The Duffey Law Firm Blog

Wednesday, October 11, 2017

Can improper execution of a trust be validated under Fla. Stat. 736.0415, Florida’s statute permitting reformation?

The decision in Kelly v. Lindenau, 42 Fla. L. Weekly D1133 (Fla. 3d DCA May 17, 2017) is in keeping with Florida’s long-standing tradition of strictly enforcing execution requirements of wills and trusts, notwithstanding the intent of the testator or settlor. In Kelly, the Second District Court of Appeals held that Fla. Stat. 736.0415, Florida’s trust reformation statute, was not an appropriate remedy to correct execution defects of a trust which conveyed real property to the decedent’s beneficiaries upon his death.  This case, like many other cases, emphasizes the importance of a Florida resident having a knowledgeable Florida attorney familiar with the legal requirements of creating a valid will or trust.

In the case of Kelly v. Lindenau, 42 Fla. L. Weekly D1133 (Fla. 3d DCA May 17, 2017), Ralph Falkenthal created his revocable trust while he was residing in Illinois. His trust was validly executed under Illinois law, and directed that the trust assets would go to his wife if she survived him and if she did not survive him then equally to his three children. After Ralph’s wife predeceased him, he purchased a home Bradenton, Florida where he resided with Donna Lindenau. While in Florida, Ralph executed a first amendment to his trust (which is not at issue in this case). Two years later, he executed a second amendment to his trust that provided for a devise of a Sarasota property to his son from his previous marriage, Jeff. This amendment also provided for a devise of his Bradenton property to Donna. The amendments were prepared by Ralph’s Illinois attorney, despite the fact that Ralph was residing in Florida at the time the amendments were executed. The trust amendments, while executed in the presence of 2 witnesses, were only signed by one of the witnesses, and therefore was not validly executed. The Florida Trust Code requires that a trust with testamentary aspects be signed with the same formalities as a will. Fla. Stat. 736.0403. The Florida Probate Code provides that a will must be signed in the presence of two attesting witnesses, and those witnesses must sign in the presence of each other and the testator. Fla. Stat. 732.502.

Judy, Ralph’s daughter from his prior marriage, filed a petition for declaratory judgement as successor trustee with regards to the validity of the amendments. Donna objected and relied on a “mistake of law” argument, claiming that the failure to obtain the second witness’s signature was a mistake of law hindering Ralph’s intent. The decedent’s other two children, Jill and Jeff, brought a motion for summary judgement, asserting that the amendments were invalid because they did not meet the execution requirements under Florida law. The trial court denied the motion for summary judgement, and at a subsequent bench trial, the court granted Donna’s reformation request made pursuant to Florida’s reformation statute, Fla. Stat. 736.0415, and ordered that Donna was the rightful owner of the Bradenton home.

On appeal, the Second District Court of Appeals reversed the trial court’s holding, concluding that reformation was not appropriate to correct the execution defects. The court relied upon the language of the reformation statute, which states that a trust may be reformed to conform with 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” [emphasis supplied]. In other words, the statute focuses on the reformation of the terms of the trust, not the execution of it.

The court in Kelly relied upon Crawford v. Watkins, 75 So.2d 194 (Fla. 1954), in which the Florida Supreme Court upheld a circuit court’s refusal to admit a will to probate where one of the two witnesses to a will refused to sign. The court in Crawford stated that the signature of a witness serves “as testimony of the fact that all legal steps necessary to make the will a legal instrument have been taken by a testator.”

The Takeaway?

Florida’s reformation statute cannot be used to validate an improperly executed trust, notwithstanding the intent of the testator or settlor. State laws regarding valid execution of estate planning documents are not all the same. What may have been a validly executed trust amendment under Illinois law, was not valid under Florida law. This unfortunate outcome could have been prevented had the decedent employed a competent Florida attorney, familiar with the execution requirements of estate planning documents under Florida law. 

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