Zuckerman v. Alter
1993 WL 15589, 615 So. 2d 661 (1993)
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Rule of Law:
Florida Statute § 689.075(1)(g) establishes two alternative tests for the validity of an inter vivos trust where the settlor is the sole trustee: it must either be valid under the laws of the jurisdiction in which it is executed or executed in accordance with the formalities required for the execution of wills in that jurisdiction.
Facts:
- Celia Kahn died testate in 1986.
- Kahn’s will named her nephew Jack Alter as personal representative, devising all household goods and personal effects to him.
- Kahn left the residuary of her probate estate to her nieces, Sharon Zuckerman and Beverly Kanter.
- In 1982, Kahn executed an inter vivos trust for the benefit of Jack Alter, making herself the sole trustee, which contained the majority of her assets in a brokerage account.
- Kahn created the trust instrument using a standardized form she obtained and completed herself.
- Kahn’s signature on the trust instrument was notarized, but it was not attested to by two subscribing witnesses.
Procedural Posture:
- Sharon Zuckerman and Beverly Kanter petitioned the circuit court for a determination that Celia Kahn's inter vivos trust contained testamentary aspects and was therefore invalid because it lacked will execution requirements.
- The circuit court entered summary judgment in favor of Zuckerman and Kanter, determining the inter vivos trust was ineffective and its assets should pass through Kahn's will's residuary clause.
- Jack Alter appealed the circuit court's decision to the Third District Court of Appeal (intermediate appellate court).
- The district court reversed and remanded the case, holding Kahn's inter vivos trust valid because it complied with the formalities of subsection 689.075(1)(g)'s two alternative tests.
- The district court denied rehearing but certified a question of great public importance to the Supreme Court of Florida.
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Issue:
Does Florida Statute § 689.075(1)(g) create a single test, or two alternative tests, for the validity of an inter vivos trust executed on or after July 1, 1969, where the settlor is the sole trustee?
Opinions:
Majority - McDonald, Justice
Yes, Florida Statute § 689.075(1)(g) creates two alternative tests for the validity of an inter vivos trust where the settlor is the sole trustee. The plain language of subsection 689.075(1)(g), particularly the disjunctive effect of the words "either" and "or," unequivocally establishes two alternative tests: the trust instrument must be "either valid under the laws of the jurisdiction in which it is executed or it is executed in accordance with the formalities for the execution of wills required in such jurisdiction." Kahn’s written inter vivos trust of personal property, employing words sufficient to create a trust, was "otherwise valid" under Florida law, which requires fewer formalities for personal property trusts than for wills or real property conveyances. Therefore, it satisfied the first alternative test and did not need to comply with will execution formalities. The trust was also not a testamentary disposition, as it created a contingent equitable interest in remainder in Alter during Kahn's life, consistent with Restatement (Second) of Trusts § 56, cmt. f, and § 57, which clarifies that retaining powers or a life interest does not make a trust testamentary. The Court found the statute's language clear on its face and declined to speculate beyond its plain meaning.
Dissenting - Overton, Justice
No, Florida Statute § 689.075(1)(g) does not create two alternative tests, and the majority's interpretation is contrary to legislative intent. Justice Overton fully agreed with Justice Grimes's dissenting opinion regarding the history and interpretation of section 689.075, believing it to be correct and in full accord with the legislature's original intent. He strongly suggested that the legislature review the statute at its earliest opportunity due to the majority's decision.
Dissenting - Grimes, Justice
No, Florida Statute § 689.075(1)(g) was intended to require one-party trusts created in Florida to be executed with the formalities of a will. The legislative history is crucial for proper construction. The 1969 enactment of § 689.075 aimed to address uncertainty after Hanson v. Denckla, explicitly requiring one-party trusts (where the settlor is sole trustee) to be executed with will formalities. The 1971 amendment, which introduced the "either...or" language, was primarily intended to validate trusts properly executed in other jurisdictions with less stringent requirements, not to remove the will formality requirement for Florida-executed trusts. The majority's interpretation renders the will execution formality clause superfluous for Florida trusts, creating a circular logic that an "otherwise valid" trust is valid if it is "valid." Furthermore, the 1975 amendment's clarification that the will formality requirement "shall not be imposed upon any trust executed prior to July 1, 1969," strongly implies it is imposed on trusts executed after that date. Justice Grimes argued that a one-party trust that functions as a testamentary disposition (a "will substitute") should be executed with will formalities to ensure authenticity and prevent fraud.
Analysis:
This case significantly clarifies the formal requirements for inter vivos trusts in Florida, particularly those involving a sole trustee and personal property. By affirming that Florida Statute § 689.075(1)(g) presents two alternative tests, the court makes it easier for self-settled trusts of personal property to be valid without the strict execution formalities typically required for wills. This decision broadens the utility of such trusts as estate planning tools, potentially reducing technical invalidations for those not engaging comprehensive legal counsel. However, the dissent raises concerns about the majority's interpretation diverging from legislative intent, particularly regarding fraud prevention and the functional equivalence of these trusts to wills, which might prompt future legislative review or challenges to the statute's application.
