Trust Language Isn’t Set in Stone — Should the Nurse Get the Apartment? Maybe. The Trustee Has Standing to Argue She Should Via Reforming the Language of the Trust.
Cecilia Reid was Edgar Sonder’s nurse for several years. Being a responsible man, Edgar Sonder created a “pour over” trust in May 2000, naming himself as trustee. (A “pour over” trust is a trust that is funded by assets “pouring over” from an estate, and is a common vehicle used in estate planning.)
Later, Mr. Sonder amended the trust, naming Nurse Reid as its sole successor trustee. The trust in its final version (Edgar Sonder amended the document twice before he died) included instructions on how his assets were to be distributed; several gifts were itemized.
First, $31,000 was to be distributed among ten different charities (Art. II, section 1); second, and importantly, after the first gifts were completed, $125,000 was to be given to the Hebrew Union College Jewish Institute of Religion (Art. II, section 2); and third, again after the prior gifts were given, various assets were to be distributed as gifts to certain, named individuals (Art. II, section 3). Among those listed in this third round of gifts was nurse Cecilia Reid, with the trust dictating that Nurse Reid was to receive $25,000 and the apartment Mr. Sonder resided in at the time of his death, together with its furnishings. The residue of his estate was likewise given to Cecilia Reid.
Edgar Sonder died on May 12, 2005. His will was admitted to probate, and Cecilia Reid was accordingly appointed personal representative. An inventory revealed that there were not sufficient assets within the estate to complete the gifting desires of Mr. Sonder, as described in the three sections of Article II of the pourover trust.
Cecilia Goes to Court
So, Cecilia Reid went to court and asked that these enumerated, financial gifts be abated proportionately and that the apartment itself be legally deemed as a devise, and not subject to abatement at all. She was unsuccessful; the lower court denied her motion for abatement and the appellate court affirmed that decision in Reid v. Hebrew Union College-Jewish Institute of Religion, 947 So. 2d 1178 (Fla. 3d DCA 2007).
Cecilia Goes to Court, Again
Cecilia Reid’s next step was to approach the court in her role as sole trustee, petitioning for the trust to be reformed and arguing that the trust instrument did not evidence Edgar Sonder’s intent, which was to give his apartment to his nurse, Cecilia Reid, and not have it be subject to abatement.
The Same Attorney for the Settlor in Drafting and the Trustee in Court: a Man with Many Hats
To bolster her argument, Nurse Reid attached handwritten notes that Edgar Sonder had given his estate planning attorney describing how he wanted his assets distributed after his death. Reid also filed the sworn affidavit of the attorney who had prepared both the trust and its two amendments for Edgar Sonder.
There, the estate planning attorney swore that Edgar Sonder intended to devise as a specific gift, not subject to any priorities, the apartment and its contents to his nurse, Cecilia Reid. He also swore that the court’s decision to convert the apartment, and its contents, to a general gift subject to abatement violated the intent of Edgar Sonder due to the error of the scrivener.
Interestingly, this same attorney, William Palmer, was also representing Cecilia Reid as she made her arguments before the court. The fact that Mr. Palmer was a man wearing many hats was a situation that did not go unrecognized by Reid’s opponents.
The Nurse is Challenged by Fellow Beneficiaries – and so is her Attorney
Two beneficiaries of Mr.Sonder’s benevolence, the Temple Judea (Art. II, section 1) and Hebrew Union College (Art. II, section 2), vigorously challenged Cecilia Reed and William Palmer.
First, they fought to remove Attorney Palmer from the proceedings, moving the court to disqualify him because he had been the attorney who prepared the underlying documents. The trial court denied their request.
Second, they argued that Trustee Cecilia Reid lacked standing to bring a lawsuit seeking to reform the trust, because (1) she was “not an ‘interested person,’ instead she was a volunteer and stakeholder in the Trust, having no personal stake in the outcome;” (2) as trustee, she owed a fiduciary duty of loyalty to all the beneficiaries to act impartially; and finally, (3) that the appellate court had already affirmed the decisions of the lower court on how the trust’s distribution provisions (Article II, sections 1, 2, 3) were to be read and carried out. The trial court agreed with this argument, and dismissed Reid’s suit because she lacked legal standing to bring it.
So, Reid appealed again.
With Edgar Sonder’s trust again before the Florida appellate court, the reviewing court held that Cecilia Reid did have standing to petition the court to reform the trust. The trial court’s decision was reversed, and the case remanded for further proceedings.
The basis of their decision was not only the law in place at the time Mr. Souder signed the trust documents and its amendments, but current statutes and precedent, as well as that incorporated into the trust by its own language. (The Edgar Sonder Trust expressly states, “the Trustee has the powers now or hereafter provided by law.”)
Equitably, Cecilia Reid has standing because a trustee has standing to seek reformation of a trust as part of the trustee’s general obligations to follow the settlor’s true intent and purposes in discharging his/her duties in managing the trust. Here, the trustee acts as an indispensable party in all proceedings affecting the estate, and “clearly has standing to seek reformation.”
Statutorily, Cecilia Reid has standing because Florida statutory law has consistently allowed a trustee to change or modify the terms of a trust when complying with the trust’s existing terms will frustrate the settlor’s purpose. The rationale behind this power to modify necessarily encompasses the power to reform, the appellate court held, and in support of its opinion quoted the legislative history of § 736.0415, Fla. Stat. (2007).
Bottom line, the appellate court held that the trustee had legal standing to seek reformation of a trust either before or after enactment of section 736.0415, and Cecilia Reid has been given the right to proceed in the lower court in her attempts to prove that the true intent of Edgar Sonder was to give her his apartment, and its furnishings, outright.
Practitioner Point: This case is far from over – and curious by its absence is any discussion by the appellate court on the argument to disqualify the attorney who is effectively in the courtroom advancing his own affidavit as key evidence to prove his position. This is a textbook example of why our firm acts as experienced probate litigation co-counsel with probate practitioners across the state.
Real World Point: Even though your trust is an official document which legally controls, those notes and memoranda that you write, detailing your intent and wishes regarding your assets and estate, can be very important. They can be truly invaluable to a probate litigator if what you really wanted to happen with your estate even comes into question.
Cecilia Reid, as Trustee of the Edgar Sonder Trust, Appellant, vs. Temple Judea and Hebrew Union College Jewish Institute of Religion, Appellees, 33 Fla. L. Weekly D 1546 (June 11, 2008)
Appeal from Miami-Dade County Circuit Court Judge Arthur L. Rothenberg, to the Third District Court of Appeals (Opn: Justice Wells, joined by Justices Rothenberg and Salter)
