Court Opinion

ID: 4293183
Source: CourtListenerOpinion
Date Created: 2018-07-11 15:09:01.761706+00
Date Added: 2024-06-11T14:38:25.948423
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                                FOURTH DISTRICT

             REBECCA RACHINS and RICHARD MINASSIAN,
                           Appellants,

                                        v.

     PAULA M. MINASSIAN, individually, and as Trustee of the Zaven
    Minassian Trust dated December 29, 1999, as amended and restated
           July 16, 2008, and THE ANDERSEN LAW FIRM, PC,
                               Appellees.

                                No. 4D17-2005

                                [ July 11, 2018 ]

   Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; Charles M. Greene, Judge; L.T. Case No. PRC 12-1320.

  James A. Herb of the Herb Law Firm, Chartered, Boca Raton, for
appellants.

  Thomas F. Luken of The Andersen Law Firm, Fort Lauderdale, for
Appellee Paula M. Minassian.

  Donald H. Benson of Bradham, Benson, Lindley, Blevins, Bayliss &
Wyatt of Florida East Coast, P.L.L.C., Fort Lauderdale, for Appellee The
Andersen Law Firm, P.C.

TAYLOR, J.

   The decedent’s adult children, Rebecca Rachins and Richard Minassian
(hereinafter the “children”), appeal a partial final order dismissing multiple
counts of their Amended Trust Complaint on the ground that they lacked
standing to bring any claims against Paula Minassian, who was the
decedent’s wife at the time of his death, or against the Andersen Law Firm,
the attorneys who prepared the relevant trust document. 1 We reverse,

1 Contrary to the parties’ representations in this appeal, the order did not have
the effect of resolving all of the children’s claims against the Andersen Law Firm.
However, the order did have the effect of terminating the action as to Paula
Minassian. Thus, to the extent the order disposed of the entire action as to Paula
concluding that the children are qualified beneficiaries of the Family Trust
and therefore have standing to challenge the wife’s administration of the
Family Trust.

   Most of the salient facts of this case are set forth in our opinion in
Minassian v. Rachins, 152 So. 3d 719 (Fla. 4th DCA 2014). Zaven
Minassian (the “husband”) executed a Restatement of Trust in 2008, which
superseded an earlier 1999 trust document. Id. at 720. In the 2008
Restatement of Trust document (the “original trust document”), the
husband created a revocable trust (the “original trust”), which would
become irrevocable upon his death. Id. The husband and the wife were
the sole trustees of the original trust. Id.

   The husband died in 2010. Id. Because the wife survived the husband,
and because the federal estate tax was not in effect at the time of the
husband’s death, the original trust document directed that all remaining
trust property be distributed to a Family Trust. Id. at 721.

    The original trust document empowered the wife, as trustee, to
distribute income and principal of the Family Trust to herself, in her sole
and absolute discretion, for her “health, education, and maintenance.” Id.
Upon the death of the wife, the Family Trust would terminate, and the
remainder of the Family Trust would be divided into a separate trust share
for each of the children. Id.

    Soon after the husband’s death in 2010, the children filed a complaint
against the wife, alleging that she was improperly administering the Family
Trust. Id. at 720. The wife moved to dismiss the children’s complaint,
arguing that they lacked standing because they were not beneficiaries of
the Family Trust. Id. at 721. The children countered that they had
standing because the trust provisions did not create a new trust, but
instead created separate shares in the existing Family Trust for each child
upon the wife’s death. Id. The trial court denied the motion to dismiss.
Id.

   The wife later appointed a “trust protector,” as allowed by the terms of
the original trust. Id. at 722. The trust protector was authorized to amend
the provisions of the original trust if the amendment would either benefit
the beneficiaries or further the husband’s probable wishes.              Id.
Accordingly, the trust protector purported to amend the original trust to

Minassian, this court has jurisdiction. See Fla. R. App. P. 9.030(b)(1)(A) & Fla.
R. App. P. 9.110(k).

                                       2
clarify that, if there was any property remaining upon the death of the wife
and the termination of the Family Trust, the remaining property would be
disbursed to a new trust to be created for the benefit of the children. Id.

