Understanding the limits of and exceptions to intent.
The Most Common Limitation
The most common and arguably the most misunderstood limitation on an individual's intent is the limitation the document itself places on a trustee's otherwise apparent broad power or authority. Consider, for example, the following invasion provision: "The trustee may pay to my wife so much of the corpus of the trust estate as the trustee, in his sole and absolute discretion, deems appropriate for her health, support, or happiness. My trustee need not act reasonably when exercising this discretion." The above provision is clear and unambiguous. In such cases, words are supposed to be accorded their usual, ordinary, or commonly accepted meanings. (1) Further, a court must assume that a testator (and presumably a settlor) meant what was said in the will (or in the trust). (2)
Based on the use of the conjunction "or" in the above provision, one might think that "happiness" is an independent standard for invading the trust, and that the settlor wants to give the trustee complete and total authority over whether to make a distribution to his wife, when to make distributions, and the amount of any distribution. Additionally, when considering the extent of the discretion granted, the use of the term "happiness," and the statement that the trustee does not have to act reasonably, it appears that the trustee could distribute the entire corpus of the trust to the wife if she told him that such a distribution would make her happy. (3)
Undoubtedly, the intent of the testator controls, governs, or determines the construction of a will. (4) But an individual's intent is not ascertained from some random term, phrase, or paragraph of a will or trust. Rather, "[i]ntent is ascertained from the four corners of the document through consideration of all the provisions of the will taken together, rather than from detached portions or any particular form of words. This rule prevails whether the entire will or some specific clause or part of it is being construed." (5)
Confirming the above approach, another court stated, "The interpretation of any integral part of a will must be based on the total will, construed solely in the light of the testator's intent gathered from the complete instrument." (6) The Florida Supreme Court stated, "a court must ascertain and determine a testator's 'paramount' intention and take this as its guide." (7) Scott on Trusts states, "[t]he extent of the powers conferred on a trustee does not depend only on the language used by the settlor in creating the trust but may depend also on the purposes for which the trust is created." (8)
Taking all of the above into account, the primary question that needs to be addressed is what the instrument as a whole indicates that the individual's paramount or overall intent was for creating the trust. Once that is established, one must use that finding as the guide for determining what the testator or settlor meant.
With the above parameters in mind, assume that the last provision of this same trust provides as follows: STATEMENT OF INTENT. I love both my wife and my children equally. However, this is a second marriage. She has children from her first marriage and I have children from my first marriage. After my death I want my wife to be supported in the same manner to which she was accustomed to during our marriage. With this in mind, I want the trust administered in such a manner as to preserve as much of the trust estate as possible for my children and their descendants who are the ultimate objects of my bounty.
The above statement changes the whole understanding of the settlor's intention. The invasion provision indicated that the settlor wanted to create something akin to a total discretionary trust. However, whether that language should be accorded its broadest breath or application is dependent upon the intent of the testator or settlor as gathered from a reading of the entire will or trust, not just from an isolated paragraph. (9) This statement of intent provision creates an ambiguity as to the settlor's true intention. As a result, the plain and ordinary meaning of the language used would not be the only source from which to interpret the will or trust. Extrinsic evidence could be introduced to explain what the settlor actually meant.
Florida law is very clear that isolated words, phrases, and even paragraphs are not the determining factors regarding someone's intent. (10) The whole document must be considered. The overall plan or scheme gleaned from a reading of the entire instrument sets forth the tone for how specific provisions should be construed. (11) If the general intention of the testator is clear, a court will give effect to such intention, disregarding the particular intent of the particular clause. (12)
The above statement of intent provision almost certainly conveys the settlor's general dispositional scheme and the purposes for which the trust was created. It emphasizes a balanced approach between supporting his wife while at the same time not distributing so much of the trust to her that it diminishes his children's inheritance. It indicates that the term "happiness" should not be accorded its broadest application. It creates substantial doubt that the phrase, "My trustee need not act reasonably" is to be taken literally. Finally, it shows that he does not want the trustee to have absolute authority as to whether and when to make a distribution and the amount of any distribution. It shows he clearly wants there to be some limits on what is distributed.
When Is a Will or Trust Ambiguous?
Too many attorneys attempt to determine an individual's intent based solely on isolated terms or phrases used in the will or trust. This is a common mistake. The invasion provision set forth at the beginning of this article is arguably clear and unambiguous on its face. However, the question is not whether a specific invasion provision is clear and unambiguous. The proper question is whether the will or trust, taken in its entirety, is ambiguous.
