Peck v. Peck
Peck v. Peck, 133 So.3d 587 (Fla. 2d DCA 2014)
When attempting to modify or terminate an irrevocable trust, most trust attorneys will first run through the litany of available statutory methods of modification provided to us in the Florida Trust Code (for a review, click here). If none of the statutory methods work in a given situation, most attorneys will rely on the common law to modify an irrevocable trust.
The Court in this case upheld a lower court decision allowing modification of an irrevocable trust under the common law. The trust being modified came about because the settlor's father's will devised the residuary of his estate to two trusts established by his children for their own benefit. The daughter's trust was settled by the daughter, was irrevocable and named the daughter and her brother as co-trustees. Twenty years after the trust was established, the daughter filed a petition to terminate the trust and her children agreed to the termination. Her brother, as co-trustee, objected to the termination because he feared his sister might unwisely spend the trust assets, and his father, when he made the initial devise, had similar concerns about his daughter's spending. The brother argued that the trust could not be terminated because under F.S. 736.04113, the trust's purposes had not yet been fulfilled.
The trial court held that the trust could be terminated, since F.S. 736.04113 does not limit the court's common law authority to terminate a trust. Citing Preston v. City National Bank of Miami, 294 So.2d 11 (Fla. 3d DCA 1974), the court allowed the trust to be terminated since the settlor and all beneficiaries consented, even though the trust was irrevocable and the trust's purposes have not been accomplished. The Court upheld the termination of the trust, and said that if the father had created the trust himself as settlor, he probably could have structured the trust so that it could not be modified under the common law after his death. But since he structured his estate plan in a way which allowed the daughter to settle her own trust, she was able to modify or terminate her trust with the beneficiaries' consent, even if it defeated her father's intent.