Minassian v. Rachins

• Decision Date: 03 December 2014
• Docket Number: No. 4D13–2241.,4D13–2241.
• Citation: 152 So.3d 719
• Parties: Paula MINASSIAN, Appellant, v. Rebecca RACHINS and Rick Minassian, Appellees.
• Court: Florida District Court of Appeals

152 So.3d 719

Paula MINASSIAN, Appellant

v.Rebecca RACHINS and Rick Minassian, Appellees.

No. 4D13–2241.

District Court of Appeal of Florida, Fourth District.

Dec. 3, 2014.

Thomas F. Luken of The Andersen Firm, Fort Lauderdale, for appellant.

James A. Herb and Jennifer Fulton of Herb Law Firm, Boca Raton, for appellees.

Opinion

WARNER, J.

In the midst of litigation in which the trustee of a family trust was being sued for accountings and breach of fiduciary duty, the trustee appointed a “trust protector,” as allowed by the terms of the trust, to modify the trust's provisions. These modifications were unfavorable to the litigation position of the beneficiaries, and they filed a supplemental complaint to declare the trust protector's modifications invalid. The trial court found that, because the trust was unambiguous, the trust protector had no authority to change the terms of the trust. We conclude, however, that the trust provisions were ambiguous, that the settlor allowed for the trust protector to act to effectuate his intent, and that the amendment was not invalid. We therefore reverse.¹

Zaven Minassian (“husband”) executed a statement of trust in 1999 and executed a re-statement of trust in 2008. The restatement created a revocable trust, which became irrevocable upon his death. He named himself and his wife as the sole trustees. After his death in 2010, his children filed a complaint against his wife alleging that she was improperly administering the trust. They claimed she had breached her fiduciary duties, sought a surcharge against her, and demanded an accounting of the trust.

The Restatement of Trust Document

The husband established the trust for the primary purpose of taking care of himself and his wife. Both he and his wife remained trustees of the trust during the life of the husband, the settlor. Article 8 of the restatement of trust provides that, if the wife survived the husband, the trustee should divide the trust property into two separate trusts: the Marital Trust and the Family Trust. However, if the federal estate tax was not in effect at the time of the husband's death, the trust directed creation of only the Family Trust. The parties agree the latter circumstance occurred, and only the Family Trust was created.

Article 10, which created the Family Trust, empowers the trustee to distribute net income and principal of the Family Trust to the wife “as my Trustee, in its sole and absolute discretion, shall consider advisable for my spouse's health, education, and maintenance.” The trustee is directed to “be mindful that my primary concern and objective is to provide for the health, education, and maintenance of my spouse, and that the preservation of principal is not as important as the accomplishment of these objectives.” One of the provisions regarding investments empowers the trustee to purchase life insurance on the wife's life “as an investment for the Family Trust.”

Article 10 also provides that “The Family Trust shall terminate at the death of my spouse. The remainder of the Family Trust, including any accrued and undistributed net income, shall be administered as provided in the Articles that follow.” (Emphasis added). Article 11, which immediately follows, provides:

It is not my desire to create a Common Trust for the benefit of my beneficiaries. Upon the death of my spouse, or if my spouse predeceases me, all of the trust property which has not been distributed under prior provisions of this agreement shall be divided, administered, and distributed under the provisions of the Articles that follow.

The provisions for administration after the death of the settlor's wife are contained in Article 12, which is entitled “The Distribution of My Trust Property.” Section 1 is entitled, “Creation of Separate Shares,” and provides: “All trust property not previously distributed under the terms of my trust shall be divided into a separate trust share for each of” the children. (Emphasis added). It directs the trustee to “create a trust share for each beneficiary....” (Emphasis added). Article 15 names “Comerica Bank and Trust, National Association” as “Trustee for any trust share created under Article Twelve ... or any other trust share created after the deaths of both me and my spouse....”

Proceedings in the Trial Court

The wife moved to dismiss the children's complaint against her, arguing they lacked standing because they were not beneficiaries of the trust. She pointed to the trust provisions in Articles 10–12, indicating that the Family Trust would terminate upon her death, and thus argued the children could not be beneficiaries of this trust. Instead, she argued, new trusts were to be created upon her death, of which the children would be the beneficiaries. The children claimed they had standing because the trust provisions did not create a new trust, but instead created separate shares in the existing Family Trust for each child upon the wife's death.

