Dean Mead’s Tax Department handles tax planning issues for businesses and individuals. The attorneys in our department have extensive experience in a full range of…
In the recent case of Bernal v. Marin, the Third District Court of Appeals interpreted F.S. §736.0602(3), which sets forth the methods by which a trust settlor may revoke or amend a trust. The statute provides alternative ways that settlor may amend or revoke a trust in addition to those allowed under the common law.
Under F.S. §736.0602(3), provides that a settlor may revoke a trust as in accordance with the express terms of the trust. If the trust does not provide a method, then the settlor may revoke the trust in the following manner:
(b)(1) A later will or codicil that expressly refers to the trust or specifically devises property that would otherwise have passed according to the terms of the trust; or
(2) Any other method manifesting clear and convincing evidence of the settlor’s intent.
In Bernal, the settlor established a revocable trust in 2004 in which she left her assets to a cousin and several wildlife related charities. The settlor funded the trust with her home and a brokerage account. In 2008, the settlor hired an attorney to draft a Will in which settlor revoked “all other wills, trust and codicils previously made by me”. At issue was whether this language was sufficient to revoke the 2004 trust. The trial court held that settlor did not properly revoke the 2004 trust in accordance with F.S. §736.0602(3)(b)(1) because the 2008 Will did not expressly mention the trust. Furthermore, the trial court held that a will which does not comply with F.S. §736.0602(3)(b)(1) could not be used for revoking a trust under F.S. §736.0602(3)(b)(2). Thus, the trial court held that a validly executed will could not be used to show clear and convincing evidence of a settlor’s intent to revoke a trust.
Not surprisingly, the Third District Court of Appeal disagreed. The appeals court held that the failure of the will to meet the requirements of F.S. §736.0602(3)(b)(1) does not preclude using the will for other purposes under the statute. In the present case, the settlor did not have a copy of the trust but knew it existed and knew its terms. She advised her attorney that she did not want that trust to control the disposition of her assets and that she wanted her assets to be given to a caretaker. The appeals court noted that settlor’s attorney and a long-time friend each provided testimony of the settlor’s intent to revoke the trust.
The Third District Court noted that if the trial court was correct then a validly executed will would be insufficient evidence of settlor’s intent under F.S. §736.0602(3)(b)(2) if the will failed to meet the requirements of F.S. §736.0602(3)(b)(1), but if settlor had “scribbled the exact same thing on a napkin,” it would be admissible to show settlor’s intent.
The appeals court cited to the testimony of decedent’s long-time friend: “I feel it is a shame that there is litigation surrounding [settlor’s] estate as I have always know that [Settlor] intended on leaving all of her possessions, including her home to” the caretaker. This drives home the real importance of this case: a lot of estate and trust litigation can be avoided by making sure estate planning documents clearly state a person’s wishes.
About the Author:
Brad Gould practices in Dean Mead’s Fort Pierce office located in St. Lucie County, Florida. His practice covers the areas of federal income, estate, and gift tax law and business succession planning. He represents businesses and business owners in all types of business and tax matters, including choice of entity, mergers and acquisitions, reorganizations, and other general business matters. Mr. Gould represents individuals, businesses and fiduciaries before the IRS and also counsels clients on estate and wealth preservation planning matters. Additionally, he represents trustees, personal representatives and family members in controversies regarding wills, trusts and estates. Mr. Gould is a Certified Public Accountant. He may be reached at firstname.lastname@example.org.