Filed 2/1/23 Koenig v. Koenig CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions 

not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has 

not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

VIRGINIA JUNG LUM 

KOENIG,

Plaintiff and Respondent,

v.

LESLEY KOENIG et al.,

Defendants and 

Appellants.

 B322647

 (Santa Clara County

 Super. Ct. No. 21PR190203)

APPEAL from an order of the Superior Court of Los 

Angeles County, Julie A. Emede, Judge. Affirmed.

Law Office of Kenneth H. Prochnow and Kenneth H. 

Prochnow for Defendants and Appellants.

Wagstaff, von Loewenfeldt, Busch & Radwick, Michael von 

Loewenfeldt; Jorgenson, Siegel, McClure & Flegel and John L. 

Flegel, for Plaintiff and Respondent.
2

Appellants Lesley Koenig and Diana “Dee” Koenig Otte 

(sometimes grandchildren)1 appeal from the probate court’s order 

on the petition of respondent Virginia Jung Lum Koenig, who 

sought instructions under Probate Code section 172002 regarding 

a transfer of real property to the Koenig Family Trust. The issue 

is whether this triggered Lesley and Dee’s right of first refusal to 

purchase the property. The trial court found that the property 

had not been transferred into the trust, that if a transfer had 

occurred, it did not trigger a right of first refusal, and that Lesley 

and Dee did not have the right to obtain the real property at no 

cost. We affirm the order.

FACTUAL BACKGROUND

Frederick Koenig obtained the home at 13651 Old Altos 

Road, Los Altos, California (Los Altos home), in 1979 as a bequest 

in the will of his mother, Marie-Luise Koenig. A provision was 

included in her will that if Frederick chose to sell or otherwise 

dispose of the Los Altos home, then her other son, George 

Koenig,3 or her grandchildren would have a right of first refusal 

to purchase the Los Altos home from Frederick. Marie-Luise’s 

will allowed George or her grandchildren 60 days to exercise the 

right of first refusal after they received written notice of 

Frederick’s decision to sell or otherwise dispose of the Los Altos 

1 In that many of the parties share the same surname, we 

will refer to them by their first name. We mean no disrespect.

2 All further statutory references are to the Probate Code 

unless otherwise specified.

3 In 2014 George and his son Nick both waived any claim to 

the property.
3

home. The right of first refusal allowed George or the grandchild 

to purchase the home for the lesser of the sale price or the fair 

market value of the property, as determined by an independent 

appraiser. The probate court confirmed the transfer of the real 

property to Frederick in a 1981 order for final distribution of 

Marie-Luise’s estate.

In 2014, while making an estate plan, Frederick filed a 

petition to seek an order clarifying whether the right of first 

refusal would be triggered if he transferred the Los Altos home 

into a revocable trust. The trial court denied the petition on the 

ground that it lacked the authority to clarify the 1981 order for 

final distribution of Marie-Luise’s estate.

Frederick then drafted a will that directed the executor to 

transfer the Los Altos home to the trustee of the Koenig Family 

Trust, dated September 27, 1993, so it could be added to the trust 

estate. He also directed the executor to comply with the 

procedures identified in the 1981 order for final distribution by 

giving written notice of the transfer to the grandchildren.

In 2018, Frederick and his wife Virginia executed an 

amendment to the Koenig Family Trust in which they made a 

general assignment of all real and personal property to the 

Koenig Family Trust. In the amendment, they agreed that either 

settlor could revoke the trust and that they could withdraw their 

property from the trust without notice to the other settlor.

PROCEDURAL BACKGROUND

Frederick passed away on February 17, 2019. His will 

designated Virginia to be the executor, and she filed a petition on 

March 18, 2019, for probate of Frederick’s will.
4

Lesley and Dee, Frederick’s daughters from a previous 

marriage, then filed a petition under section 850 on August 12, 

2019, to request that the Los Altos home be transferred out of the 

probate estate. They claimed a right to the Los Altos home 

following their discovery that Frederick had transferred the Los 

Altos home to the Koenig Family Trust in the 2018 amendment 

to the trust. They alleged that this transfer allowed them to 

exercise their right of first refusal and obtain the Los Altos home 

at no cost to them because Frederick had received no money

when he transferred the Los Altos home into the trust.

