A recent case from the 5th District answers the question of when, and under what circumstances, can step children take an inheritance and disinherit lineal descendants. See Timmons v Timmons 35 Fla.L.Weekly D1264 (Fla. 5th DCA Case No. 08-4103).
When Frank died in 1999, he was married to Myrtle and had two adopted children from a previous marriage. Myrtle had four children, none of whom was ever adopted by Frank. Frank created two trusts, a family trust, and a marital trust. Myrtle was the sole income beneficiary of the trusts during her lifetime, and upon her death, the marital trust was to pour over into the family trust. The marital trust provided that upon Myrtle’s death, the trust’s remaining principal would pour over into the family trust and be distributed in accordance with the terms of the family trust. The family trust provided that upon Myrtle’s death, the trust assets were to be divided “into as many equal shares as there are children of mine then living and deceased children of mine leaving issue then surviving.”
Frank defined “children” in his will as including both his adopted children and Myrtle’s children. Several years after Frank’s death, Myrtle, using a limited power of appointment in the family trust, executed a document that attempted to grant all of the principal and income of the family trust, then in existence or later coming into the trust, to her four (4) natural children. The limited power of appointment in Frank’s Trust allowed Myrtle to direct the assets of the family trust to and among my then living lineal descendants. The trustees then were alleged to have commenced distributing certain trust assets to Myrtle’s children and denied Frank’s adopted children access to trust records.
Frank’s adopted children sued Myrtle for breach of fiduciary duty and for an accounting. They argued that Myrtle’s attempt to disinherit them was ineffective because the limited power of appointment could only be executed in favor of Frank’s “lineal descendants.”
The court said that “lineal descendant” or “descendent” as interpreted by Florida inheritance law is defined to mean “a person in any generational level down the applicable individual’s descending line.” Adopted children come within the definition of lineal descendants.
“A technical term used in a trust instrument should be accorded its legal definition unless obviously used by the settlor in a different sense. Here, we believe that Frank‘s will did not reflect an intent to expand the definition of lineal descendants to include stepchildren. Therefore, Myrtle’s purported exercise of the limited power of appointment in favor of her natural children was invalid.”
Definitions in Trust agreements can be boilerplate with little to no discussion between the Settler and Attorney of the impact of these depositions. Many times these issues become obvious only after death and when it is too late.
