Stahl

Introduction

This is an appeal by Robyn and Jolie Stahl (the Stahls) from an order instructing the Wells Fargo Bank, N.A., a cotrustee in the trust (the trust) established for the primary benefit of Elaine D. Rogers under the will of John M. Stahl, dated December 19, 1966, to allocate items between income and principal. The Stahls contend the trial court erred in determining, contrary to Probate Code sections 16303, subdivision (b)(ll) and 16312, subdivision (b)(2), that amounts held by a trustee as a depreciation reserve constituted income rather than principal. We reverse.

Background

The Stahls are the trustor’s daughters and the remainder beneficiaries of the trust. Elaine D. Rodgers is the income beneficiary. The net income of the trust is paid to Ms. Rodgers during her lifetime and, upon her death, the balance of the trust estate then remaining is divided into three equal shares. One share is paid in equal subshares to certain charitable, nonprofit, and educational entities. The remaining two shares are to be held in trust for the trustor’s daughters, during their lifetimes, and upon their deaths, are transferred to the organizations receiving the first share. The…