Before the trial court made a decision on the section 850 

petition, Virginia filed a petition under section 17200 on May 18, 

2021, requesting a determination whether the general 

assignment of assets in the 2018 amendment to the Koenig 

Family Trust had triggered the right of first refusal. On 

August 23, 2021, the trial court granted relief to Virginia on her 

petition by finding that the assignment did not transfer the Los 

Altos home into the trust. The order added that, even if the Los 

Altos home had been transferred to the trust, the transfer was 

not a sale or disposition of the Los Altos home for the purposes of 

the right of first refusal in Marie-Luise’s will.

Lesley and Dee filed a timely notice of appeal of the order 

on Virginia’s petition on October 21, 2021. As to Lesley and Dee’s 

separate petition for relief under section 850, the trial court 

stayed proceedings until the decision on this appeal.

DISCUSSION

I. Standard of review

The probate court has wide discretion to make any order 

and take any action necessary or proper to dispose of matters 
5

presented by a petition under section 17200. (Manson v. 

Shepherd (2010) 188 Cal.App.4th 1244, 1258.) The applicable 

standard of review, therefore, is abuse of discretion. (Ibid.)

This standard, however, is not a unified standard; the 

deference it calls for varies according to the aspect of a trial 

court’s ruling under review. (Manson v. Shepherd, supra, 188 

Cal.App.4th at p. 1259.) The trial court’s findings of fact are 

reviewed for substantial evidence, its conclusions of law are 

reviewed de novo, and its application of the law to the facts is 

reversible only if arbitrary and capricious. (Ibid.)

The main question presented in this appeal is whether the 

trial court correctly concluded that Frederick did not trigger the 

right of first refusal in Marie-Luise’s will by amending the 

Koenig Family Trust in 2018. “The interpretation of a will or 

trust instrument presents a question of law unless interpretation 

turns on the credibility of extrinsic evidence or a conflict therein.” 

(Burch v. George (1994) 7 Cal.4th 246, 254.) Lesley and Dee argue 

that we should use the de novo standard of review because we are 

interpreting a phrase in a will. This is the standard we use here 

because we are reviewing the trial court’s conclusions of law with 

regard to the interpretation of a will and trust. Further, there is 

no indication in the record that the parties offered or the trial 

court used any extrinsic evidence to determine the meaning of 

the will or trust documents. Courts may utilize extrinsic evidence 

to aid in construing a will or trust if it first finds that the will is 

ambiguous. (Estate of Dodge (1971) 6 Cal.3d 311, 318.) The order 

does not indicate that the trial court made any such finding of 

ambiguity; therefore, we assume that the trial court followed the 

mandate of section 21102 and relied exclusively upon “[t]he 

intention of the transferor as expressed in the instrument.” We, 
6

therefore, use the de novo standard because the interpretation of 

the will and trust involves solely conclusions of law.

II. Principles of will and trust interpretation

The rules governing the construction and interpretation of 

wills and trusts are set out in part 1 of division 11 of the Probate 

Code. The intention of the transferor, “as expressed in the 

instrument,” controls our interpretation. (§ 21102.) The words of 

an instrument are to be given their ordinary and grammatical 

meaning. (§ 21122.)

Where there are provisions in a will or trust that appear to 

conflict, the different parts “are to be construed in relation to 

each other and so as, if possible, to form a consistent whole.” 

(§ 21121.) Further, “[t]he words of an instrument are to receive 

an interpretation that will give every expression some effect, 

rather than one that will render any of the expressions 

inoperative.” (§ 21120.)

Bearing these principles in mind, we turn to the language 

of Marie-Luise’s will and the 2018 amendment and restatement 

of the Koenig Family Trust to determine whether Lesley and 

Dee’s right of first refusal arose in 2018.

