PROBATE CORNER

By: David M. Garten, Esq.

ARTICLE: Reviving A Void Testamentary Devise Through Incorporation By Reference

PREREQUISITES: There are three prerequisites to incorporating a trust into a will: (1) the trust must be in existence when the will is executed; (2) the will must manifest an intent to incorporate the trust; and (3) the will must describe the trust sufficiently to permit its identification. See §732.512(1), F.S. (Incorporation by reference). Once the trust is incorporated into the will by reference, it is made an integral part of the will and is construed along with the will.

INCORPORATION ALLOWED: In the following cases, the courts found that the operative provision of the will was sufficient to incorporate the trust into the will:

In Pasquale v. Loving, 82 So.3d 1205 (Fla. 4th DCA 2012), the operative provision of the will reads: “I give all the residue of my estate, including my homestead, to the Trustee then serving under my revocable Trust Agreement dated October 26, 1999, as amended or hereafter amended (the “Existing Trust”), as Trustee without bond, but I do not exercise any powers of appointment held by me except as provided in the later paragraph titled “Death Costs.” The residue shall be added to and become a part of the Existing Trust, and shall be held under the provisions of said Agreement in effect at my death, or if this is not permitted by applicable law or the Existing Trust is not then in existence, under the provisions of said Agreement as existing today. If necessary to give effect to this gift, but not otherwise, said Agreement as existing today is incorporated herein by reference.”

In Estate of Baer, 446 So. 2d 1128 (Fla. 4th DCA 1984), the will was admitted to probate that contained a pour-over provision in favor of a trust created at the same time. Prior to the testator’s death, this trust was revoked, evidently because the testator felt well enough to manage his own affairs. If the pour-over failed, intestacy would occur, and the property would pass to the testator’s siblings, persons that he did not want to get his property. To avoid such a result, the court held that although the inter vivos trust was revoked, a testamentary trust was created by incorporation by reference. The court stated that “[a]ll of the circumstances surrounding the revocation of the trust point to incorporation of its dispositive provisions into the will by reference, notwithstanding the loss of force of the trust instrument standing alone” citing §732.512(1), F.S. The court concluded, based on the facts, that there had been incorporation of the “dispositive provisions” of the trust into the will by reference.

In Estate of Potter, 469 So.2d 957 (Fla. 4th DCA 1985), the will provided, in part, that in the event that the testator’s husband did not survive her, she bequeathed her residence together with all household goods contained therein to her daughter, if she shall survive her. Contemporaneous with the execution of her will, the testator executed an amendment to her preexisting inter vivos trust which amendment provided that in the event her daughter received her residence under the terms of the will, then the trustee shall thereupon pay over to testator’s son an equivalent amount out of the trust assets before its division into the two trusts for testator’s son and daughter free of the trust. In addition, the will provided that any property specifically bequeathed would pass free of administrative expenses and any liability for estate and inheritance taxes and authorized the executor, if necessary, to request sums to be paid from the trust to the estate to pay debts, administration expenses, taxes, etc. The trust also provided for the trust to pay those expenses of the estate. To summarize, the testator, via her will, wanted her daughter to have the residence, free and clear, and, via her inter vivos trust, wanted her son to have a sum in cash equivalent to the value of the residence received by her daughter.

In Sun Bank Miami v. Hogarth, 536 So.2d 263 (Fla. 3rd DCA 1988), the will and trust at issue were executed the same day. The court found that the trust was specifically referred to in the will as a pour-over trust for the residuary of the testator’s estate. The pour-over trust was an integral part of the will; without it, the will does nothing more than appoint a personal representative and exercise the power of appointment under the testator’s husband’s trust, a result not likely to have met the testator’s intent. The court held that both the will and the amended trust agreement must be read together to give effect to the testator’s testamentary plan.

In Miller v. First Nat’l Bank & Trust Co., 1981 OK 133; 637 P.2d 75 (OK 1981), the court found that the “Decedent’s will clearly identifies the trust. The trust was in existence when the will was executed. The reference exhibits decedent’s intention that the trust operate with his will to dispose of his property. He signed the will and the trust contemporaneously, indicating one instrument and a scheme of testamentary disposition. Article II of the will gave Frances only those things to which she would have been statutorily entitled. The remainder of the will is directed to the trust. The will without the trust has no meaning or value to the decedent’s estate plan.”

In Tyson v. Henry, 133 N.C. App. 415; 514 S.E.2d 564 (NC App. 1999), the court held that the following evidence showed that the will “clearly and distinctly” referred to the void trust agreement (the trust was never funded), providing assurance that the decedent intended that the trust agreement be incorporated in the will: (a) the will stated, “I bequeath and devise all tract or parcels of land which I own at the time of my death to VANCE B. TAYLOR, as Trustee under the provisions of a certain Trust Agreement executed on the __ day of April, 1996, by me as the Grantor and VANCE B. TAYLOR as the Trustee therein designated[.]“; (b) the trust agreement admitted into evidence was dated the same date that the will was executed; (c) Tyson was the grantor and Taylor was the designated trustee of the document; (d) the will specifically refers to a trust agreement executed in April of 1996. There was no evidence in the record that any other trust agreement was created by Tyson, with Taylor as the designated trustee, in April of 1996; and (e) the will clearly expressed an intent on the part of the grantor to make the trust agreement part of his will. The purported trust was incorporated in the will by reference and made an integral part of the will. “By said incorporation, it makes no difference whether the purported trust was legally valid.”

In Hageman v. Cleveland Trust Co., 45 Ohio St. 2d 178; 343 N.E.2d 121 (OH 1976), the court held that if the will is valid, then so is the (void) trust incorporated by reference into the will.

INCORPORATION NOT ALLOWED: In the following cases, the courts found that the operative provision of the will was not sufficient to incorporate the trust into the will: Flinn v. Van Devere, 502 So. 2d 454 (Fla. 3d DCA 1986) (mere reference in will without manifestation of intent to incorporate insufficient); Lewis v. SunTrust Bank, Miami, N.A., 698 So. 2d 1276 (Fla. 3d DCA 1997) (the decedent’s appointment of an individual as personal representative and trustee in her will, without more, was insufficient to manifest the decedent’s intent to substitute that individual as the trustee of her inter vivos trust); Martin v. Martin, 687 So. 2d 903 (Fla. 4th DCA 1997) (the will and trust were executed two years apart. Two references in the will to testator’s inter vivos trust, one providing for estate’s residue to pour over into trust and another providing for estate taxes to be paid from trust assets, were insufficient to incorporate trust into will); and Bravo v. Sauter, 727 So. 2d 1103 (Fla. 4th DCA 1999)(where the will manifested an intention to incorporate the terms of the trust into the will only if the trust were no longer in existence at the time of the testator’s death, was insufficient to incorporate trust into will).

PRACTITIONER’S CORNER: You should consider the following issues when litigating incorporation by reference: (a) whether the trust was in existence when the will was executed; (b) whether the will manifests an intent to incorporate the trust (a unified estate plan); (c) whether the will describes the trust sufficiently to permit its identification; (d) whether the will and trust were executed contemporaneously (evidence of a unified estate plan); (e) avoid intestacy. Intestacy is not favored over a disposition where construction leads to a valid testamentary disposition. See Wehrheim v. Golden Pond Assisted Living Facility, 905 So. 2d 1002, fn6 (Fla. 5th DCA 2005) and the cases cited therein; and (f) if there is ambiguity as to the identification of the trust referenced in the will, look to other documents and testimony to determine whether the trust is the document to which the will refers. See Estate of McGahee, 550 So. 2d 83 (Fla. 1st DCA 1989).