PROBATE CORNER
By: David M. Garten, Esq.
ARTICLE: The Erosion Of Revocable Trusts In Florida
There has been a steady erosion of the protection afforded revocable trusts in Florida. Once the settlor becomes incapacitated, he loses all control over his revocable trust, including the right to revoke or amend the trust. Upon the settlor’s incapacity, who takes control of the trust, and what is the extent of that individual’s authority to modify or terminate the trust?[1]
Guardianships: Pursuant to §736.0207, F.S., a court may authorize a guardian of the property to contest the validity of all or part of a revocable trust during the settlor’s lifetime. However, before authorizing a guardian to bring the action, the court shall first find that the action appears to be in the ward’s best interests during the ward’s probable lifetime. See, §744.441(11), F.S. and Fla. Probate Rule 5.630.
Durable Power of Attorney: Pursuant to §709.2202, F.S. a principal can authorize an agent to:
(a) create an inter vivos trust, or (b) amend, modify, revoke, or terminate a trust, but only if the trust instrument explicitly provides for amendment, modification, revocation, or termination by the settlor’s agent.
Trust Code: Pursuant to §736.0414, F.S., (1) the trustee of a trust consisting of trust property having a total value less than $50,000 may terminate the trust if the trustee concludes that the value of the trust property is insufficient to justify the cost of administration, and (2) a trustee or any qualified beneficiary may modify or terminate a trust or remove the trustee and appoint a different trustee if the court determines that the value of the trust property is insufficient to justify the cost of administration.
Pursuant to §736.0415, F.S., upon application of any interested person, the court may reform the terms of a trust, even if unambiguous, to conform the terms 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.
Pursuant to §736.0416, F.S., upon application of any interested person, to achieve the settlor’s tax objectives, the court may modify the terms of a trust in a manner that is not contrary to the settlor’s probable intent. The court may provide that the modification has retroactive effect.
[1] This article assumes that the trust does not state that it becomes irrevocable upon the settlor’s incapacity.