In order to have a court construe a will or trust, an attorney must show that there is an ambiguity in the document. (13) Just because the opposing parties in litigation ascribe different meanings to the language in a will or trust does not mean that the will or trust is ambiguous. (14) If there is no ambiguity, then no extrinsic evidence may be submitted (15) and the will's or trust's effect can be determined as a matter of law.
Patent vs. Latent Ambiguity
In order for a court to construe a will, there must be an ambiguity. The ambiguity can be either patent or latent. A patent ambiguity is one which is readily apparent from a reading of the will. If a will's language is not patently ambiguous on its face, the will is not patently ambiguous. (16)
A latent ambiguity arises when in applying the words of a will (or a trust) to the subject matter of a devise, it renders the will (or trust) ambiguous. (17) The language of the invasion provision set forth at the beginning of this article is not patently ambiguous on its face. However, when you read the invasion provision in conjunction with the statement of intent provision, there is an obvious ambiguity. Specifically, when you apply the intent provision (i.e., the words of the entire will) to the invasion provision (the subject matter of the devise), it is not clear even to a trained mind how much authority the decedent intended to convey to the trustee. Therefore, what we have here is a latent ambiguity.
Once the testator's or settlor's general dispositional scheme has been determined, an attempt must be made to reconcile inconsistent provisions. (18) If no evidence of surrounding circumstances is available or submitted as evidence, what effect should be given to the above invasion provision? Since reconciliation of the two provisions appears not to be possible, the intent as indicated in the statement of intent provision should prevail for two reasons. First, it almost certainly sets forth the settlor's general dispositional scheme and his purpose for creating the trust. When there is an inconsistency between a provision of the will or trust versus the settlor's general dispositional scheme, the rule is that the overall dispositional scheme should prevail. (19) Second, where two provisions of a will or trust conflict, the latter provision should prevail because it constitutes the last expression of the testator's or settlor's intent. (20)
Understanding the Exceptions to the General Rule
Florida Jurisprudence makes the following statement regarding a testator's intent: "Perhaps the most repeated formulation of the central principle governing the interpretation of wills is that the testator's intention, as expressed in the will, must prevail over all other considerations, if that intention is consistent with the principles of law." (21) The phrase "principles of law" includes public policy, the Florida Constitution, state statutes, and rules of law. There are two instances in which the intent of the testator or settlor will not prevail. The first exception to the general rule that the intent of an individual controls is when that intent violates some public policy of the state of Florida. Over the years, most public policy concerns have been codified and, therefore, an example of a noncodified prohibition is hard to cite. Regarding codified public policy, however, probably the best example is a will or trust provision that attempts to take away a court's jurisdiction from deciding certain issues relating to the will or trust. (22) Such a provision is so contrary to the principles of justice that no court would honor it.
A second exception to the general rule that the intent of the individual controls is whenever the settlor's intent violates some law, rule of law, or principle of law.
* Statutory Provisions--Regarding how statutes limit an individual's intent, [section] 736.0105(2) of the new Florida Trust Code sets forth certain mandatory provisions that a settlor cannot draft around. As to these provisions, a settlor's intent, no matter how clear and unambiguous, will not be followed.
Another example of how this exception applies is with an "in terrorem" clause in a will. Clearly, F.S. [section] 732.517 prohibits such a provision and, therefore, a testator's contrary intention must yield to this statute.
* Court-made Rules--How does this exception apply when a settlor's or testator's intent conflicts with some court-made rule? The answer depends on the type of rule in question. With a rule of construction or a rule of interpretation, the testator's or settlor's intent clearly controls. (22) However, if it is a rule of law, then the rule of law should prevail. Problems occur, however, determining what constitutes a rule of law.
Consider the invasion standard set forth at the beginning of this article. That provision provided that the trustee did not have to act reasonably when exercising absolute discretion. Not having to act reasonably when the trustee is granted absolute discretion over trust distributions is the Restatement Second's position on this issue. (23) Can a testator or settlor effectively provide that it is not necessary that a trustee act reasonably when exercising absolute discretion? The answer depends on whether he or she is violating some rule of law by doing so.
