Deference to the Intent of a Testator or Settlor
May 13, 2019
The Third District Court of Appeal’s recent opinion in Sibley v. Estate of Sibley, — So. 3d —, 2019 WL 1461325 (Fla. 3d DCA April 3, 2019) reminds us that a testator’s or settlor’s intent is to be given paramount deference in constructing the language of a testamentary document.
In Sibley, Charles Sibley, the trustee, appellant, and brother of the decedent, appealed the trial court’s order determining, inter alia, that the foundation-beneficiary of the trust was “not in existence” at the time of the decedent’s death. The trial court made its determination after receiving competent substantial evidence that the foundation was not in existence at the time of the decedent’s death because it had been administratively dissolved 3 months prior to the decedent’s death and not reinstated until 7 months after his death. Moreover, and in further support of its finding, the evidence at trial revealed that the foundation had not been funded, was not functioning, did not have an open bank account, and did not file necessary filings with the IRS. The Third District Court of Appeal affirmed.
The Third District explained that, not only was the foundation non-functioning, but the fact that it had been administratively dissolved was dispositive. The fact that it was later reinstated was of no consequence. At the time that the decedent died, the foundation was no longer in existence. The Third District reasoned that any relation back, such as the later reinstatement of the foundation, could not apply here, because the administration of an estate “might never achieve finality”. After death, and despite any testamentary provisions, a foundation could possibly always be in existence if someone prospectively filed the requisite reports and paid the applicable fees.
The takeaway of this case is the paramount tenant in construction of wills and trusts, which is to ascertain the intent of the settlor and to give effect to this intent. The question in Sibley was not about resuming the business of the foundation as if the administrative dissolution never occurred, but rather pinpointing a precise point in time whether the foundation existed (i.e., that point in time being the date of the decedent’s death). Because at that date the foundation did not exist, the trustee had to make distribution per the residuary provision in the trust document. The Third District stated, “to apply the relation-back provision [of the corporation statutes] would unquestionably frustrate [the decedent’s] intent as set forth in the trust, rendering it incompatible with the paramount rule of testamentary construction.” Giving effect to the testator’s intent is the cardinal rule.
If there is any question on the intent of a settlor or testator as set forth in a will or trust, you should speak with an experienced estate and trust attorney, who can advise you on these nuances.