This is a case which has common facts of many Florida trust lawsuits. A marital trust. A second or third wife. Children from a prior relationship. A dead husband and father. A trust which gives the trust income to the stepmother or widow, while the children from the prior relationship are the remainder trust beneficiaries. Oil and water? Blood money? Trust litigation? Yes.
AL CREATES A MARITAL TRUST FOR HIS CURRENT WIFE
- Susan’s husband Al passed away in 2002
- Susan is the widow or surviving spouse of Al
- Al had a will which created a marital trust
- Susan, the widow, was sole trustee of the marital trust
- Susan was also the income beneficiary of the marital trust
- Al had three children from a previous marriage from a previous marriage
I’m sure you guessed it by now: the three stepchildren sue the widow, or surviving spouse, or stepmother, over trust.
MARITAL TRUST TERMS FOR WIDOW – don’t touch trust principal ! Widow only gets income …..
Q: If you were widow, or a surviving spouse, wouldn’t you want to get trust money from a marital trust created by your husband? More than just “income.”
Most Florida residents have a revocable trust that becomes irrevocable upon death. In Florida, Florida estate plans often have a revocable trust, which splits off into a marital trust and a family trust. In this trust case, a marital trust was created:
- the trustee shall distribute the entire net to or for the benefit of Susan — the surviving spouse
- neither the Trustee nor Susan Has the right to take trust principal for any purpose
- the trust is supposed to qualify for the federal estate tax marital deduction
- Upon Susan’s death, the successor trustee should distribute the trust principal to Al’s three children
TRUST ASSETS…………… the trust assets included:
- Cash
- Wells Fargo stock
- Cisco stock
- Ford Stock
- mutual funds
- real estate
- private investments
Evidently, there was a loan on certain property which was not paid in full. There were also some apartment complexes which generated a lot of cash — perhaps “income”. An apartment complex sold that a trustee’s sale. Evidently Susan, the trustee, was not involved in some of these decisions. Should the trustee have been involved?
TRUSTEE WIDOW FILES SUIT
- The trustee sued to recover damages for the Trust
- The trustee paid for her attorney from trust funds
- the attorney represented Susan as trustee and also Susan individually
- the stepchildren countersued or filed a counterclaim against the widow who was also the trustee
STEPCHILDREN SUE DAD’S LAST WIFE, NOW WIDOW TRUSTEE
The stepchildren sued their stepmother :
- they wanted the trustee of the marital trust removed as trustee
- they accuse the trustee of the marital trust of breach of fiduciary duty
- they wanted a trust accounting
- they alleged that trust funds were misappropriated
For Florida residents who have Florida estate plans, including Florida wills and a Florida revocable trust, you may wish to read this case.
- Does it make sense to create a Florida marital trust light of this recent case?
- Do you want to put your stepchildren and your latest husband or wife into the same family trust or marital trust ?
- Should you create a Florida marital trust, or do something else?
Maybe you should consider giving your children from a prior relationship a specific dollar inheritance. And leave everything else to your latest spouse. Or, vice versa, should you leave everything to your children, and give a specific dollar inheritance to your latest wife?
This recent trust litigation case should cause Florida estate planning clients to consider whether they want their children and your second or third spouse in the same financial basket.
Ask yourself this question:
Q: when you are gone, will your children will sue your current spouse?