As explained in Black's Law Dictionary, the Restatement is merely a treatise. The only time the Restatement approach is binding upon a state court is when it has been adopted by the highest court of that state. (24) The Florida Supreme Court has not adopted the Restatement (Second) approach as it relates to absolute discretion. Instead, the Florida Supreme Court in the case of Wallace v. Julier, 3 So. 2d 711 (Fla. 1941), sitting in banc, decided in a unanimous decision that whenever a trustee is granted absolute discretion, the trustee must act reasonably. (25)
Does the Supreme Court's ruling regarding absolute discretion constitute a rule of law that would bring into play this second exception? In this respect, Black's Law Dictionary defines a rule of law in two ways. In its strict legal sense, it defines it as "a substantial legal principle." In its everyday sense, it defines it as "[l]oosely, a legal ruling; a ruling on a point of law." Under this later definition, just about any legal ruling on a point of law qualifies.
Black's indicates that a legal principle is some principle relating to "substance." If you look at how Black's defines "substantive law," you will see that it is defined as that part of law that "creates, defines, and regulates the rights, duties and powers of parties."
Presumably a Florida court, in any case determining whether there was a violation of a rule of law, would rely on the strict legal definition. Therefore, a rule of law would be any court ruling that creates, defines, or regulates the duties of a trustee. That is exactly what the Florida Supreme Court promulgated in Julier. It created a rule defining a trustee's duties when the trustee possesses absolute discretion. Therefore, any attempt at dispensing with this duty of acting reasonably when absolute discretion is granted should be found to be a violation of a rule of law.
One might think that the Florida Probate Rules would not be considered to be rules of law. However, most of the probate rules have underlying statutes supporting them and, therefore, are based on laws. Thus, it is unlikely that a testator's contrary intent would control.
Are there any instances in which an individual's intent will prevail over a rule of law? Consider legal presumptions. At least one court has stated that a legal presumption is a rule of law. (26) If this is so, then at least in one instance, an individual's intent will control when it conflicts with a rule of law. Looking at this issue closer, however, maybe this court was defining the phrase "rule of law" in its looser everyday sense. Regardless, a legal presumption is just that, a presumption, and as such can be overridden by a testator's or settlor's contrary intent.
* Absurd Results--Florida Jurisprudence states that one other instance in which a settlor's literal intent as expressed in a will (or a trust) will not control is whenever that meaning leads to an absurd result.27 Bryan v. Dethlefs, 959 So. 2d 314 (Fla. 3d DCA 2007), is the sole case cited in support of this position. In that case, the trust provided: "Distribution to Grandson: Upon my death, the then balance of principal and accumulated income remaining in the trust shall be distributed to my grandson, ROBERT R. BIZZELL, if he is living at the time of distribution. If he is not living at the time of distribution then...." (28) The grandchild survived his grandparent, but died prior to the balance of his share being distributed.
It appears that the above provision is ambiguous. If the definition of an ambiguity is something that can be variously interpreted, does not the above provision fall within that definition? The parties agreed, however, that the trust provision was unambiguous. As a result, the court did not permit parol evidence that might have explained this apparent ambiguity. (29)
The court found that the language of the trust showed an intention to vest the trust assets in the grandson at his grandfather's death. (30) In light of this indication of the grandfather's intent (his general dispositional scheme), the "time of distribution" language constituted either an isolated phrase or isolated language, which, under case law such as Roberts v. Sarros, 920 So. 2d 193 (Fla. 2d DCA 2006), should be ignored.
It appears that this case was decided based on the rules previously discussed herein regarding ascertaining the testator's general dispositional scheme from a reading of the whole trust. It is suggested that an absurd result in and by itself is not a sufficient reason against a certain construction being accorded to a will or trust. There are instances in which a testator intends what might be considered to be an absurd or an unjust result. (31) As the Florida Supreme Court stated, however, "[W]e must assume that he meant what was said in the will." (32) As long as the result does not violate public policy, it should be honored as the testator's intent. The possibility of an absurd result is just one factor that should be considered in the bigger and paramount determination of the testator's intent. Therefore, regarding any assertion in Florida Jurisprudence that the intent of a testator or settlor as indicated in the document will in all cases not be honored when the meaning applied leads to an absurd result, this author does not agree.
* Unambiguous Wills--Up to this point this article has involved wills that contain an ambiguity. What rules apply when a will is clearly unambiguous? In this respect there are two rules observed in many states commonly referred to as the "plain language rule" and the "no reformation rule." Under the plain language rule, if the language of a will is clear and unambiguous, then no extrinsic evidence may be introduced to add to, vary, or contradict the language of the will. An individual's intent can only be determined based on the plain and ordinary meaning of the language used in the will, even when there is evidence of an obvious mistake. The no reformation rule is a related rule and prevents any reformation of a will even to correct obvious mistakes.
