Trusts like most parts of an estate plan are meant to last a long time but they may still need amended from time to time. All to often though these issues are ignored until its actually causing a beneficiary to lose money or assets. Now a Court has to be asked to modify the trust but traditionally the Court was bound by the four corners of the document in interpreting it, in Florida is there anyway to have the Court hear the other evidence? Yes, in legal terms this is called extrinsic evidence and it is admissible in Florida to modify a trust.
- Historically, common law rules of construction provided that the intent of a settlor of a trust should be ascertained from the “four corners” of the trust and that extrinsic evidence of the settlor’s intent should only be considered if there was an ambiguity in the trust instrument.
- The effect of this common law rule was that a trustee or beneficiary seeking to modify the terms of the trust would only be permitted to do so if the court found that the trust, or a portion thereof, was ambiguous.
- Absent ambiguity, the court was unable to consider any other evidence of the settlor’s intent and the beneficiaries were stuck with whatever the trust said on its face.
- The old analysis changed when Florida adopted the Florida Trust Code on July 1, 2007.
The Florida Trust Code:
- Florida’s Trust Code is modeled after the Uniform Trust Code (“UTC”)
- The UTC contains a section specifically dealing with trust modification (s. 412). The Comments to section 412 state that “[t]his section broadens the court’s ability to apply equitable deviation to terminate or modify a trust…The purpose of the “equitable deviation” authorized by the section is not to disregard the settlor’s intent but to modify inopportune details to effectuate better the settlor’s broader purposes.”
- The Florida Trust Code incorporates the equitable deviation doctrine in a string ofjudicial modification statutes designed to provide flexibility to a court of equity to effectuate a settlor’s intent that is otherwise being frustrated by unanticipated circumstances.
- The old analysis of whether the trust instrument is ambiguous is irrelevant.
- The court is specifically authorized and directed to consider extrinsic evidence of the settlor’s probable intent.
What to take away:
- Know your rights as a beneficiary or trustee. The common law rules are long engrained in the minds of practitioners and the public at large but a lot of these rules are no longer valid after 2007. Learn the rights afforded you under the FTC and exploit them rather than being controlled by them. These modern adaptations ad a level of ease and control to trusts that the common law simply lacked.
- Don’t rely on caselaw from before 2007, this is no longer controlling in Florida and can give you inaccurate information.
- Modify your trusts now rather than later, do not wait for it to be a problem. A judge is much more likely to buy your story before a million dollars is on the line.
Want to learn more about the Florida Trust Code? Check out our FAQ video library here: http://www.pankauskilawfirm.com