   The children challenged the validity of the trust protector’s
amendments, and both sides eventually moved for summary judgment as
to the validity of the amendments. Id. The trial court found that the
original trust document was unambiguous, that only one trust (the Family
Trust) was intended after the husband’s death, and that the trust protector
had no authority to change the terms of the original trust. Id. at 720, 723,
725–26. The trial court therefore entered partial summary judgment for
the children on the issue of the validity of the trust protector’s
amendments. Id. at 723.

    On appeal, the only issue before our court was whether the trust
protector’s amendments were valid. Id. at 720 n.1. We reversed the trial
court’s order, holding that the original trust document was ambiguous as
to whether the husband intended to create a single trust or separate trusts
for the wife and children, that the trust protector was authorized to amend
the trust to correct ambiguities, and that the trust protector’s amendments
were valid. Id. at 724–27.

    We found that “the single-trust interpretation reached by the trial court
does not appear to be unambiguously supported by the trust document.”
Id. at 726. We reasoned that the provisions of the trust were conflicting
and that “the overall structure of the trust contemplates something
separate and apart from the Family Trust.” Id. at 726. We further found
that the original trust document was “patently ambiguous on the issue of
whether a new trust is created, where the language in the trust instrument
dictates that the Family Trust terminates on the death of the wife.” Id. We
then reviewed the uncontradicted evidence in the record as to the
husband’s intent:

          The trust protector testified in a deposition that he met
      with the husband twice, first in person to discuss his estate
      planning desires, and second over the phone to discuss and
      execute the documents he had drafted. During the husband’s
      life, the husband and wife’s “lives revolved around horse
      racing and legal gambling,” and, in the trust, the husband
      wanted “to provide for [the wife] in the way they had lived in
      the past. . . .” The plan was “to create a separate Trust for the
      benefit of his children” which “would be created only if the
      Family Trust described in Article 10 . . . was not exhausted
      during [the wife’s] lifetime[.]” The purpose of Article 10,

                                     3
      Section 7 and Article 11 was “to assure that the Family Trust
      was not in any way associated to a new Trust that might be
      created for his children.” The trust protector also stated, “This
      challenge by the children is exactly what [the husband]
      expected.” The trust protector noted that the husband
      referred to his daughter in derogatory terms, and that the
      daughter had not seen her father in years.

         From the trust protector’s affidavit, it appears that the
      husband settled on the multiple-trust scheme for the very
      purpose of preventing the children from challenging the manner
      in which the wife spent the money in the Family Trust during
      her lifetime. The trust protector also testified that his law firm
      always recommends this split-trust approach, rather than
      what he referred to as a “pot trust . . . where everything goes
      into the pot for the beneficiaries.” He testified, “We have never
      done it the other way you’re talking about, about keeping the
      same trust.” On that basis, he prepared the amendments to
      the trust to reflect this intent of the testator.

Id. at 726–27 (emphasis added).

   In finding that the trust protector’s amendments were valid, we
explained: “The amendments may have disadvantaged the children, but
the trust protector was authorized [to] correct ambiguities with the
limitation that he act either to benefit a group of beneficiaries or to further
the husband’s probable wishes.” Id. at 727. We therefore reversed and
remanded “with directions that the trust protector’s amendments are
valid.” Id. Finally, we added: “We reject all other arguments made by the
children against the validity of these provisions, although not ruling on any
matters beyond that issue.” Id. (emphasis added).

    On remand, the children filed a 14-count Amended Trust Complaint,
alleging, among other things, that the wife had dissipated trust assets due
to a gambling problem. The Amended Trust Complaint added William
Andersen, Esq., who was the trust protector and drafting attorney, and
the Andersen Law Firm as defendants. William Andersen passed away at
some point after the children filed the Amended Trust Complaint, but the
children apparently did not serve William Andersen with the Amended
Trust Complaint before his death.

   Counts 1 and 2 of the Amended Trust Complaint were claims for “Trust
Construction” and “Declaratory Judgment.” In these counts, the children
essentially sought a declaration that the Family Trust never came into

                                      4
existence under the terms of the original trust document because the
husband attempted to create the Family Trust with the wife as the sole
trustee and sole beneficiary.

