WHEN OUT-OF- STATE ESTATE PLANNING DOCUMENTS DO NOT ACHIEVE THEIR OBJECTIVES UNDER FLORIDA LAW
“There is nothing more important than a good, safe, secure home.” Rosalynn Carter
Often, out-of-state residents own property in Florida and have their estate planning documents prepared out-of-state, without consulting with competent Florida counsel to inquire if their estate planning documents will achieve their objectives and goals under Florida Law.
In July of 1996, Hillard J. Aronson resided in Massachusetts with his second wife, Doreen Aronson, and Mr. Aronson was the owner of a condominium located in Key Biscayne, Florida. He decided to create a revocable trust in which he was both a life beneficiary and a trustee, and upon his death, his trust created a life-time irrevocable marital trust for his wife, Doreen, with remainder to his two sons from his prior marriage. Mr. Aronson then deeded the Florida condominium to himself as the trustee of his revocable trust. Mr. Aronson’s plan was that the trust was to provide the use of the trust assets for his wife, Doreen, for her lifetime, and upon her death, the remainder was to go to his two sons from his prior marriage. In addition, Doreen had the right to require the successor trustees (who were Mr. Aronson’s two sons) to annually distribute to her an additional 5% of the trust or $5,000.00, whichever was greater.
Then, in December of 1996, Mr. Aronson deeded the Florida condominium to his wife, Doreen by quitclaim deed. Several years later, Mr. and Mrs. Aronson sold their home in Massachusetts and permanently moved into the Key Biscayne, Florida condominium, which became their homestead property. Approximately a year later, Mr. Aronson died, and the only asset in his trust was the Florida condominium.
Mr. Aronson’s two sons individually and in their capacity as successor trustees of Mr. Aronson’s trust filed a Complaint seeking a declaratory judgment to invalidate the conveyance to Doreen on the ground that the property has already been conveyed to Mr. Aronson’s trust in July of 1996. In 2006, the Third District Court of Appeal of Florida held that the quitclaim deed transferring the Florida condominium to Doreen was invalid, which would ensure that the Florida condominium remained a trust asset.
Doreen Aronson responded by filing suit to enforce all of her rights to the Florida condominium under the terms of the marital trust. Doreen sued for reimbursement of all of the expenses related to the condominium she paid with her own funds, and for payment of all mandatory principal distribution rights under the marital trust. At this time, Mr. Aronson’s trust owned only one asset, which was the Florida condominium. The two options that Court could rule upon were as follows: 1) sell the condominium and pay Doreen from the sales proceeds (but this would force Doreen out of her home), or 2) transfer a percentage of the condominium’s ownership interest to Doreen. Mr. Aronson’s two sons wanted the Court to require the sale of the condominium and pay Doreen from the sales proceeds, which would force her to move, and the two sons won at the trial level. Doreen Aronson appealed the Court’s decision because the Florida condominium was Mr. Aronson’s homestead property, and he was survived by his wife, Doreen, so she believed the condominium was not subject to disposition through Mr. Aronson’s trust.
In Aronson v. Aronson, 81 So.3d 515 (Fla. 3rd DCA 2012), the Court ruled that because the condominium was homestead property, a life estate in the condominium passed to Mr. Aronson’s surviving spouse, Doreen, with the vested remainder to Mr. Aronson’s two sons, who had no power as the successor trustees to sell or transfer the condominium. The Court ruled that it was indisputable that the Key Biscayne, Florida condominium was Mr. Aronson’s homestead property at the time of his demise, and that Article X, Section 4 of the Florida Constitution provided that “[t]he homestead shall not be subject to devise if the owner is survived by a spouse or minor child, except the homestead may be devised to the owner’s spouse if there be no minor child.” Id. “The Florida legislature had made clear its command that this provision shall apply equally to property held by a revocable trust as to testamentary bequests.” Aronson v. Aronson, 81 So.3d 515 (Fla. 3rd DCA 2012).
Therefore, because the Key Biscayne, Florida condominium was Hillard Aronson’s homestead, and because his wife, Doreen, survived him, the condominium was not subject to disposition through Mr. Aronson’s trust document, as he had intended. Instead, it passed outside of the trust to Doreen for her life, with the remainder to his two sons, leaving the trust completely empty, and Mr. Aronson’s Massachusetts estate plans completely derailed.
Florida property owners with out-of-state estate planning documents should consult with a competent Florida attorney to ensure that their estate plan will achieve their goals under Florida law instead of having completely unintended consequences, as in the case of Aronson v. Aronson, 81 So.3d 515 (Fla. 3rd DCA 2012).