Richard Ehrlich, Esq. issues First Article in his Law Instructional Series on Estate Planning

CORAL SPRINGS, Fla. - Sept. 4, 2018 - PRLog -- In his series of Instructional Articles, Florida Attorney Richard Ehrlich comments on the issue of having a local attorney prepare a will and other probate-related documents. In the case that Mr. Ehrlich reviews, Kelly v. Lindenau, 223 So. 3d 1074 (Fla. Dist. Ct. App., 2^nd District 2017), an Illinois resident moved to Florida yet had an Illinois attorney prepare amend his trust twice. Here, the second amendment was signed by only one of the two witnesses.  While the amendments met the requirements of Illinois law, it failed to comply with Florida requirements.

Mr. Ehrlich notes that a recent decision coming out of the Second District Court of Appeal of Florida serves as a cautionary tale for all Florida residents to review their estate planning documents with a competent licensed Florida attorney.

Ralph Falkenthal created a revocable trust, also commonly known as living trust, while he was still a resident of Illinois with the aid of an Illinois attorney.  Mr. Falkenthal's wife passed away and he moved to Florida after her death.  In Florida, Mr. Falkenthal met Donna Lindenau and moved in together at a new residence purchased by Mr. Falkenthal in Bradenton.

After moving to Florida, Mr. Falkenthal employed his Illinois attorney to amend his trust twice.  The second amendment in 2014 specifically provided that the residence in Bradenton should pass to Ms. Lindenau upon Mr. Falkenthal's death.  There was no dispute that the second amendment met the signing requirements of Illinois law, but Mr. Falkenthal was a Florida resident at the time.

Mr. Falkenthal passed away on February 7, 2015 and his daughter Judy took over the administration of the trust as a successor trustee.  Judy, as a trustee, filed a lawsuit in Florida court, seeking to have the court determine the validity of the second amendment that left the Bradenton residence to Ms. Lindenau.

Under Florida law, portions of a revocable trust dealing with disposition of property upon the trustor's death must meet the same formality as a will, which must be signed in front of two witnesses and those witnesses must also sign the document in front of each other.  Here, the second amendment was signed by only one of the two witnesses.  While no one disputed whether that met the requirements of Illinois law, everyone agreed that it fell short of Florida's requirements.

Seeking to save the second amendment from being invalidated, Ms. Lindenau sought reformation of the trust under Florida law.  Ms. Lindenau argued that because Mr. Falkenthal's intent was clear and it was only a mere mistake of law that prevented his intent from being carried out, the trust should be reformed. Trial court agreed and granted the remedy of reformation and the children appealed.

Second District Court of Appeal of Florida reversed, noting the important distinction between terms of a trust and the execution of a trust.  The appeals court noted that "[s]ection 736.0415 provides in relevant part that the terms of a trust can be reformed 'to conform ... to the settlor's intent if it is proved by clear and convincing evidence that both the accomplishment of the settlor's intent and the terms of the trust were affected by a mistake of fact or law, whether in expression or inducement.'"   The appeals court went on to explain that the problem with the second amendment was that the execution failed to meet Florida's requirement, not that the terms failed to reflect Mr. Falkenthal's intent.  Therefore, appeals court concluded that the remedy of reformation was not available.  The appeals court also rejected Ms. Lindenau's alternative request for a constructive trust, because using a constructive trust to validate an invalid execution would be inappropriate.

The Court explains at the end of its opinion: "… while the imposition of a constructive trust might be appropriate where a will (and thus a trust) has been validly executed, that remedy is not appropriate where there is an error in the execution of the document. We conclude that that distinction should be extended to cases such as this one where an amendment to a trust was not validly executed. Because there was no valid, enforceable amendment, the imposition of a constructive trust on the Bradenton house "would only serve to validate an invalid" amendment. Accordingly, we hold that the trial court erred by denying the petition for declaratory judgment, by applying section 736.0415 to reform the second amendment, and by requiring the transfer of the Bradenton house to Lindenau. Our reversal makes it unnecessary to decide a second issue raised solely by Judy in her capacity as successor trustee."

"The case highlights the potential pitfalls that may arise as individuals move to Florida from other states", cautions Mr. Ehrlich.  "Different states may have differing requirements when it comes to estate planning documents and plans.  Therefore, individuals who become Florida residents would be well served to review their estate planning documents and plans with a competent Florida attorney to ensure that their wishes will be respected and carried out upon their death."

The case is Kelly v. Lindenau, 223 So. 3d 1074 (Fla. Dist. Ct. App., 2^nd District 2017).

References:

Website: http://ehrlichlaw.us

News at: https://hype.news/richard-ehrlich-estate-planning-attorney-in-florida/n-c110b0d8-b16b-4efb-8016-a79ef8a4954a/stories

Attorney Directory Listing: https://uslawdir.com/lawyers/richard-eugene-ehrlich-17407211

Mr. Richard Ehrlich's Blog is at http://richardehrlichblog.blogspot.com