Cessac v. Stevens
Cessac v. Stevens, 2013 WL 6097315 (Fla. 1st DCA 1013)
We don't often see cases regarding the exercise of a power of appointment but the First DCA recently addressed the validity of such an exercise in this case. The will at issue included a provision that stated:
"Included in my estate assets are the STANTON P. KETTLER TRUST, FBO, SALLY CHRISTIANSEN, under will dated July 30, 1970, currently held at the Morgan Stanley Trust offices in Scottsdale, Arizona, and two (2) currently being held at Northern Trust of Florida in Miami, Florida."
Other than the quoted language, the will did not mention the trusts or mention any powers of appointment. The trusts described contained powers of appointment which authorized the decedent to direct who would receive the trusts assets upon her death. The trusts required her to make specific reference to the power in order to exercise it.
The trial court entered a judgment declaring the trusts' assets were not the property of the decedent's estate, since the decedent's will did not include a valid exercise of the power of appointment provided in the trusts because it failed to reference the power of appointment in the trusts as required by the grantor.
Before this case was decided, there was only one Florida case dealing with a similar power of appointment- Talcott v. Talcott, 453 So.2d 951 (Fla. 3d DCA 1982) (Thanks for the fix Jeff!). In Talcott, the court held that the holder of a power of appointment did not properly exercise his power in accordance with the requirements of the trust and that evidence of the power holder's intent was immaterial in light of his failure to comply with the specific reference requirements of the trust.
Here, the will went a step farther than the will in Talcott, since it at least mentioned the trusts, but the Court held that it still was not enough. The Court said that the question of whether a donee has validly exercised a power of appointment does not depend on the intent of the donee, but on whether the power was exercised in the manner prescribed by the donor.
Appellants urged the Court to adopt an equitable construction standard and construe the "specific reference" requirements in the trusts to demand only reasonable substantive compliance. In doing so, they cited to several out-of-state decisions that required only reasonable compliance with the terms of the power of appointment. The Court held these cases to be distinguishable, since here, the decedent's will did not include even a general reference to the powers of appointment held by the decedent, just a reference to the trusts.
Appellants also argued that the terms of the will met the requirements of F.S. 732.607. The Court agreed with the Talcott Court, and explained that if the trust contains no specific limitation on the manner of executing the power, then other evidence that the power had been executed may be considered to determine intent.