28 Jan ATTORNEY GENERAL’S ESTATE PLANNING FLAWED
Former Attorney General Janet Reno (appointed by President Clinton) created and funded a revocable living trust prior to her death in 2016. She was not married and had no descendants. Her trust had a specific bequest of her mostly underdeveloped four acre ranch home in the Miami area (that she had inherited from her mother who built the home by hand in the 1940’s) to the University of Miami on the condition that the property remain undeveloped and to keep and maintain the property as it was at the time of her passing. The remainder of her estate was to pass to her seven nephews and nieces. Unfortunately, the University of Miami decided the maintenance was too expensive, so it refused the bequest. Since the trust did not say what happened if the University declined acceptance, it began a legal battle as to whether another university in the area could accept the bequest or would the property pass to the seven nieces and nephews. The trustee went to court which decided the trust could be modified in a manner consistent with her charitable purposes. Miami-Dade College agreed to accept and maintain the ranch.
One of the nieces appealed the decision of the lower court arguing that her aunt’s intent that the property go to the University of Miami could not be fulfilled. As a result, she asked for a ruling that the property be sold and the proceeds be distributed to the seven nieces and nephews notwithstanding Attorney General Reno’s desire it remain in its unique condition. The niece argued that a revocable trust becomes irrevocable on death and could not be modified by the court or else it would alter anyone’s right to freely devise away their assets. The case has been appealed to the Florida Supreme Court.
In Texas, even an irrevocable trust can be modified for five reasons including two that would be appropriate in this case: (1) the purposes of the trust have been fulfilled, have become illegal or impossible to fulfill; and (2) based upon circumstances not known to be anticipated by the creator of the trust, terminating the trust will further the purpose of the trust. Thus, in this author’s opinion that Texas courts would agree with the decision of the Florida lower court in light of (1) above so Miami-Dade College could be the beneficiary by court modification.
However, the lesson learned is that whenever you have a bequest, there should be an alternate beneficiary or guidance to the executor or trustee if the bequest cannot be realized for whatever reason.
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