   The wife and the Andersen Firm (collectively the “defendants”) moved
for summary judgment as to Counts 1 and 2, arguing that the children
had no standing because they were “neither beneficiaries nor qualified
beneficiaries as those terms are defined in the Trust Code.” The
defendants further argued that the original trust, at the time of its
creation, met all of the requirements of Florida law because it had two
trustees and two beneficiaries.

   The trial court entered summary judgment in favor of the defendants
on Counts 1 and 2, ruling in relevant part that: (1) the children “lack
standing as they are not beneficiaries or qualified beneficiaries of the
original Trust, as amended by the trust protector”; and (2) section
736.0402, Florida Statutes, which states that a trust is created only if the
same person is not the sole trustee and sole beneficiary, was inapplicable
to this situation because the husband and wife served as co-trustees of
the original trust during the husband’s life.

   The trial court later entered a final order dismissing the other counts
of the Amended Trust Complaint, except for Count 9, which applied
primarily to William Andersen personally, 2 and Counts 13 and 14, which
the children had previously dismissed. The trial court found that the
children lacked standing to bring any of the claims in the Amended Trust
Complaint because the children were neither beneficiaries nor qualified
beneficiaries.

   On appeal, the children argue that they are qualified beneficiaries
under section 736.0103(16), Florida Statutes, and therefore have standing
to question whether the wife is properly administering the trust corpus.
We agree.

   A trial court’s interpretation of a statute presents a pure question of
law and is therefore subject to the de novo standard of review. Kephart v.
Hadi, 932 So. 2d 1086, 1089 (Fla. 2006). Likewise, a trial court’s
interpretation of a trust document is reviewed de novo. Minassian, 152
So. 3d at 724.

2 However, contrary to the representations in the briefs, Count 9 did not apply
exclusively to William Andersen. Count 9 also sought to hold the Andersen Firm
jointly and severally liable with Mr. Andersen.

                                      5
   The Florida Trust Code defines a “beneficiary” as “a person who has a
present or future beneficial interest in a trust, vested or contingent, or who
holds a power of appointment over trust property in a capacity other than
that of trustee.” § 736.0103(4), Fla. Stat. (2017) (emphasis added). In
other words, “[t]he term ‘beneficiary’ refers to the universe of persons who
have a beneficial interest in a trust.” John G. Grimsley, Florida Law of
Trusts, 18 Fla. Prac. § 16:1 (2016-2017 ed.). “It is immaterial for this
purpose whether the beneficial interest is present or future, vested or
contingent, or whether the person having the interest is ascertainable or
even living.” Id.

   The term “qualified beneficiary” is, in turn, defined under the Florida
Trust Code as

      a living beneficiary who, on the date the beneficiary’s
      qualification is determined:

      (a) Is a distributee or permissible distributee of trust income
      or principal;

      (b) Would be a distributee or permissible distributee of trust
      income or principal if the interests of the distributees
      described in paragraph (a) terminated on that date without
      causing the trust to terminate; or

      (c) Would be a distributee or permissible distributee of trust
      income or principal if the trust terminated in accordance with
      its terms on that date.

§ 736.0103(16), Fla. Stat. (2017).

    “The term ‘qualified beneficiary’ encompasses only a limited subset of
all trust beneficiaries. In effect the class is limited to living persons who
are current beneficiaries, intermediate beneficiaries, and first line
remainder beneficiaries, whether vested or contingent.” Grimsley, supra,
§ 16:1. For example, contingent remainder beneficiaries of a trust are
qualified beneficiaries under section 736.0103(16), Florida Statutes,
because of their interest in the distribution of any principal remaining after
the death of a lifetime beneficiary. Harrell v. Badger, 171 So. 3d 764, 769
(Fla. 5th DCA 2015).

