Blogs from January, 2012

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Florida Trust Termination

It is not uncommon for people to place real estate in a trust as part of their estate plan. What happens when the person dies and the real estate is unproductive or the value gets reduced?  Recently a client had a one-half interest in a trust that was to last for several years, the primary asset of which was a house.  The owner of the house wanted it to be available for his sibling to use after his death.  Unfortunately, the house had fallen behind in monthly dues with the homeowner’s association and was not used or lived in after the death of the owner.  Of course, expenses (such as property taxes and homeowner’s dues) needed to be paid and the homeowner’s association sued for past due bills.

Fortunately, Florida law permits the Court to modify an irrevocable trust if not inconsistent with the settlor’s (the creator of the trust) purpose and the purposes of the trust have been fulfilled or have become illegal, impossible, wasteful, or impractical to fulfill.  The law allows for modification of the trust for other reasons as well.  The law even allows termination of the trust, in whole or in part!

The client feared that the expenses on the real estate would greatly diminish his interest in the trust when it ended after the set term of years.  Fortunately, through the application of Florida Statute 736.04113, we were able to request the trust be terminated and the real estate sold, with the proceeds distributed in accordance with the terms of the trust.  This use of the probate law in Florida worked to our client’s advantage and allowed the settlor’s intent to be followed.  This is a great example of how circumstances can change after signing estate planning documents, but with the help of experienced probate, attorney everyone was pleased with the outcome.

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