Does a Trustee, Acting Alone, Have Standing to Seek Trust Reformation?

The enactment of Florida’s new Trust Code invited many unanswered questions, and the question of whether a trustee, acting solely in her capacity as trustee, has standing to seek reformation of a trust was presented to our appellate court in Reid v. Temple Judea, 994 So.2d 1146 (Fla. 3^rd DCA 2007). 

The case involved a trust executed by Edgar Sonder who named Ceclia as trustee.  On May 17, 2000, Edgar Sonder executed a trust naming himself as trustee.   After Sonder’s death, his estate was probated and finding trust funds insufficient to pay all of the gifts provided for in Sonder’s will, Reid moved to abate the enumerated pecuniary gifts proportionately. Reid also claimed that the apartment was a devise, not subject to abatement. Read the rest of this entry

FLORIDA UNIFORM TRUST CODE

Is it Time for Trusts to Take a Trip to the Repair Shop?  Florida Court Gives Liberal Application of New Trust Code Provision Allowing for Repair of Mistakes in Trust Language Upon Application of an Interested Person.

The Florida Legislature’s adoption of the Uniform Trust Code fostered a welcome change to the way mistakes in trust documents are now treated. Formerly, beneficiaries were shackled by mistakes made by their relative in drafting provisions of their trust documents, sometimes neglecting gift or similar provisions when there was clear evidence that the relative intended to give someone an inheritance.

The Reformation

Now, the new trust code under section 736.0415, an interested person may ask the Court through probate litigation, to reform the terms of a trust to conform to the settlor’s intentions if it is proved by clear and convincing evidence that both the accomplishment of the settlor’s intent and the terms of the trust were affected by a mistake. Under this new section of the Trust Code, reformation is available for both mistakes of law and of fact, whether or not the terms of the trust are ambiguous.

The Enlightenment

After the Florida Real Property, Probate & Trust Law Section of The Florida Bar to file a brief was asked by the Third District Court of Appeals to file an amicus brief on the issue, the court issued its opinion in Reid v. Temple Judea, — So.2d —-, 2008 WL 2356814, (Fla.App. 3 Dist., 2008) addressing the issue of trust reformation. The opinion is instructive guidance for those contemplating trust litigation in order to effectuate necessary changes to a trust in order to achieve the settlor’s true intent.

In Action

In this case, Edgar Sonder executed a trust naming his nurse, Ceclia Reed, as successor trustee. The trust was funded by assets “pouring over” from Sonder’s estate, and provided for a number of gifts following Sonder’s death. Specifically, it provided for gifts totaling $31,000 to ten charities. Another section of the trust provided that after the gifts to the ten charities were satisfied, $125,000 was to be paid to the Hebrew Union College Jewish Institute of Religion. A final provision of the trust provided that after giving effect to the first two categories of gifts listed above, it provided for a number of specific gifts that were to be made to enumerated individuals including a gift of $25,000 and the apartment in which Sonder then resided to his nurse, Cecilia Reid.

Since there were insufficient assets to satisfy the first two categories of gifts in the trust, Nurse Reid, as sole trustee, petitioned to reform the trust claiming that the trust instrument did not evidence the settlor’s intent which was to give his apartment to Reid not subject to abatement. In support of her claim, Reid appended to her petition Sonder’s handwritten instructions, which she maintained supported her position. Clear and Convincing-What Does it Mean?

The appellate court allowed Reid to reform the trust to allow the gift of Sonder’s apartment to his nurse. In my view, the court’s decision rested on the fact that there existed extrinsic evidence that was considered “clear and convincing” evidence of the settlor’s intent—the handwritten notes. I would expect that oral statements, as well as written statements by the settlor would suffice for the evidence necessary to reform a trust to reflect the settlor’s intent.