III. No right of first refusal in 2018 on transfer into the 

Koenig Family Trust

Paragraph “SIXTH” of Marie-Luise’s will contains the right 

of first refusal for the Los Altos home:

“If my son FREDERICK and any of my 

grandchildren survive me for 30 days and 

FREDERICK inherits my residence situated in Santa 

Clara County, California, and commonly known as 

13651 Old Altos Road, Los Altos, California, he shall 

give written notice to my grandchildren and my son, 
7

GEORGE in the event he thereafter desires to sell or 

otherwise dispose of my residence to someone other 

than one or more of my grandchildren. Delivery of 

such notice to my grandchildren and GEORGE shall 

be deemed to be an offer by FREDERICK to sell my 

said residence as provided below. Within 60 days 

after the receipt of said notice, my grandchildren and 

GEORGE shall have a ‘right of first refusal’ to 

purchase my residence for the lesser of the following 

amounts: (1) the selling price, or (2) the fair market 

value of the property at that time, as determined by 

an independent appraiser acceptable to all parties.”4

4 When the probate of Marie-Luise’s will occurred, the 

probate court issued on June 3, 1981, an “ORDER AND DECREE 

SETTLING AND CONFIRMING FIRST AND FINAL REPORT 

AND WAIVER OF ACCOUNT OF EXECUTOR AND OF FINAL 

DISTRIBUTION OF ESTATE AND ALLOWANCE OF FEES TO 

EXECUTOR’S ATTORNEYS FOR THEIR ORDINARY 

SERVICES,” i.e., a decree of distribution. “A decree of 

distribution is a judicial construction of the will arrived at by the 

court ascertaining the intent of the testator. . . . Once final, the 

decree supersedes the will . . . and becomes the conclusive 

determination of the validity, meaning and effect of the will, the 

trusts created therein and the rights of all parties thereunder.” 

(Estate of Callnon (1969) 70 Cal.2d 150, 156, citations and 

footnote omitted.) The probate court’s decree of distribution 

restated the relevant portions of paragraph SIXTH of MarieLuise’s will. It did not include any judicial construction of the 

terms in the will or any language ascertaining the intent of 

Marie-Luise. As a result, the probate court’s decree does not 

include any conclusion determination on the meaning of the right 
8

“‘A right of first refusal is a contractual right to purchase 

property in the event the owner decides to sell.’” (J&A Mash &

Barrel, LLC v. Superior Court (2022) 74 Cal.App.5th 1, 34.) The 

holder of the right merely has the preference to purchase the 

property over other purchasers if the owner of the property 

“‘elects to sell the property.’” (Ibid.) It is a conditional right that 

arises when the specified conditions exist. (Ibid.)

The contract terms dictate the particular circumstances 

that will trigger the right. (Hartzheim v. Valley Land & Cattle 

Co. (2007) 153 Cal.App.4th 383, 389.) The question presented is 

primarily one of contract interpretation. (Ibid.) Unless 

interpretation turns upon the credibility of extrinsic evidence, 

interpretation of a contract is purely a judicial function. (Ibid.)

“‘“‘When a dispute arises over the meaning of contract 

language, the first question to be decided is whether the language 

is “reasonably susceptible” to the interpretation urged by the 

party. If it is not, the case is over. [Citation.] If the court decides 

the language is reasonably susceptible to the interpretation 

urged, the court moves to the second question: what did the 

parties intend the language to mean?’”’” (Hartzheim v. Valley 

Land & Cattle Co., supra, 153 Cal.App.4th at pp. 389-390.)

In Marie-Luise’s will, the specified condition that triggers 

the right of first refusal is when Frederick “. . . desires to sell or 

otherwise dispose of my residence to someone other than one or 

more of my grandchildren.” We begin, therefore, by determining 

whether the language of paragraph SIXTH is reasonably 

of first refusal. Since the parties cite to the will when analyzing 

the right of first refusal in their papers, we will cite to the will 

and not the decree to avoid confusion and maintain consistency.
9

susceptible to the meaning Lesley and Dee give it, i.e., that the 

2018 amendment and restatement of the Koenig Family Trust 

triggered the right of first refusal.