    The definition of a “qualified beneficiary” was addressed in Brown-Thill
v. Brown, 929 F. Supp. 2d 887 (W.D. Mo. 2013), where the federal district
court considered whether the co-trustee’s children, who were also the

                                      6
grandchildren of the settlor, were qualified beneficiaries under Florida law.
In Brown-Thill, the settlor (Eugene) created a revocable trust. Id. at 890.
Eugene later died, survived by his wife (Saurine) and their two children,
Brown and Brown-Thill. Id. The trust instrument provided that, upon
Eugene’s death, a portion of the principal would be placed into a marital
trust for the benefit of Saurine, while the remainder would be placed in a
separate residuary trust for the benefit of Saurine and her descendants.
Id. The residuary trust permitted discretionary distributions to Saurine’s
descendants, but only during her lifetime. Id. After Saurine died, Brown
and Brown-Hill became co-trustees. Id. Saurine’s trusts were to be
distributed into two separate residuary trusts for Brown and Brown-Thill.
Id. Brown’s children were discretionary income and principal beneficiaries
of Brown’s separate trust. Id. On those facts, the federal district court
found that Brown’s children were qualified beneficiaries under Florida law
at the time of an arbitration between the co-trustees:

         The Court finds that Brown’s children are qualified
      beneficiaries under Florida law . . . . Brown’s children will
      receive trust income and principal at Brown’s discretion when
      the separate residuary trusts are created, and will receive
      outright or in trust any portion of the principal that Brown
      appoints by will. . . .

          None of the beneficiaries are currently entitled to trust
      income or principal, given that Saurine’s estate has not been
      terminated and discretionary disbursements could have been
      made only during her lifetime. Assuming the interests of
      Saurine, who is the only distributee under subsection (a),
      terminated, Brown would be a qualified beneficiary under (b),
      as would Brown’s children under (c). If the separate trusts
      had already been created, Brown’s children would be
      permissible distributees under (a), and his children under (b).
      Under any of the above circumstances, . . . their interest is in
      the proper administration of the trust before and after
      Saurine’s trusts terminate, since the principal of Saurine’s
      trusts will eventually flow into their father’s trust, and finally
      to them.

Id. at 897–98.

   Although not directly bearing on the issue of who constitutes a qualified
beneficiary, the Second District’s opinion in Mesler v. Holly, 318 So. 2d
530 (Fla. 2d DCA 1975), is instructive. In Mesler, the Second District held
that even an unlimited power of invasion by a trustee who is also a lifetime

                                      7
beneficiary of a trust “is subject to implied limitations to protect the
remaindermen.” Id. at 533. The Second District explained that, while the
grant of absolute discretion to a fiduciary is very broad, “a trustee is always
subject to accountability to remaindermen where discretion is improperly,
arbitrarily or capriciously exercised.” Id.

   Here, the children are both beneficiaries and qualified beneficiaries of
the Family Trust. The children are beneficiaries because they have a
future beneficial interest in the Family Trust. More specifically, the
children have a future beneficial interest in any property remaining in the
Family Trust after the wife’s death, since any remaining property
remaining in the Family Trust will be disbursed to a new trust for the
children’s benefit under the terms of the original trust document. Stated
another way, because any remaining property in the Family Trust would
be distributed to a new trust created for the benefit of the children upon
the wife’s death, the children will, at a minimum, have an equitable
interest in any property in the Family Trust at that time.

   The fact that any remaining principal of the Family Trust would flow
into a new trust created for the children, as opposed to being distributed
to the children outright, does not preclude the children from being
beneficiaries of the Family Trust under the statutory definition. See
Brown-Thill, 929 F. Supp. 2d at 898 (finding that grandchildren were
qualified beneficiaries, even though they were not currently entitled to
trust income or principal, “since the principal of [their deceased
grandmother’s] trusts will eventually flow into their father’s trust, and
finally to them”); see also Mesler, 318 So. 2d at 532–33 (treating great
grandchildren as remaindermen of a Florida Trust even though the
remainder of the Florida Trust would not be distributed to them outright,
but instead would flow to a Massachusetts Trust for their benefit).

    Likewise, the fact that the Family Trust terminates upon the wife’s
death does not preclude the children from having a beneficial interest in
the Family Trust. Indeed, by definition, a remainder interest in a trust
refers to the right to receive trust property upon the termination of the
trust. See Restatement (Third) of Trusts § 89 (2007) (“Thus, for example,
the termination date of a trust for L for life, remainder to R, arrives upon
L’s death[.]”); Remainder, Black’s Law Dictionary (10th Ed. 2014) (a
remainder interest is “[a] future interest arising in a third person . . . who
is intended to take after the natural termination of the preceding estate”);
Duncan v. O’Shea, 07-11-0088-CV, 2012 WL 3192774, at *7 (Tex. App.
Aug. 7, 2012) (“[B]oth Trusts terminate upon Rita’s death and John’s
descendants may inherit the Trusts’ assets, if any remain. Thus, John’s

                                      8
descendants have a remainder interest in any property that might remain
in either Trust upon Rita’s death.”).

