Taxation & Estate Planning

The Problem of Sloppy Drafting

By Michael D. Bonasera, Esq.

This one is really too bad…

A testator?s will poured the residue of his estate over to his lifetime trust which directed the trustee to distribute certain parcels of real property to certain persons. However, the parcels were owned by a corporation of which testator was sole shareholder.

Well, skip ahead… The testator passes away; where does the real estate go? The will pours all the property owned by decedents to his trust (including the shares of the corporation)… The trust says that all the shares of the corporation pass to the surviving spouse… Does she have to distribute the real property out of the corporation to the other beneficiaries per the trust?

The court in Vaughan v. Boerckel, 963 So. 2d 915 (Fla. Dist. Ct. App. 2007), affirmed a lower court’s judgment that said no. They held that the failure to transfer title to the realty to the trustee meant that title remained in the corporation all the shares of which passed to the widow.

That hurts… Too bad his lawyer wasn’t thinking when they drafted his trust and advised him on its funding. Sounds like a nice sized malpractice suit to me.

Thanks to Professor Beyer for this wild one.

Full post as published by The Ohio Trust & Estate Blog on February 01, 2008 (boomark / email).