In 2018, Frederick and Virginia amended and restated the 

Koenig Family Trust, which had been executed on September 27, 

1993, and then amended on December 20, 1998, June 1, 2010, 

and May 1, 2015. The trust identifies the trust property as that 

described in “Schedule A,” which is labeled “General Assignment 

of Assets to Revocable Trust.” In Schedule A, Frederick and 

Virginia assign, transfer, and convey the following to Frederick 

and Virginia, as trustees of the Koenig Family Trust:

“all right, title, and interest in and to all real 

property in the United States and all personal 

property, tangible and intangible, now owned or 

hereafter acquired by them jointly or individually, 

including, by way of illustration and not by way of 

limitation, all of their jewelry, clothing, household 

furniture and furnishings, personal automobiles, 

books, and other tangible articles of a personal 

nature; real property; publicly traded or privately 

held stocks, bonds, or other securities; partnership 

interest, whether as a general or as a limited partner; 

sole proprietorships; deeds of trust; safe deposit 

boxes; and certificates of deposits, bank accounts, 

brokerage accounts and other similar accounts, 

excluding IRAs and any employer plans, as those 

plans are defined in Internal Revenue Code Sections 

401-416.”

The transfer of all right, title, and interest in and to all real 

property to the trust is not a sale because there is no exchange of 

consideration. However, the transfer to the trust could be a 

disposal of Frederick’s interest in the Los Altos home. “Dispose 

of” means “‘[t]o transfer or part with, as by giving or selling.’” 
10

(People v. Splawn (1985) 165 Cal.App.3d 553, 558.) The phrase 

“all real property” would apply to Frederick’s interest in the Los 

Altos home. Since Frederick assigned, transferred, and conveyed 

his interest in “all real property,” which included his interest in 

the Los Altos home, this transfer in Schedule A could be 

interpreted as a disposal of his interest in the Los Altos home.5

In her will, however, Marie-Luise identified the particular 

circumstances that created the right of first refusal as Frederick 

selling or otherwise disposing of the Los Altos home to someone 

other than one or more of her grandchildren. Here, Frederick 

transferred the property to his family trust. A trust is not a legal 

entity. (Boshernitsan v. Bach (2021) 61 Cal.App.5th 883, 891.) 

Since the trust is not a legal entity, the transfer of his property to 

the trust was not the disposal of the Los Altos home to someone 

other than one or more of Marie-Luise’s grandchildren.

Further, under the heading labeled “Administration,” the 

trust states in section 1.3 that either settlor may, without notice 

to the other settlor, revoke any trust or withdraw property from 

any trust created by the trust document. A revocable trust is a 

trust that the person who creates it, generally called the settlor, 

can revoke during the person’s lifetime. (Barefoot v. Jennings

5 The 2018 amendment and restatement plus accompanying 

Schedule A are sufficient to transfer the real property into the 

Koenig Family trust because they are writings signed by 

Frederick to transfer the property from him, as settlor, to him, as 

trustee. (Estate of Heggstad (1993) 16 Cal.App.4th 943, 950 [“[A]

written declaration of trust by the owner of real property, in 

which he names himself trustee, is sufficient to create a trust in 

that property, and that the law does not require a separate deed 

transferring the property to the trust.”].)
11

(2020) 8 Cal.5th 822, 826.) This language in section 1.3 of the 

2018 amendment and restatement establishes that the Koenig 

Family Trust is a revocable living trust.

When settlors transfer property to a revocable living trust, 

such property “is considered the property of the settlor for the 

settlor’s lifetime.” (Estate of Giraldin (2012) 55 Cal.4th 1058, 

1065–1066.) “‘[A] revocable inter vivos trust is recognized as 

simply “a probate avoidance device,”’ and, ‘when property is held 

in this type of trust, the settlor and lifetime beneficiary “‘has the 

equivalent of full ownership of the property.’”’” (Boshernitsan v. 

Bach, supra, 61 Cal.App.5th at pp. 891-892.)

The transfer of Frederick’s interest in the Los Altos home 

to a revocable trust, therefore, was not the disposal of the 

property to someone other than Marie-Luise’s children.6 Instead, 

the Los Altos home was considered the property of Frederick, the 

settlor, during his lifetime and he had the equivalent of full 

ownership of the property.

6 One court has found that a transfer of property to a 

revocable trust did not “dispose of or part with an asset” for the 

purposes of a fraudulent conveyance because the property is still 

reachable by creditors. (Gagan v. Gouyd (1999) 73 Cal.App.4th 

835, 842, disapproved with regards to holdings concerning 

marital settlement agreements in the context of fraudulent 

concealment in Mejia v. Reed (2003) 31 Cal.4th 657, 669.) Lesley 

and Dee suggest Frederick made the transfer to the Koenig 

Family Trust to thwart the intent of Marie-Luise in her will. 