    Furthermore, in the prior appeal, although we were hesitant to refer to
the children’s interest in the Family Trust as a “remainder,” we
nevertheless recognized that the children had an interest in the property
in the Family Trust. See Minassian, 152 So. 3d at 726 (“Although it may
not be proper to refer to such an interest as a ‘remainder,’ distributees are
entitled to the trust property upon the termination of a trust, as directed
in the trust document.”).

   The children are also qualified beneficiaries of the Family Trust. As
noted above, the term “qualified beneficiary” includes a living beneficiary
who “[w]ould be a distributee or permissible distributee of trust income or
principal if the trust terminated in accordance with its terms on that date.”
§ 736.0103(16)(c), Fla. Stat. (2017). Here, the children are qualified
beneficiaries under section 736.0103(16)(c), because they would be
distributees of trust principal if the Family Trust terminated in accordance
with its terms (i.e., the wife died). 3

   We find that the definition of “qualified beneficiary” under subsection
(16)(c) includes the children in this situation, even though the Family Trust
terminates at the wife’s death and even though the children would be
distributees of any remaining trust principal in the Family Trust only
through a newly-created trust for their benefit. Thus, while the husband
may have intended to prevent the children from challenging the manner
in which the wife spent the money in the Family Trust during her lifetime,
see Minassian, 152 So. 3d at 727, the children are qualified beneficiaries
under subsection (16)(c) and are therefore entitled to the corresponding
protections afforded to qualified beneficiaries under the Florida Trust
Code. 4

3 Alternatively, even assuming that the relevant trust is the original trust, the
children would be qualified beneficiaries under section 736.0103(16)(b), since the
original trust would not terminate when the wife dies. Furthermore, the children
would also constitute beneficiaries of the original trust for substantially the same
reasons set forth in the analysis above concerning the Family Trust.

4 The children further argue that if the wife were to prevail on her theory that the
children are not beneficiaries of the Family Trust, this would mean that the
Family Trust could never have come into existence because, upon the husband’s
death, the wife would have been both the sole trustee and the sole beneficiary of
the newly-created Family Trust. See § 736.0402(1)(e), Fla. Stat. (2017) (“(1) a
trust is created only if: . . . (e) The same person is not the sole trustee and sole

                                         9
   In sum, Florida law is clear that the wife’s unlimited power to invade
the Family Trust is subject to implied limitations to protect beneficiaries
with an interest in any property that might remain in the Family Trust
upon the wife’s death. See Mesler, 318 So. 2d at 533. Here, because the
children are qualified beneficiaries with standing to challenge the
administration of the Family Trust, we reverse both: (1) the order entering
partial summary judgment against the children as to Counts 1 and 2 on
the basis that the children lack standing; and (2) the order dismissing the
remaining counts against the wife on the basis that the children lack
standing. 5 We remand for further proceedings consistent with our
conclusion that the children are qualified beneficiaries with standing to
challenge the administration of the Family Trust, but we do not opine on
whether any particular count in the Amended Trust Complaint stated a
cause of action. 6

    Reversed and Remanded.

GROSS and KUNTZ, JJ., concur.

                             *         *          *

    Not final until disposition of timely filed motion for rehearing.

beneficiary.”). We need not reach this argument, however, because we find that
the children are in fact beneficiaries of the Family Trust.

5 Appellate review of the final order disposing of the case as to the wife
encompasses review of the prior summary judgment order. See Saul v. Basse,
399 So. 2d 130, 133 (Fla. 2d DCA 1981) (“[A]n appeal from a final order calls up
for review all necessary interlocutory steps leading to that final order, whether
they were separately appealable or not.”).
6For example, to the extent some counts in the Amended Trust Complaint are
premised on the theory that the Family Trust never came into existence, such
counts are inconsistent with our analysis in this decision.

                                       10