Dennis v. Kline
| Decision Date | 19 June 2013 |
| Docket Number | Nos. 4D12–1881,4D12–2589.,s. 4D12–1881 |
| Citation | 120 So.3d 11 |
| Parties | Dianna Robin DENNIS, individually and as Co–Trustee of the Thomas Gordon Dennis Revocable Trust of 1989 as amended and Lauren Keely Haws, Appellants, v. Harriet D. KLINE and Deutsche Bank Trust Company, N.A., as Co–Trustee of the Thomas Gordon Dennis Revocable Trust 1989 as amended, Appellees. |
| Court | Florida District Court of Appeals |
OPINION TEXT STARTS HERE
Edward Downey, Rachel M. Evert and R. Lee McElroy, IV of Downey & Downey, P.A., Palm Beach Gardens, for appellants.
James G. Pressly, Jr. of Pressly & Pressly, P.A., West Palm Beach, for appellee, Harriet D. Kline.
In 2011, a beneficiary of a 1989 trust adopted a 27–year–old woman whom she had known since birth and treated like a daughter. The adoption impacted those who would inherit under the trust, so another beneficiary brought suit in Florida seeking to modify the trust to exclude the adoptee as a potential beneficiary. The circuit court granted summary judgment, excluding the 27 year old from becoming a beneficiary of the trust. We reverse because the issue of the settlor's intent in creating the trust was not appropriately resolved on summary judgment.
Thomas Gordon Dennis (“the Settlor”) formulated a pour-over will, which provided that upon his death the assets of his estate would be marshaled into a trust for distribution (“the Trust”). Under the Trust, the balance of his estate that did not pass by specific bequest was to be split, with half the assets designated to the “Family Portion” of the Trust and the other half going to the “Marital Portion.” As their names indicate, the “Marital Portion” provided benefits for the Settlor's spouse, while the “Family Portion” provided for his descendants.
The “Family Portion,” which is central to this appeal, is bifurcated into two sub-trusts: Family Trust A and Family Trust B. For the purposes of administration, the sub-trusts are similarly constructed. In both sub-trusts, the apportioned net assets are separated into equal shares among the Settlor's five children, such that a child receives quarterly income installments throughout his or her lifetime, along with additional funding from the principal at the discretion of the trustee.
The difference between the sub-trusts lies in a child's ability to devise his or her interest. Under Family Trust B, the Settlor's children are provided with a general power to direct the apportioned trust assets following his or her death.1 By contrast,Family Trust A provides the children with no power of appointment, thus constraining distribution of the corpus to the Settlor's “issue.” 2 As a result, under Family Trust A, once one of the Settlor's children dies, that child's net trust corpus is divided per stirpes amongst the child's “issue”; however, if the child dies without “issue,” the trust assets disburse “sideways” to the Settlor's other living children or his deceased children that are survived by “issue.”
Crucial to this case is the Trust's definition of the term “issue.” The Trust, as amended and restated in 1992, contains express definitions of terms relevant to this case. Section XII(E) defines “issue” as “lineal descendants forever,” with the provision that “words of relationship in any degree includ [e] legally adopted persons.” Likewise, Section VIII of the Settlor's 1992 pour-over will included adoptees among its definition of “children” and identified “issue” as “those becoming so by adoption and those born or adopted after the execution of th[e] will.”
At the time of his death, the Settlor was survived by five living children: (1) Appellant Dianna, (2) Appellee Harriet, (3) Lilla Anna Dennis, (4) James MacAlpin Dennis, and (5) Thomas Gordon Dennis, Jr. (hereinafter “Tom Jr.”). The Settlor knew at the time of the Trust's formation that Tom Jr. was infertile. In his desire to have a family of his own, Tom Jr. adopted an infant.
Similar to Tom Jr., the Settlor knew that Dianna was unable to become pregnant due to her battle with Hodgkin's disease. In 2011, thirteen years after the Settlor's death, Dianna, a New Jersey resident, initiated a court proceeding in Pennsylvania to adopt a twenty-seven-year-old Pennsylvania resident who was living with her biological parents. Unlike Florida, Pennsylvania's statutes do not require that financially interested parties be given notice of the proceedings, and the adoption was completed without objection.
At the adoption hearing, Dianna stated that she was the adoptee's “godmother,” that she was close with the adoptee's parents, that she “took care of [the adoptee] as a baby,” that she “paid for her college tuition,” and that she otherwise maintained a “close relationship” with her by “participat[ing] in her life.” Identifying the reason for the adoption, Dianna detailed the contours of the Trust, explaining that since she was unable to have children of her own, she wanted her assets “to go to somebody that deserves them, for whom they will mean something.”
