Do You Have to Follow Your Own Rules? Amending Florida Trusts

We live in a day and age where the vast majority of people have a great many options available to them when it comes to constructing an estate plan. One popular estate planning tool that many choose to utilize is a revocable trust.

Florida law recognizes that the settlor (can be thought of as the creator of the trust) is able to revoke or amend that trust at any point, and for whatever reason they like, so long as they are living and in control of their faculties. The trust itself may specifically lay out the system or method by which the trust is to be revoked or amended. This all depends on the settlor, and is a decision typically made when the trust is first being created.

When a trust specifies a method or system by which any future revocations or amendments are to be made, Florida statute Section 735.0602 requires that revocations or amendments come into “substantial compliance” with the prescribed method or system listed in the trust instrument. If any amendment or revocation was performed NOT in “substantial compliance” with the dictates of the trust, the amendment or revocation will likely not be seen as valid if a case is brought challenging the change.

So, is this to mean that a settlor’s own dictate might be invalid, if the settlor does not comply with their own rules as set forth in the trust? This question was recently addressed by the Florida Second District Court of appeal in the case of Grassfield v. Grassfield.

Grassfield v. Grassfield

This case involved the son and widow of a deceased Florida resident who had created a revocable trust in the course of his lifetime. When the settlor created the trust he determined that the trust should operate with two trustees: the settlor himself, as well as the settlor’s financial advisor. Several years after the creation of the trust, the settlor acted to amend the trust in order to change the co-trustees to himself and his son, rather than the financial advisor that had originally been designated as a co-trustee.

The trust at issue did contain language specifying that the settlor reserved the power and right to alter, amend, etc. and even to revoke the trust BY a written instrument signed by the settlor in front of a notary public and delivered to the trustee during the lifetime of the settlor.

The issue in this case becomes the fact that two years after the settlor appointed his son as co-trustee, the settlor executed a restatement of the trust. This restatement removed his soon as co-trustee and replaced him with the settlor’s friend (later wife). The new wife was also named as the trust’s primary beneficiary. Additional trust amendments were made that dictated even further transfer of assets to the settlor’s wife and naming her as the successor trustee.

Upon the settlor’s death litigation commenced between the son, prior co-trustee, and his father’s widow. The son challenged the validity of the later trust amendments that benefitted the settlor’s wife, arguing that the settlor, his father, had failed to “substantially comply” with the provided procedures in place for amending the trust. Specifically, the settlor had not delivered the restatement or amendments to the then-co-trustee (the son). The widow argued substantial compliance HAD occurred, despite the non-delivery.

The trial court and second district court ruled in favor of the son and invalidated the restatement and later amendments. The second district ruled that under the plain terms of the trust it was apparent that the settlor had intended that two co-trustees act together. While the settlor retained the right to remove a co-trustee, the settlor also required this removal to be done through written notification. Failure to comply with these terms invalidated the actions.

Contact Suncoast Civil Law

The case above serves to illustrate the importance the court places behind adhering to plain language and terms that exist in estate planning documents. If you are considering a probate litigation suit, or simply want to ensure that your estate plan is executed correctly and can withstand any future challenges, contact our esteemed Sarasota probate litigation lawyers today.

Sources

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0736/Sections/0736.0412.html#:~:text=(1)%20After%20the%20settlor’s%20death,trustee%20and%20all%20qualified%20beneficiaries.

leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0736/Sections/0736.0602.html