A recent Florida case involving the Carvel ice-cream family raised the issue whether a decedent's probate estate is an interested party in regard to accountings issued by a revocable trust of which the decedent was the settlor. That's a bit of a mouthful - let's break it down:
-individual establishes a revocable trust during lifetime and is thus the settlor;
-the individual settlor dies; and
-during the administration of the settlor's estate, the trust issues accountings.
Does the estate have a sufficient interest in the trust as to be a required party to proceedings involving the trust accounting?
The estate of the settlor on its face appears to have an interest, since under Florida law the trust, after the settlor's death, is liable for the expenses of administration and obligations of the decedent's estate to the extent the decedent's estate has insufficient assets to pay those items. In the case, the trust also directed payment of such estate expenses. Florida Statutes defines an interested person, for the purposes of wills and trusts, as “any person who may reasonably be expected to be affected by the outcome of the particular proceeding involved. In any proceeding affecting the estate or the rights of a beneficiary of the estate, the personal representative of the estate shall be deemed an interested person.” The question before the appellate court was whether the estate, by reason of the trust being responsible for estate expenses if estate assets are insufficient, was an interested person in regard to trust accountings.
Reversing the trial court, the appellate court found the estate to be an interested person, noting that the estate, while not an income or residual beneficiary, was an intended beneficiary of the trust.
Carvel v. Godley, 31 Fla. L. Weekly D2536e (4th DCA 10/11/06)
-individual establishes a revocable trust during lifetime and is thus the settlor;
-the individual settlor dies; and
-during the administration of the settlor's estate, the trust issues accountings.
Does the estate have a sufficient interest in the trust as to be a required party to proceedings involving the trust accounting?
The estate of the settlor on its face appears to have an interest, since under Florida law the trust, after the settlor's death, is liable for the expenses of administration and obligations of the decedent's estate to the extent the decedent's estate has insufficient assets to pay those items. In the case, the trust also directed payment of such estate expenses. Florida Statutes defines an interested person, for the purposes of wills and trusts, as “any person who may reasonably be expected to be affected by the outcome of the particular proceeding involved. In any proceeding affecting the estate or the rights of a beneficiary of the estate, the personal representative of the estate shall be deemed an interested person.” The question before the appellate court was whether the estate, by reason of the trust being responsible for estate expenses if estate assets are insufficient, was an interested person in regard to trust accountings.
Reversing the trial court, the appellate court found the estate to be an interested person, noting that the estate, while not an income or residual beneficiary, was an intended beneficiary of the trust.
Carvel v. Godley, 31 Fla. L. Weekly D2536e (4th DCA 10/11/06)
1 comment:
Good information on a unique case.
Jackie
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