Since the transfer to a revocable trust could not dispose of his 

interest in the Los Altos home, it did not thwart Marie-Luise’s 

intent because her grandchildren could still reach it and exercise 

their right of first refusal once an actual sale or disposal of the 

Los Altos home occurred.
12

The trial court, therefore, correctly found that the transfer 

of the Los Altos home to the Koenig Family Trust in 2018 was not 

a sale or disposition of the property for the purposes of MarieLuise’s will. We thus affirm the trial court’s order that granted 

Virginia’s petition.

The trial court, however, did err in part when it found that 

the Los Altos home was not made an asset of the Koenig Family 

trust. The unambiguous language in Schedule A to the 2018 

amendment and restatement shows that Frederick transferred 

his rights and interest in all real property to the trust. This 

would include his interest in the Los Altos home.

However, any error was not prejudicial because the 2018 

transfer did not create the circumstances for Lesley and Dee to 

obtain a right of first refusal that would allow them to purchase 

the Los Altos home at no cost to them. After the 2018 transfer, 

Frederick had the equivalent of full ownership of the Los Altos 

property. No other party had control, possession, or an ownership 

interest in the Los Altos property. Since the home had not been 

sold or disposed of to someone other than the grandchildren of 

Marie-Luise, the 2018 transfer did not trigger Leslie and Dee’s 

right of first refusal.

The trial court, thus, correctly granted Virginia’s petition 

and found that Lesley and Dee’s right to first refusal did not arise 

in 2018 when Frederick transferred the property to himself as 

trustee of the Koenig Family Trust.

IV. Grandchildren have a right of first refusal to 

purchase the property, but not to receive it without 

cost

Lesley and Dee also argue that the trial court erred when it 

found that they cannot receive the property for no cost. In 
13

paragraph 4 of its order, the trial court found “Paragraph

SIXTH A of the Last Will of Marie-Luise Koenig dated June 7, 

1979 contains an option for [Lesley and Dee] to purchase the 

Property upon the happening of certain conditions, not to receive 

it for free.”

A review of Marie-Luise’s will reveals this is the correct 

interpretation of the manner for exercising the right of first 

refusal. Paragraph SIXTH has two sections, part A and part B. 

Part A applies if Frederick is alive and he seeks to sell or dispose 

of the Los Altos home. If Lesley and Dee then decide to exercise 

the right of first refusal, the price to purchase the property is “the 

lesser of the following amounts: (1) the selling price, or (2) the 

fair market value of the property at that time, as determined by 

an independent appraiser acceptable to all parties.” Part A does 

not state that the grandchildren have any right to receive the 

property free. Instead, as the trial court found, Lesley and Dee 

have the right to purchase the property at the price specified in 

paragraph SIXTH, part A, of Marie-Luise’s will.

Part B of paragraph SIXTH applies after Frederick dies 

and in other specified circumstances that do not fall within 

paragraph A.7 In these specified circumstances, the 

7 These include Frederick being adjudicated a bankrupt, a 

guardian or conservator being appointed for Frederick’s estate, 

Frederick making an assignment for the benefit of creditors, an 

interest being transferred or awarded to a spouse pursuant in a 

dissolution, property settlement, or separation agreement, or 

Frederick’s spouse disposing of an interest in the property for the 

benefit of someone other than Frederick or Marie-Luise’s 

grandchildren.
14

grandchildren have the right of first refusal, but the purchase 

price is the fair market value.

The trial court, therefore, correctly found that MarieLuise’s will does not allow Lesley and Dee to receive the Los Altos 

home at no cost to them.

DISPOSITION

We affirm the trial court’s order. Each side is to bear their 

own costs.

________________________

CHAVEZ, J.

We concur:

________________________

LUI, P. J.

________________________

BENKE, J.*

* Retired Associate Justice of the Court of Appeal, Fourth 

Appellate District, assigned by the Chief Justice pursuant to 

article VI, section 6 of the California Constitution.