Florida Appeals Court: Trust Beneficiaries Must File Separate Lawsuit To Challenge Trust Accounting

Sometimes, trust litigation is the result of an incomplete or poorly drafted trust instrument. Take this recent decision from the Florida First District Court of Appeal, Stokes v. Jones. This is part of an ongoing lawsuit involving the trustees and beneficiaries of a trust created by a now-deceased settlor.

The settlor had named her children and grandchildren as beneficiaries of her trust. So far, that sounds pretty normal for a trust. Where things apparently went wrong is that the settlor “inadvertently” omitted one of her grandchildren from the list of beneficiaries. This also meant the total shares of the named beneficiaries only added up to 96 percent of the trust’s assets.

Normally, once the settlor of a revocable living trust dies, the trust becomes irrevocable and cannot be modified. But there are exceptions. A Florida judge can modify or “construe” a trust to ensure the settlor’s purposes are fulfilled. In this case, the successor trustees petitioned the court to “construe the trust to include the missing beneficiary and account for 100 percent of the trust’s assets.” Once that was done, the trust could be terminated after the trustees provided a final accounting to the beneficiaries.

The judge granted the trustees’ petition. The court’s order notes that under Florida law, the beneficiaries had six months to file any objections to the final accounting. Nobody appealed the judge’s ruling at the time.

After the trustees made their accounting, however, some of the beneficiaries objected. They went back to the judge and asked for discovery–basically, an order compelling the trustees to turn over certain documents related to the trust. The petitioners argued that discovery was no longer available, since the court had already issued its final order and no longer had jurisdiction over the case.

The judge disagreed and ordered discovery as requested by the beneficiaries. The trustees then asked the First District for a writ of prohibition–essentially, an order invalidating the lower court’s discovery order. The First District granted the writ. It explained that once the judge issued its order to construe and modify the trust, it did not retain jurisdiction over the case. There was therefore no longer a pending case to justify a discovery order. That said, the beneficiaries can still file a separate legal challenge to pursue their objections to the trustees’ accounting. Indeed, that was what the trial court referred to when it noted the beneficiaries had six months to file objections.

Speak with a Pompano Beach Estate and Trust Litigation Attorney Today

All of this may sound unnecessarily complicated. But when it comes to trust litigation, there are specific rules and procedures that must be followed. One of the most basic procedures is establishing a court’s jurisdiction to hear a trust dispute. No court can rule on the merits of a claim without proper legal authority.

If you are involved in an active or potential trust lawsuit and need advice from an experienced attorney, contact the offices of Pompano Beach estate & trust litigation attorney Mark R. Manceri, P.A. today.

Source:

1dca.org/content/download/734944/opinion/192821_DA16_04292021_133834_i.pdf