A number of Florida courts have stated it is not what the testator had in mind when executing a will, but rather what he or she expresses in the will that controls. (33) These cases seem to confirm that in Florida, the plain language rule applies. Therefore, when a will is unambiguous, the only source of ascertaining a testator's intent is the language of the will.
The Restatement (Third) of Property makes the following statement applicable to wills: "When a donative document is unambiguous, evidence suggesting that the terms of the document vary from intention is inherently suspect but possibly correct." (34)
The above statement points out the irony of rules such as the plain language rule and the no reformation rule. Although in theory the purpose of these rules is intent-serving, in practice these rules may defeat a testator's actual intent.
In recent years, a few states have questioned the longstanding rule that with an unambiguous will, the individual's intent can only be ascertained based on the language set forth therein. (35) Regarding this aspect, the Restatement states: "The trend away from insisting on strict compliance with statutory formalities is based on a growing acceptance of the broader principle that mistake, whether in execution or in expression, should not be allowed to defeat intention." (36)
Particularly in situations in which a mistake is obvious, a few courts have been willing to permit extrinsic evidence to add to, vary, or even contradict the language of a will. (37) To counter the possibility of unreliable and contrived extrinsic evidence being introduced, these courts have imposed the higher burden of proof test of "clear and convincing" evidence in such cases.
The problem with the plain meaning rule and the no reformation rule is that, in certain cases, they deny to individuals remedies when there is evidence that is genuine and persuasive. (38) Query, therefore, whether this is an issue that possibly should be revisited by Florida courts, particularly considering how "will substitutes" are dealt with under the new Florida Trust Code (FTC).
* Unambiguous Trusts--Section 736.04115 of the FTC is a variation of [section] 415 of the UTC. It permits judicial modification of trusts (other than revocable trusts) when in the best interests of beneficiaries. It constitutes a deviation from the general rule governing intent since, with an unambiguous trust, it still allows a court to determine intent from sources other than the plain language of the trust.
Section 736.04115 permits a court to consider extrinsic evidence relevant to the proposed modification. Consequently, statements by the drafting attorney and other evidence can add to, vary, clarify, or even contradict unambiguous language in the instrument. Interestingly, the statute does not require the higher standard of "clear and convincing" proof that UTC [section] 415 of the expressly requires. Such failure to require a higher burden of proof exposes this modification procedure to the introduction of unreliable or contrived evidence. (39) Therefore, this possibility of tainted evidence might be sufficient reason why many clients might want to expressly prohibit judicial modification of their trusts, which F.S. [section] 736.04115(3)(b)2 specifically permits.
Ascertaining a settlor's intention continues to be an issue that many attorneys struggle with. Consequently, if only one tip is derived from this article it should be the recognition of the benefit to a client of clearly setting forth his or her intention in will or trust.
(1) Barley v. Barcus, 877 So. 2d 42 (Fla. 5th DCA 2004); Floyd v. Smith, 51 So. 537 (Fla. 1910); First Nat. Bank of Florida v. Moffett, 479 So. 2d 312 (Fla. 5th DCA 1985).
(2) Wallace v. Wallace, 160 So. 377 (Fla. 1935).
(3) See Commissioner of Internal Revenue Service v. Merchant's National Bank, 132 F.2d 483, 486 (1st Cir. 1942); see also Combs v. Carey's Trustee, 287 SW.2d 443 (Ky. Ct. App. 1955).
(4) Adams v. Vidal, 60 So. 2d 545 (Fla. 1952).
(5) Sorrels v. McNally, 105 So. 106, 109 (Fla. 1925); Bryan v. Dethlefs, 959 So. 2d 314 (Fla. 3d DCA 2007).
(6) Park Lake Presbyterian Church v. Henry's Estate, 106 So. 2d 215 (Fla. 2d DCA 1958).
(7) Wallace v. Julier, 3 So. 2d 711 (Fla. 1941).
(8) AUSTIN WAKEMAN SCOTT, 3 SCOTT ON TRUSTS, Ch. 7, [section] 186 at 7 (4th ed.).
(9) State v. North, 32 So. 2d 14 (Fla. 1947).
(11) In re Estate of Lesher, 365 So. 2d 815 (Fla. 1st DCA 1979).
