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Sunday, July 10, 2016

Napkin Theory Saves the Day [Florida]

Renee established and funded a  revocable trust, with charitable residuary beneficiaries at her death. The trust was revocable, but it did not provide a method for revocation.

Four years later, Renee prepared a will that left all of her estate to a caretaker. The will included language that "I...declare this to be my Last Will and Testament, revoking all other wills, trust and codicils previously made by me." There was no more specific reference to the prior revocable trust. Was this revocation sufficient to revoke the revocable trust and have its assets pass under the will after Renee died?

Florida has a statute dealing with revoking revocable trusts. It provides:

736.0602(3): Subject to s. 736.0403(2), the settlor may revoke or amend a revocable trust:

     (a) By substantial compliance with a method provided in the terms of the trust; or

     (b) If the terms of the trust do not provide a method, by:

          1. A later will or codicil that expressly refers to the trust or specifically devises the property that would otherwise have passed according to the terms of the trust; or

          2. Any other method manifesting clear and convincing evidence of the settlor's intent.

(3)(a) did not apply, since there was no method of revocation provided in the trust. (3)(b)1. did not either, since the revocable trust was not referenced with any specificity. This leaves (3)(b)(2) - was the will "any other method manifesting clear and convincing evidence of the settlor's intent [to revoke]?"

The trial court ruled that a will cannot be used under (3)(b)2. - that is, the will can only be used to revoke using (3)(a) or (3)(b)1. "Any other method" means a method other than by will. But does the statute say this? Perhaps - "any other" could mean excluding use of a later will or codicil since those terms are described in (3)(b)1.

A will can be a method used to meet (3)(b)2, says the appellate court. (3)(a) and (3)(b)1. provide two mechanisms to revoke a trust. If those are not followed, then (3)(b)(2) can be used - albeit with a higher standard of proof (clear and convincing evidence) than otherwise applicable. There is nothing in the statute that prohibits the will from being the method of revocation. To do otherwise would be to absurdly interpret the law such that a will revocation would be ineffective while if the settlor "scribbled the exact same thing on a napkin or a piece of paper and left it in her dresser drawer" that could be effective - i.e., giving more validity to a napkin scribble than a last will.

Note, however, that the appellate court appears to provide that a will revocation under 3(b)(2) will not be sufficient by the will language alone to meet the clear and convincing evidence burden standard. Some other evidence of intent will be needed to meet that burden - in the subject case there was other evidence of the decedent's intent to revoke the revocable trust.

(3)(b)(2) derives from Section 330(1) and the comments thereto in the Restatement of Trusts (Second). While such items do not impose a clear and convincing standard unlike the Florida provision, the findings in this case may also be relevant in other states that do not have law contrary to the Restatement.

Bernal v. Marin, 3rd DCA (Case No. 3D15-171, June 15, 2016)

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