The Duffey Law Firm Blog

Wednesday, October 11, 2017

Does a contingent beneficiary of a discretionary trust have a right to receive notice of an adoption proceeding?

In Edwards v. Maxwell, 215 So.3d 616 (Fla. 1st DCA March 31, 2017), a beneficiary of three irrevocable trusts moved to set aside his father’s adoption of a child, who became a qualified beneficiary of the trust as a result of the adoption. The First District Court of Appeals held that the original beneficiary was not entitled to notice of the adoption and did not have standing to set aside the adoption because the trusts were to be distributed in the complete discretion of the trustees, and therefore he did not have a direct, financial, and immediate interest in the trusts. 

Ryan Maxwell, the biological son of John Adam Edwards, was the beneficiary of three irrevocable trusts created by his grandparents for their descendants. The trusts provide that the trustees have complete discretion to determine how and to whom distributions can be made. In 2004, Edwards adopted Brindley Kuiper, adding him as a qualified beneficiary of the trusts. Over the next years, Kuiper received thousands of dollars in distributions from the trusts. Maxwell, who claimed he was unaware of the adoption, filed a motion in 2014 to set aside the final judgement of adoption, alleging that it was fraudulent and should be vacated. Further, he argued that the adoption should be vacated because he did not receive notice of the adoption, which he claims he was entitled to as a qualified beneficiary of the trusts. The trial court vacated the judgement of adoption, and Edwards and Kuiper appealed.

The First District Court of Appeals relied upon the Florida Supreme Court’s decision in Stefanos v. Rivera-Berrios, 673 So.2d 12 (Fla. 1996), which was later codified in 2006 under Fla. Stat. 63.182(2)(a) under the Florida Adoption Act. Under Stefanos and the Florida Adoption Act, a third party must show “a direct, financial, and immediate interest in an adoption to be entitled to notice, or to have legal standing to vacate an adoption order.” Edwards, 215 So.3d at 618.  The Court in Stefanos held that such interest shall be more than a mere contingent or indirect interest.

In this case, the First District Court of Appeals held that Maxwell did not possess a direct, financial, and immediate interest in the trusts because he had no direct or immediate right to the trust funds. The trustees had complete discretion over how and to whom distributions were made, making Maxwell’s interest as a beneficiary contingent.  Unlike in Rickard v. McKesson, 774 So.2d 838 (Fla. 4th DCA 2000), where a contingent beneficiary was completely divested of her interest in a trust and was entitled to notice of an adoption proceeding, Maxwell retained his contingent interest. As such, the court reversed the trial court’s decision and held that Maxwell did not have a right to receive notice of the adoption and did not have standing to vacate the final judgement of adoption.

The Takeaway?

The Edwards case makes clear that a contingent beneficiary of a completely discretionary trust does not have the right to be notified of a fellow qualified beneficiary’s adoption and does not have standing to challenge the adoption because there is no direct, financial, or immediate interest at stake. However, it is important to keep in mind that this case could have had a very different outcome with a non-discretionary trust, as shown by the Rickard case. 





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