(12) West v. Francioni, 488 So. 2d 571 (Fla. 3d DCA 1986).
(13) Barley v. Barcus, 877 So. 2d 42 (Fla. 5th DCA 2004).
(14) Kipp v. Kipp, 844 So. 2d 691, 693 (Fla. 4th DCA 2003).
(15) Howe v. Sands, 194 So. 798 (Fla. 1940); First Union Nat. Bank of Fla. v. Frumkin, 659 So. 2d 463, 464 (Fla. 3d DCA 1995); Roberts v. Sarros, 920 So. 2d 193 (Fla. 2d DCA 2006).
(16) Jones v. Jones, 412 So. 2d 387 (Fla. 2d DCA 1982).
(17) Perkins v. O'Donald, 82 So. 401 (Fla. 1919).
(18) Meszaros v. Holsberry, 84 So. 2d 565 (Fla. 1956).
(19) West v. Francioni, 488 So. 2d 571 (Fla. 3d DCA 1986).
(20) Elliot v. Krause, 531 So. 2d 74 (Fla. 1987); In re Smith's Estate, 75 So. 2d 686 (Fla. 1954); Jureski v. Scaduto, 882 So. 2d 1061 (Fla. 4th DCA 2004).
(21) 18 FLA. JUR. 2d, Decedent's Property, [section] 336 (2013).
(22) Sternberg v. Florida Nat. Bank of Jacksonville, 154 So. 844 (Fla. 1934); see also FLA. STAT. [section] [section] 732.6005(1) (2001) and 736.1101(1) (2006), which both provide that the rules of construction set forth therein are subject to the contrary intent of the testator or settlor.
(23) RESTATEMENT (SECOND) OF TRUSTS, [section] 187, Comment J (1959).
(24) BLACK'S LAW DICTIONARY 1428 (8th ed. 2005).
(25) Julier, 3 So. 2d at 717; see also Dunkley v. Peoples Bank and Trust Co., 728 F. Supp. 547 (W.D. Ark. 1989).
(26) Bohmont v. Moore, 295 N.W. 419 (Neb. 1940).
(27) 18 FLA. JUR. 2d, Decedent's Property, [section] 339 (2013).
(28) Bryan, 959 So. 2d at 316 (emphasis in original).
(29) Id. at 317.
(30) Id. at 318.
(31) Sands v. Fly, 292 SW.2d 706 (1956).
(32) Wallace, 160 So. at 383.
(33) Howe v. Sands, 194 So. 798 (Fla. 1940); Iles v. Iles, 29 So. 2d 21 (Fla. 1947); Bowe v. Howe, 171 So. 667 (Fla. 1935); In re Pratt's Estate, 88 So. 2d 499 (Fla. 1956); Pajares v. Donahue, 33 So. 3d 700 (4th DCA 2010).
(34) RESTATEMENT (THIRD) OF PROPERTY, [section] 12.1, Comment B.
(35) See Langbein & Waggoner, Reformation of Wills on Ground of Mistake: Change of Direction in American Law, 130 Univ. Pa. L. Rev. at 521 (Jan. 1982); see also Langbein, Curing Execution Errors and Mistaken Terms in Wills, LAW TRENDS & NEWS ESTATE PLANNING, GP/ SOLO (Sept. 2005), available at https:// www.americanbar.org/newsletter/publications/law_trends_news_practice_ area_e_newsletter_home/executionerrors.html.
(36) RESTATEMENT (THIHD) OF PROPERTY, [section] 12.1, Comment C (2000).
(37) Engle v. Engle, 377 A.2d 892 (N.J. 1.977); Estate of Taft, 6y Cal. App. 3d 319 (1976).
(38) A mistake of expression occurs when the terms of the trust mistake the settlor's intention, fail to include a term that was intended to be included, or include a term that was not intended to be included. UNIFORM TRUST CODE [section] 415, Comment (27710).
Peter B. Tiernan practices in Margate and concentrates in the areas of estate planning and taxation. He is the author of 26 articles on estate, trust, and tax issues.
This column submitted on behalf of the Real Property, Probate and Trust Section, Margaret Ann Rolando, chair, and Kristen Lynch and David Brittain, editors.
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|Title Annotation:||wills and trusts; Florida|
|Author:||Tiernan, Peter B.|
|Publication:||Florida Bar Journal|
|Date:||Jan 1, 2014|
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