This Texas case, whose opinion was published just a few days ago, touches on two issues that are very common for Palm Beach probate litigators who are involved in estate litigation: modifying the terms o f a trust and settlement agreements for probate lawsuits which result from a mediation conference. Most Florida probate courts, including the Palm Beach probate courts and the Ft. Lauderdale probate courts, often require parties to a probate lawsuit to go to mediation. Mediation is an attempt to resolve issues involving inheritance fights, or probate litigation and estate lawsuits. In this case, the central issue was trust modification. Sometimes, states, like Florida, permit you to change the terms of a trust: even when the trust is irrevocable.
Here are the basic facts of this recent trust modification case:
- Willa created a trust under her will, sometimes referred to as a testamentary trust
- In 1986, she also created a family trust to which she transferred valuable trust property: mineral rights
- Under her will, her estate went to the trust created under the will
- Willa’s daughter, Mary, is a trust beneficiary
- The probate court modified the trust document
- The probate dispute resulted in a mediation and a mediated settlement agreement
- The mediated settlement agreement for the probate lawsuit called for the probate court to modify the trust document — a trust modification. (Florida has a specific statute on trust modification in the Florida Trust Code. The Florida Probate Code does NOT permit a Florida will to be modified, but a Florida will can be reformed to correct a mistake.)
TRUST BENEFICIARY APPEALS PROBATE SETTLEMENT AGREEMENT FROM PROBATE MEDIATION
Mary, the trust beneficiary, claims in her probate appeal that
- the modifications to the trust are inconsistent with the trust purposes
- the probate court should have awarded sanctions
- and other things
TWO FAMILY TRUSTS
- One of the family trusts distributed the income to Willa’s daughter, Mary, and also Willa’s son Lantz
- Lantz died
- The trustee also had the discretion to distribute trust principal for the health, support, education, and maintenance of Mary, Lantz, or their issue.
- Lantz had a son Michael
GRANDCHILD BECOMES BENEFICIARY OF FAMILY TRUST
TRUST LITIGATION OVER INCOME AND TAXES
- When Lantz died in October of 2012, his son, Michael, became the second income beneficiary
- A dispute between the beneficiaries resulted in litigation regarding the depreciation allowance for the mineral income distributions.
- An international bank was a co trustee and was sued
PROBATE COURT ORDERS INVESTIGATION, then orders mediation after guardianship is filed
- the probate judge ordered an investigation into Mary’s competence,
- A guardianship is filed
- More trust litigation and guardianship litigation
- In February of 2013, the probate court ordered the parties to mediate their disputes.
- At the conclusion of a two-day mediation held in May of 2013, all of the parties and their attorneys signed a mediated settlement agreement.
PROBATE MEDIATOR FILES PROBATE COURT PETITION TO MODIFY TRUST TERMS: MEDIATED SETTLEMENT AGREEMENT
- Mary objected to modifying the trust or the trust terms
- The Probate Court confirmed that all of the parties and their attorneys had signed the mediated settlement agreement,
- the probate court approved the probate settlement agreement that was the result of the 2 day probate mediation
- the probate court ordered the modifications to the trust requested in the petition.
On appeal, the court upheld the probate court’s ruling in part and reversed the probate court’s ruling in part.
Trust beneficiaries, Florida trustees and Florida personal representatives of Florida estates: take note ! There was a recent Florida probate case, which went to appeal, that said that once you sign a settlement agreement, you can’t back out the next day !