Bravo v. Sauter

• Decision Date: 10 March 1999
• Docket Number: No. 97-1576, No. 97-2512.
• Citation: 727 So.2d 1103
• Parties: Rose BRAVO, Appellant, v. Matilda SAUTER, as Successor Trustee of the Vincent J. Bravo Revocable Trust Agreement (as amended), and as Personal Representative of the Estate of Vincent J. Bravo, Deceased, Appellee.
• Court: Florida District Court of Appeals

727 So.2d 1103

Rose BRAVO, Appellant, v. Matilda SAUTER, as Successor Trustee of the Vincent J. Bravo Revocable Trust Agreement (as amended), and as Personal Representative of the Estate of Vincent J. Bravo, Deceased, Appellee.

Nos. 97-1576, 97-2512.

District Court of Appeal of Florida, Fourth District.

March 10, 1999.

William Jay Palmer and Steven D. Ginsburg of Adorno & Zeder, P.A., Miami, for appellant.

James A. Herb and Jennifer L. Fulton of Herb & Mednick, Boca Raton, for appellee.

ON MOTION FOR REHEARING

WARNER, J.

We withdraw our previously issued opinion and substitute the following in its place.

This case raises an issue of first impression in the field of estates and trusts. In brief, the question raised is does the surviving spouse forego her right to trust income where a decedent leaves an estate plan consisting of a pour-over will and a partially funded revocable inter vivos trust, but the surviving spouse takes an elective share in the estate? We hold that the wife does not lose her interest in the trust even though that interest may be paid from assets that pour over from the estate.

On January 2, 1980, Vincent J. Bravo ("decedent") created an inter vivos revocable trust agreement and executed his last will and testament. Approximately seven months after the decedent married appellant Rose Bravo (hereinafter referred to as "Bravo"), he amended his will and trust to substitute Bravo in place of his first wife who had predeceased him. The decedent died in 1993, and in his will he specifically devised a life estate to Bravo of all his tangible personal property, with its remainder to his children from his first marriage. The will provided that upon the decedent's death, the rest, residue and remainder of the property, both real and personal, would pour over to the trust, which allowed income for life to Bravo and distribution upon Bravo's death to the decedent's children, one of whom was Matilda Sauter (hereinafter referred to as "Sauter"), who was also the successor trustee of the trust and personal representative of the decedent's estate.

Bravo made an election, pursuant to section 732.201, Florida Statutes (1993), to claim an elective share in the decedent's probate estate. Sauter then contested Bravo's right to share in the trust since she had taken her statutory elective share of the estate. After many proceedings, the trial court ruled that Bravo's election to take her statutory share of the estate did not preclude her from receiving her beneficial interest in the trust. Additionally, the court made other rulings concerning the trust accounting. Bravo appeals the issues with respect to payment of certain expenses and the trust accounting, and Sauter cross-appeals the trial court's ruling as to Bravo's interest in the trust. We consider first the issue on cross-appeal.

Pursuant to section 732.513(1), Florida Statutes (1979), a testator could devise a "pour-over" of the residue of his estate to a trust that was already in existence. If the trust and will were executed concurrently, the written instrument establishing the trust must be identified in the will. See § 732.513(1). The decedent's will and trust included such a "pour-over" provision whereby the remainder assets of the estate would be placed into the inter vivos trust created by the testator. The trust authorized payment of income from the trust to Bravo for life and, upon her death, provided for distribution of the trust estate to the children of the decedent.

Sauter argues that the court erred in finding that by taking her elective share of the estate, Bravo did not forego her right to income from the remaining assets of the estate which poured over to the trust. She claims that application of section 732.211, Florida Statutes (1993), requires Bravo to lose any interest in the trust. That section, entitled "Effect of exercise of right of election on testamentary or statutory disposition," provides:

If an election is filed, the remaining assets of the estate after payment of the elective share shall be distributed as though the surviving spouse had predeceased the decedent.

While the application of this statute may be clear that the spouse loses any interest in the trust where the decedent's will provides for distribution to the spouse or to a testamentary trust created for the spouse, see Tarbox v. Palmer, 564 So.2d 1106, 1107 (Fla. 4th DCA 1990), this is a case of first impression at the appellate level as to whether the spouse's interest is likewise terminated in an inter vivos trust.

