Taxation & Estate Planning

5th DCA: Why a de novo appellate standard of review can be your best friend in trust-construction litigation

By Juan C. Antúnez

Brown v. Miller, --- So.2d ----, 2008 WL 4600940 (Fla. 5th DCA Oct 17, 2008)

In trust construction litigation the litigants are asking the judge to read the trust agreement and tell them what it means. In this type of litigation you often have the choice of allowing the court to rule on the trust agreement without taking any evidence or pressing for a trial on the merits. For example, if one side files a summary judgment motion, the other side can either: (1) object on the grounds that there are genuine issues of material fact in dispute (i.e., argue a full-blown trial is needed) or (2) file it's own counter summary judgment motion and let the trial court dispose of the case without the need of taking evidence.

Why might you opt for the first approach? Because you basically get a second bite at the apple if you lose before the trial court and appeal your case.  Why do you get a second bite at the apple? Because the standard of review on appeal in a case where the issue is limited to a trial court's interpretation of a trust agreement without relying on extrinsic evidence is de novo, a Latin expression meaning "from the beginning," "afresh," "anew," "beginning again." In other words, the appellate court can read the document itself and come to its own conclusions, without any of the deference usually extended to findings of fact by trial courts.

As reflected in the following excerpt from the linked-to opinion, on appeal both sides agreed that the standard of review for this case was de novo.

Here, we agree with both parties that the interpretation of the Elinor Miller Trust documents is a question of law which is entitled to de novo review. See Fleck-Rubin v. Fleck, 933 So.2d 38, 39 (Fla. 2d DCA 2006); Gallagher v. Dupont, 918 So.2d 342, 346 (Fla. 5th DCA 2005).

Based on this appellate standard of review the losing side in this case was able to get the 5th DCA to take a fresh look at the contested trust agreement and deliver the win it didn't get at trial. Here's the contested trust-agreement clause and how the 5th DCA explained its ruling:

Contested trust agreement clause:

With respect to Trust “A-1” and Trust “A-2”, the Trustee shall pay quarterly or oftener, the entire net income derived from the trust estates to my husband, THOMAS W. MILLER, JR., so long as he shall live. In addition thereto, the Trustee shall pay to my husband, THOMAS W. MILLER, JR., such amounts from the principal of Trust “A-2” first and then from “A-1” after the exhaustion of “A-2”, as it deems necessary or advisable to provide liberally for his maintenance, health, and support in his accustomed manner of living, taking into account all of his other income and means of support known to the Trustee. The Trustee shall also pay to my husband such additional amounts of principal from Trust “A-2” as he may from time to time request....

Ruling:

Tom argues that Elinor only authorized transfers from Trust A-2 to “my husband.” Based on this argument, Tom contends that the transfer to the Bill Miller Trust was invalid because Elinor was “not married” to the Bill Miller Trust. Appellants respond that the Bill Miller Trust was an irrevocable trust and, accordingly, a conveyance to the Bill Miller Trust was equivalent to a transfer to Bill Miller. We agree with Appellants. It is undisputed that Bill maintained 100% control over the Bill Miller Trust assets. Furthermore, he had the right to end the trust at any time and thereby regain absolute ownership over the trust property. Florida Nat'l Bank of Palm Beach Co. v. Genova, 460 So.2d 895, 897 (Fla.1984). Thus, Bill had complete and unfettered access to the seven million dollars conveyed into his trust. In construing the provisions of a trust document, the cardinal rule is to give effect to the grantor's intent, if possible. Knauer v. Barnett, 360 So.2d 399, 405 (Fla.1978). We believe that in authorizing transfers of Trust A-2 assets to her husband, Elinor clearly intended to permit transfers to an entity, such as an irrevocable trust, over which her husband retained complete control and the right to absolute ownership.

Full post as published by Florida Probate Litigation Blog on October 25, 2008 (boomark / email).