Believing that the adult adoption undermined the Settlor's intent, Harriet filed a two-count complaint in the circuit court, challenging the adoptee's status as a qualified beneficiary under the Trust. In her first count, Harriet asked the trial court to enter a declaratory judgment, which would construe the Trust to exclude adult adoptees from becoming qualified beneficiaries as “living issue.” In the alternative, Harriet requested judicial modification of the Trust, which would exclude the adoptee from taking by conforming the Trust to the Settlor's intent of keeping Family Trust A's assets within the family bloodlines.
In response, Dianna answered the complaint, filed two affirmative defenses, and moved to dismiss on the ground that there was no ambiguity as to the Trust's inclusion of adopted children as beneficiaries. The trial court denied the motion to dismiss without elaboration.
After moving for a default judgment against the other qualified beneficiaries of the Trust,3 Harriet moved for summary judgment on Count II, requesting modification or reformation of the Trust through the argument that by forming sub-trusts, it was clear that the Settlor intended for Family Trust A's assets to remain within the “the family bloodline,” a concept that could be stretched only to the limits of infant adoption.4,5 Under such view, although the Settlor knew of Dianna's unfortunate predicament when he drafted the Trust, he intentionally “did not provide for her to be able to effectively exercise a power of appointment by the means of an adult adoption.”
Two weeks later, Harriet also submitted a supplement to her motion for summary judgment, contending that the trial court should not give full faith and credit to the adoptee's adoption since Pennsylvania's adoption statutes contrast with Florida law in that they do not require notice of adoption to be given to financially interested parties. Additionally, Harriet asserted that Dianna breached her fiduciary duty as co-trustee by failing to make such disclosure to the beneficiaries of the Trust.
In response, Dianna filed a cross-motion for summary judgment on the declaratory relief count, requesting that the trial court find the “adoption of [the adoptee] valid for purposes of her being” a qualified beneficiary. As to the allegations of Harriet's motion, Dianna contended that the Settlor created Family Trust A not to limit inheritance to his bloodlines but “to take strategic advantage of tax benefits.” The affidavits and depositions submitted by both parties paint the following picture.
When the Settlor approached attorney William D. McEachern to draft the Trust instrument in question, his net worth was approximately fifteen to sixteen million dollars. Without elaborating on the purpose for creating Family Trust A, McEachern stated in a deposition that in 1992, the Settlor requested that he draft a restatement of the Trust to incorporate his desire to “include adopted persons” as “issue.” McEachern said that at the time of the Trust's restatement, he did not contemplate an adult adoption and never broached the idea with the Settlor.
Addressing the issue of the Settlor's intent, Dianna described in a deposition that when her father created the Trust, he was initially “anti-adoption” in his desire to maintain his “bloodlines” and “blood rules.” However, following Tom, Jr.'s adoption of an infant daughter, her father started to “come around” to the idea of adoption, resulting in the addition of the “adopteds” provision of the Trust.
Harriet, on the other hand, described her father as “very conservative” and “old fashioned.” She stated that his intention in creating the Trust was to allow his assets to pass per stirpes, since it was desire “to provide this money for his family to go down the line.” Thus, while her father was initially opposed to Tom, Jr.'s adoption, he eventually agreed to modify the trust to include adopted children since “he had acknowledged [Tom, Jr.'s daughter] and wanted to make [sure] she also got [her] part” as a family member. Harriet did not discuss the concept of an adult adoption with her father.
Prior to the adoptee's birth, Dianna was close friends with her biological parents; Dianna attended their wedding and was later chosen as the adoptee's godmother. From the girl's birth in 1984 until 1986, the girl's parents shared a small apartment building as tenants with Dianna, during which period Dianna built a bond with the infant. Over the years, Dianna and the adoptee maintained their relationship; Dianna took the girl on a vacation and later assisted her college aspirations by paying for testing and funding a substantial portion of her college tuition.
When the adoptee was twelve years old, Dianna approached her biological parents regarding her desire to adopt the girl. Recognizing that this was a difficult...
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Adoptions and gestational surrogacy
...policies. The adoptee also will be entitled to the same inheritance as the adopting parents’ biological children. [ Dennis v. Kline , 120 So. 3d 11, 19 (Fla. 4th DCA 2013).] A home study is not required for an adult adoption but can be ordered for good cause shown. [Fla. Stat. §63.092(3); D......