This identical issue has been addressed in Lorch v. Mercantile Trust Co. National Ass'n, 651 S.W.2d 540 (Mo.Ct.App.1983), a case which is factually "on all fours" with the present case. In Lorch, the decedent set up a revocable inter vivos trust and also executed a will with a "pour-over" provision very similar in content to the decedent's will in this case. The wife elected to take her statutory share of the estate and obtained a declaratory judgment that she could also receive the income from the trust during her lifetime in accordance with the trust provisions. The trustee appealed, and the Missouri appellate court rejected the trustee's argument that the surviving spouse had obtained "double benefits" from the same assets by electing against the will and then claiming her interest in the inter vivos trust, finding that "[b]ecause the trust in the case under review is inter vivos rather than testamentary in character, the disposition of the residue of the testator's estate is made to a trust which functions independently of the will." Id. at 542. The court then noted the following with regard to the effects of a surviving spouse's election against the decedent's will on the spouse's beneficial interest in the assets transferred to a trust by a pour-over provision in a will:

If ... the trust, at least when it is funded, has significance independently of the will, then so does the trust provision for the surviving spouse, and the spouse could not be viewed to take entirely by virtue of the will. The devise or bequest would seem to be to the trustee in its fiduciary capacity, not to the spouse. Breaking the chain of events down into steps, the will only goes so far as to give the trustee the devise or bequest; the trustee then, on his own, pays over what the trust instrument provides for the spouse.

Id. (quoting Thomas P. Atkins, Note, Surviving Spouse's Election and Acceleration of Remainders in Pour-Over Trusts, 41 U. Cinn. Law Rev. 441, 448 (1972))(footnotes omitted). Accordingly, the Missouri appellate court upheld the surviving spouse's right to retain a beneficial interest in the inter vivos trust, concluding that the decedent's will had effected a conveyance of the residuary to the trustee, who was then independently directed by the trust agreement. See id.; see also Carnahan v. Stallman, 29 Ohio App.3d 293, 504 N.E.2d 1218, 1220-21 (1986).

Sauter cites In re Clark's Estate, 8 Pa. D. & C.2d 665 (Orphans' Ct.1956), in contravention of Lorch. In Clark, the court held that a widow electing to take against the will could not then receive any beneficial interest in assets from a pour-over inter vivos trust. However, Lorch distinguishes Clark on the basis that Pennsylvania treats revocable inter vivos trusts as testamentary trusts, while Missouri does not. See Lorch, 651 S.W.2d at 542. Similarly, in Florida inter vivos trusts are not considered testamentary even though the settlor may reserve a beneficial life interest, the power to revoke or modify, and the power to control the trustee's administration of the trust. See Zuckerman v. Alter, 615 So.2d 661, 663 (Fla. 1993); In re Estate of Robinson, 720 So.2d 540, 542 (Fla. 4th DCA 1998).

Because section 732.211 treats Bravo as predeceasing her husband for purposes of distribution of the remaining assets of the estate, Sauter claims that the incorporation by reference of the trust in the will means that the trust provisions regarding distribution where Bravo predeceases her husband apply, thus requiring distribution of the assets to the remaining beneficiaries. In Lorch, the trustee also argued that the trust was incorporated by reference into the will so that the terms of the trust should be read as part of the will. If that were done, then the wife's interest in the trust would become part of the will, which interest would then be denied to her under section 474.160, Missouri Revised Statutes, the counterpart to section 732.211. The court held that the trust was not incorporated by reference, as the will only referred to it by name and date and, just as in the present case, specifically provided for the incorporation by reference of the terms of the trust into the will only if the trust were no longer in existence at the time of the testator's death.

Florida law also would not support the contention that the will incorporated by reference the terms of the trust. Section 732.512(1), Florida Statutes (1995), provides that: "A writing in existence when a will is executed may be incorporated by reference if the language of the will manifests this intent and describes the writing sufficiently to permit its identification." We have held that two references in the testator's will to an inter vivos trust, one which provided for the testate's residuary to pour over into the trust and the other which provided for the payment of estate taxes from trust assets, were insufficient to incorporate the trust into the will by reference. See Martin v. Martin, 687 So.2d 903, 907 (Fla. 4th DCA 1997). In addition, the will in the present case manifested an intention to incorporate the terms of the trust into the will only if the...