Dinkins v. Dinkins

Dinkins v. Dinkins, 2013 WL 3834371 (Fla. 4th DCA 2013)

It is well established in Florida that penalty clauses in trusts are invalid.  Fla. Stats. 736.1108(1) provides that, "A provision in a trust instrument purporting to penalize any interested person for contesting the trust instrument or instituting other proceedings relating to a trust estate or trust assets is unenforceable."  Here, a husband's trust contained a conditional specific bequest of cash for his spouse, which said that if his wife made a valid disclaimer of her interest in the QTIP trust created under the trust, and she waived her right to elect the elective share, then she would receive a cash bequest of $5,000,000.  The wife argued that this was an unlawful penalty clause, since it would penalize her for taking the elective share by causing her to forfeit the $5,000,000 bequest.  The Court held that the clause is not a penalty clause.

The Court explained that if it were a penalty clause, the wife would have to forfeit her right to contest the instrument in order to receive the devise.  Here, she is only forfeiting her right to a statutory benefit.  Since she had the ability to reject the $5,000,000 devise to take the statutory devise, the purpose of the statutory devise is satisfied and the alternative devise clause does not penalize the beneficiary for purposes of Fla. Stats. 736.1108(1).

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