaui upon Juney's death. The Trusts are irrevocable, with both including the following provision:

         Section 3. Irrevocable Trust

Our Trust is irrevocable. Except as expressly herein provided to the contrary, no Trustor or any other person shall have any right or power to alter, amend, or in any manner whatsoever modify any of the provisions hereof.

         Additionally, both the Waiakamilo Trust and the Winant Trust specifically exclude the Ishidas' third daughter, Deenie, with both Trusts including the following provision:

c. Exclusions
We hereby exclude RICHARDEEN R. KIMURA and such person's descendants as beneficiaries under our Trust Agreement, including without limitation for the purposes of intestate succession. For the purposes of our Trust Agreement, all excluded persons shall be treated as having died prior to the execution of our Trust Agreement.

         On March 28, 2007, Jeri and the Ishidas executed a series of deeds, transferring ownership of the Waiakamilo Trust property (Waiakamilo Property) from the trust to Jeri personally.

         On May 4, 2012, the Ishidas filed in probate court a Petition for Rescission of Warranty Deed, Imposition of Constructive Trust and an Order for Disgorgement related to the Waiakamilo Trust (Waiakamilo Petition), and a Petition for Reformation of Trust and/or Order Setting Aside the Ishida-Winant Trust (Winant Petition). The Ishidas alleged that, although they had asked their attorney to make simple wills and revocable trusts as part of their estate planning, their attorney went against their wishes and designed the Waiakamilo and Winant Trusts to be irrevocable. The Ishidas further claimed that Jeri had schemed with their attorney to transfer the Waiakamilo Property to Jeri personally in the March 28, 2007 deeds. Accordingly, the Ishidas asked the probate court to rescind the deed transferring the Waiakamilo Property to Jeri, and to set aside both Trusts and restore ownership of Trust properties to the Ishidas. In apparent compliance with HPR Rule 5(a), [1] both petitions included the following text above the Ishidas' signatures:

THE UNDERSIGNED UNDERSTANDS THAT THIS DOCUMENT IS DEEMED TO INCLUDE AN OATH, AFFIRMATION, OR STATEMENT TO THE EFFECT THAT ITS REPRESENTATIONS ARE TRUE AS FAR AS THE UNDERSIGNED KNOWS OR IS INFORMED, AND PENALTIES FOR PERJURY MAY FOLLOW DELIBERATE FALSIFICATION.

         Jeri and Juney (Respondents) disputed the Ishidas' account of the Trusts' creation, claiming that the Ishidas intentionally made the trusts irrevocable because they had disinherited Deenie. Respondents further contended that Deenie had recently reconciled with their parents, and that she was behind the petitions. Respondents also alleged that the transfer of property from the Waiakamilo Trust to Jeri personally had been done with the Ishidas' knowledge in order to avoid "issues" raised by the Ishidas' accountant. Respondents concluded that "further discovery into the Ishidas' allegations is ...


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