After reviewing the trust, the court denied the motion to dismiss, finding that Article 12's use of the word “shares,” to describe the interest the children would receive after the death of the wife, prevented the court from concluding that new trusts were created. The court found “the wording simply [was not] clear” and decided it “would be inappropriate on the standing grounds to deny a forum for [the children] to seek relief.”

After the trial court denied the motion, the wife appointed a “trust protector” pursuant to Article 16, Section 18 of the trust. This section authorizes the wife, after the husband's death, to appoint a trust protector “to protect ... the interests of the beneficiaries as the Trust Protector deems, in its sole and absolute discretion, to be in accordance with my intentions....” The trust protector is empowered to modify or amend the trust provisions to, inter alia: (1) “correct ambiguities that might otherwise require court construction”; or (2) “correct a drafting error that defeats my intent, as determined by the Trust Protector in its sole and absolute discretion, following the guidelines provided in this Agreement[.]” The trust protector can act without court authorization under certain circumstances. The trust directs the trust protector, prior to amending the trust, to “determine my intent and consider the interests of current and future beneficiaries as a whole,” and to amend “only if the amendment will either benefit the beneficiaries as a group (even though particular beneficiaries may thereby be disadvantaged), or further my probable wishes in an appropriate way.” The trust provided that “any exercise ... of the powers and discretions granted to the Trust Protector shall be in the sole and absolute discretion of the Trust Protector, and shall be binding and conclusive on all persons.”

The wife filed an affidavit from her appointed trust protector stating he had “amend[ed], clarif[ied], and correct[ed] ambiguities to the Trust” to effectuate the settlor's intent. He purported to amend Article 12 to clarify that it was meant to create a new trust after the wife's death, and grant the children shares in the new trust. The new Article 12 was entitled, “The Distribution of the Remaining, if any, Trust Property Upon the Death of [the Wife],” and Section 1 was entitled, “Creation of a Trust With Separate Shares.” The new Section 1 provided, “Upon the death of [the wife] and the termination of the Family Trust as provided in Article Ten, Section 7, if there is any property remaining, it shall be disbursed to a new trust to be created upon the death of [the wife] with a separate share for each of” the children. (Emphasis added).

The children filed a supplemental complaint challenging the validity of the provisions amended by the trust protector. Both parties then moved for summary judgment as to the validity of the trust protector amendments.

The court entered an order granting the children's motion for partial summary judgment and denying the wife's motion. The court found the trust protector's amendment was improper because it did not benefit the beneficiaries as a group or further the settlor's probable wishes, as required under the trust. The court found the amendment did not benefit all the beneficiaries because it would leave the children without the ability to challenge the actions of the wife as trustee, leaving her “to do as she wishes without having to annually account to the children....” The court found the trust protector's amendment also did not further the settlor's probable wishes in an appropriate way because the settlor “clearly intended to provide for his children from the Family Trust at the time of his wife's death[.] The children were to share in whatever remained.”

The court did not rely on the testimony of the trust protector in determining the husband's intent, instead finding that, “by examining the four corners of the document, and also examining the plain language he used, the meaning of the document is clear.” The court relied on the original Article 12's reference to “trust shares.” The court also noted that, in the provisions regarding the trust protector, the trust restatement referred to “my spouse and beneficiaries.” The court found this indicated “the entire trust was intended not only to benefit his wife, but also his children,” because it “shows that when he speaks of his ‘beneficiaries' he is referring to individuals other than his wife.”

The court relied on several provisions it saw as establishing “[t]he continuity of the trust beyond the life or remarriage of the wife[.]” It cited the trustee's authority to purchase life insurance on the settlor's wife “as an investment for the Family Trust,” reasoning, “[t]here would be no need for such an investment if the Family Trust ceased to exist upon the wife's death.” The court rejected the literal language of Article 10, Section 7—which provides the Family Trust terminates on the death of the wife and the remainder shall be administered as provided...