• 06
  • January
    2012

A recent decision by an appellate court in Florida further clarified the status of revocable trusts in Florida when the beneficiary of the trust dies before the grantor. The case itself follows the horrific 2004 murder of James and Martha Hughes by Mrs. Hughes's adopted son from a prior marriage.

In this particularly complex Florida trust litigation, the appellate court sided with arguments proffered by attorneys Keith Grumer and Maidely Macaluso of Fort Lauderdale based Grumer & Macaluso, P.A.

Florida Revocable Trust

The emphasis of this particular case involved issues of probate and not the criminal liability surrounding their tragic deaths - specifically the case revolved around a revocable trust created by James Hughes years earlier.

In 1999, Mr. and Mrs. Hughes were married and Mr. Hughes subsequently executed a revocable trust. The trust provided that "Martha would receive the family home in Florida, the country home in North Carolina, a sum of one million dollars, the contents of the residences, and various other items of personal property," according to the court opinion.

Following their passing, the probate court deemed their deaths to be simultaneous - per Florida statute - since the coroner could not determine which spouse died first. Accordingly, Mr. Hughes' estate was to be disposed of as if he survived Mrs. Hughes - unfortunately for the heirs of Mrs. Hughes, it was unclear if she was required to survive her husband in order to receive the benefits of the trust, and thus be able to pass these benefits on to her heirs.

At the trial level, the personal representative of Mrs. Hughes' estate argued that Mrs. Hughes' interest in the trust became vested when the trust was created - the trial court actually sided with this argument when it decided that Mrs. Hughes' interest in the trust vested prior to the death of Mr. Hughes, and thus Mrs. Hughes' heirs had an interest in the property.

Appellate Court Decision

The appellate court ultimately reversed the trial court's opinion. The opinion was based on common law since the trust was created prior to the enactment of a Florida anti-lapse statute.

Under Florida common law, when the beneficiary or devisee (Mrs. Hughes) of a trust dies before the grantor (Mr. Hughes), a lapse occurs and the gift reverts back to the estate - which means the property belongs to Mr. Hughes' estate and Mrs. Hughes' heirs will get nothing. The court noted:

The intended beneficiary's interest lapses should the beneficiary predecease the grantor. Mr. Hughes was the sole trustee and beneficiary under the Trust during his life. Mrs. Hughes was among the contingent residual beneficiaries whose interest came into creation only upon the death of Mr. Hughes and who were entitled to distribution of the then remaining corpus of the trust. Because it was judicially determined that Mrs. Hughes predeceased her husband, her interest in the Trust lapsed upon her death.

Probate issues such as this only illustrate how complex these cases can be. It is always best to speak with a knowledgeable attorney before you find yourself in over your head in a probate dispute.

Source: Darian v. Weymouth