RECENT FLORIDA TRUST CASE AND WILL CHALLENGE: who gets the money from a power of appointment ? Children against non family estate beneficiary

Florida trusts hold a lot of money. I’ve never seen any estimates, or studies, but anyone’s best guess is that Florida trusts hold billions and billions of dollars.

So, imagine if a Florida trust says that before someone dies, that person can       give    away    trust   money. The Florida trust tells you how that money can be given away, and what happens to that trust money if the money is not given away.

The power to give money away in a Florida trust can be referred to as a power of appointment. If you exercise the Florida    power of appointment    in one way, a certain    beneficiary  inherits    the trust money. If, however you don’t exercise the power of appointment according to the Florida trust, or you just don’t exercise it at all, the    trust money goes to  different beneficiaries.   When there’s a disagreement about whether the Florida trust money was given away — to whom , or not — enter the probate litigators. The inheritance war rages on.

This is a case of    Florida probate litigation   which made it up to the appellate court. It involves a Florida personal representative, a   Florida  will  challenge, and beneficiaries’ rights over a  Florida estate inheritance.

BENEFICIARY OF THREE FLORIDA TRUSTS

Sally was the beneficiary of three Florida trusts. Sally died. Sally had a last will which left $5000 to one beneficiary and the remainder of her Florida estate to another, sole beneficiary — who was not a family member, and not a child of Sally. This is important. This Florida estate lawsuit pits a nonfamily member against Sally’s children. This case is about what happens to the remainder of Sally’s estate.

In Sally’s will, she references that she is a beneficiary of three trusts.    But she doesn’t say much more………… This was the focus of the Florida will challenge.

The three trusts gave Sally a    Florida trust power of appointment.   The Florida trust power of appointment permitted Sally to leave the trust money to anyone she wanted — any beneficiary that Sally chose could inherit the trust money.   The three trusts said that if Sally did not use her power of appointment, or exercise her power of appointment, then the    trust money went to children.   But Sally’s will did not mention the power of appointment.   The  beneficiary of Sally’s will wanted the probate court to give the trust money to her.   Sally’s children wanted the probate court to give the trust money to them.

Who wins?  Does the trust money stay in the family — or does the trust money go outside the family?

FLORIDA PROBATE COURT GIVES TRUST MONEY TO CHILDREN

The Florida probate court sided with his children — they inherit the trust money. The estate remainder beneficiary under Sally’s will did not.

3 TIPS FOR DEAING WITH FLORIDA TRUST POWERS OF APPOINTMENT

1. if you are drafting a Florida will, or another document which references a Florida trust power of appointment,    re-read the trust document   which should tell you how to use or exercise the Florida power of appointment
2. if you want to use the power of appointment, or exercise the Florida power of appointment, you should follow the instructions of the Florida trust document, but also specifically reference the name of the trust, the date of the trust, and who you are giving the trust money to —- make it clear
3. remember, a Florida power of appointment is something regarding a trust and an inheritance — it is not a Florida power of attorney
4. don’t turn a power of appointment, as one legal commentator calls it, into a power of disappointment

FOR PROBATE LITIGATORS AND PROBATE LAWYERS

In this very recent Florida estate case involving a power of appointment, it dealt with seeking a   declaratory judgment   from the probate court. This is very common in a so-called will construction, or Florida will interpretation, lawsuits when two more beneficiaries disagree about what the will says.   So they ask a probate court judge to interpret the will and tell everyone    what the Florida will says    —  who inherits, and who doesn’t inherit.   Consider bringing an action for will Reformation according to the Florida probate code. The Florida probate code is a set of laws which sets forth rights, guidelines, and time frames for personal representatives, estates, and estate beneficiaries. Florida is on the cutting edge of probate law – – it permits you to change a Florida will, or alter a Florida will, after the death of the person who signed the Florida will. You are not rewriting the will — you are limited to correcting a mistake. If there was a mistake of law or mistake of fact, a Florida probate court can correct that and    reform  the  Florida  will.   In this particular case, a Florida will Reformation lawsuit may give the residuary beneficiary the relief being sought. This was a classic case of interpreting a Florida will, and challenging a Florida will. A classic case of a Florida probate court putting a lot of money in the pockets of one set of beneficiaries, and removing it from the pocket of another estate beneficiary. For a complete copy of this opinion, or to discuss any probate litigation or estate or inheritance challenges, please email michelle@pankauskilawfirm.com.