How Contractual Obligations Can Follow Your Trust or Estate After You Die
In general, you are free to make a will or trust free of outside restrictions. However, if you have previously entered into a legal contract where you agree to make certain provisions in your estate plan, the other party can turn around and sue your estate or trust if you did not hold up your end of the bargain. A common scenario where this can occur is divorce. The divorcing spouses may have agreed to honor certain estate planning arrangements post-divorce, either through the final settlement or even a prenuptial agreement.
Florida Appeals Court Rejects Deceased Ex-Husband’s Attempt to Avoid Prenuptial Agreement by Creating Empty Trust
A Florida appeals court recently addressed an example of the latter. In Baldwin v. Harris, the ex-wife of a deceased Florida man sued to enforce a prenuptial agreement the couple signed before their marriage. As relevant to this case, the agreement stated that if the wife survived the husband, and the couple were not still married when the husband died, the husband agreed the wife would continue to receive the same “monthly payment” she was entitled to under the agreement from his trust or estate.
As it turned out, the ex-husband did create a trust before his death, which included instructions to make the required monthly payment to the ex-wife. The only problem was that the ex-husband apparently failed to place any assets into the trust to fund said payments. Indeed, the ex-wife claimed in court papers that her ex-husband “intentionally defunded” the trust just before he died.
The trustee argued that the ex-husband fulfilled his end of the bargain when he created the trust. In other words, the trustee insisted the prenuptial agreement only required the husband to include provisions in his estate plan directing his fiduciary to make the monthly payment to the ex-wife; it did not actually require him to make the payments.
The Florida Fifth District Court of Appeal said such an interpretation of the prenuptial agreement “strains the contractual language well beyond the bounds of common understanding.” By the trustee’s reasoning, the ex-husband only agreed to include “empty words in his estate planning documents.” But the plain meaning of the contract was clear: The ex-husband agreed to continue making certain payments through his trust or estate after his death. The Court noted the ex-husband was certainly free to decide how he wished to fund the trust or meet his obligation after death. But he could not simply get out of his obligation by creating an empty trust.
Contact Florida Trust Attorney Mark R. Manceri Today
As this case demonstrates, there are some contractual obligations that survive death. This can lead to litigation when the still-living party feels they have been cheated. If you find yourself in need of advice from an experienced Pompano Beach estate and trust litigation lawyer, contact the offices of Mark R. Manceri, P.A., today to schedule a consultation.