Mistakes happen all the time when people are making their estate planning documents. The law is designed to provide fair remedies and solutions for families and loved ones who are victimized by an honest mistake by the deceased relative.

A uniform code for dealing with mistakes in wills is set froth in the Restatement of Property (Third)-
Wills and Donative Transfers, which provides:

§ 12.1 Reforming Donative Documents To Correct Mistakes

“A donative document, though unambiguous, may be reformed to conform the text to the donor’s intention if it is established by clear and convincing evidence (1) that a mistake of fact or law, whether in expression or inducement, affected specific terms of the document; and (2) what the donor’s intention was. In determining whether these elements have been established by clear and convincing evidence, direct evidence of intention contradicting the plain meaning of the text as well as other evidence of intention may be considered.” (more…)

Court holds trust instrument was effective in transferring both real and personal property to the trust.Prior to Florida’s adoption of the new Trust Code, which became effective on July 1, 2007, the common law held that in order for a trust to be created, the settlor was required to make a present and unequivocal disposition of property so that he or she is no longer vested with its full legal and equitable ownership. For example, it has been held in Florida that the failure of a settlor to execute a deed which conveyed real estate to the trustees of a trust precluded the creation of a “living trust” for the realty. Flinn v. Van Devere, 502 so.2d 454 (Fla. 3d DCA 1986). Although the new Trust Code is now effective, it provides that the common law of trusts and principles of equity supplement the Code, except to the extent modified by the Code or another law of Florida. Fla. Stat. §736.0106. This leaves a lot of “gray” area in the law of trusts, and whether certain attempts to transfer property into a trust are valid.

I’m always interested in how our sister jurisdictions handle problems in connection with attempts to transfer real and personal property into a trust that might fall short of the formalities required by the Uniform Trust Code. One such case recently surfaced in our Midwestern sister state of Nebraska in Chebatoris v. Moyer 757 N.W. 2d 212 (Neb. 2008). (more…)

Extrinsic Evidence Sufficient to Construe Settlor’s Original Intent

The new Florida Trust Code recognizes the recent increase in use of long-term trusts, thereby requiring greater flexibility in the restrictive rules that apply concerning when a trust may be terminated or modified other than as provided in the instrument. The governing principal of the trust code is to carry out the settlor’s intent. The power to modify the terms of a trust appears in a variety of sections of the new trust code. For example, a court now has discretion to modify an irrevocable trust because of circumstances not anticipated by the settlor. In exercising its discretion the court is to consider any spendthrift provision but is not precluded from modifying the trust for that reason. Fla.Stat. §736.04113. Also, a court may modify a trust if such action is in the best interest of the beneficiaries. Fla.Stat. §736.04115. (more…)

Learn the Language: Fifth District Court of Appeals Reverses Probate Judge and Predicates Opinion On its Own Perception of Trust Language and “Settlor’s Intent”In Brown v. Miller, — So.2d —-, 2008 WL 4600940, 33 Fla.L.Weekly D2433c, Fla.App. 5 Dist., October 17, 2008 (NO. 5D07-1356, 5D07-1288) the Fifth District Court of Appeals reversed Orange County Judge Lawrence Kirkwood’s order which had invalidated a seven million dollar transfer from a testamentary trust to its lifetime beneficiary.

The Wife
Elinor Miller set up a trust naming her husband Bill as the trustee and lifetime beneficiary (the “Elinor Miller Trust”). After her death the assets remaining in the trust (after her charitable bequests and distributions to family members) were divided into three separate sub-trusts, designated as Trust A-1, Trust A-2 and Trust B with each serving a distinct purpose.

The Elinor Miller Trust provided that the Trustee should pay Bill the income from A-1 and A-2, in addition to “such amounts from the principal of Trust A-2 first and then liberally for his maintenance, health, and support in his accustomed manner of living, taking into account all of his other income and means of support known to the Trustee. The Trustee shall also pay [Bill] such additional amounts of principal from Trust A-2 as he may from time to time request.” Further, the Trust provided that upon Bill’s death, the “Trustee shall pay over and distribute the then remaining balance of Trust A-2, if any to such person or persons, and in such manner, as he shall appoint by his Last Will and Testament, which makes reference to said power of appointment, including in him the power to appoint to his estate. Any portion of Trust A-2 not effectively appointed by [Bill] shall continue to be held in trust for the lifetime of my son, [Tom].” Id. (more…)