Can the Settlor of a Trust Gift the Trust Property Back to Herself?

A revocable trust is one where the settlor–the person who created and funded the trust–has the right to revoke the trust at any point during their lifetime. Revocation is not all-or-nothing. It is possible to partially revoke a trust. For example, the settlor can remove certain assets from the trust, returning legal title to the property to themselves.

Florida Appeals Court Rejected Son’s Challenge to Mother’s Handling of Her Condo

Of course, there may still be litigation over such partial revocations even after the settlor dies. A 2020 Florida case, Schlossberg v. Estate of Kaporovsky, provided an unusual example of this concept. Here, the son of a deceased settlor argued that his mother improperly gifted trust assets to herself before she died. Although a trial court went along with this, the Florida Fourth District Court of Appeals held it was a nonsensical interpretation of what happened.

So what did happen? The deceased settlor, Sadie Kaporovsky, owned a condo in Palm Beach. In 2000, she signed a deed conveying the condo to herself and her daughter, Candy Wisotsky, as joint tenants with right of survivorship. This meant that if either woman died, the other would automatically hold full title to the condo.

Four years later, however, Kaporovsky created a revocable living trust. The trust documents named Kaporovsky and Wisotsky as co-trustees. Kaporovsky then signed a new deed conveying her interest in the Palm Beach condo to the trust. This effectively abolished Wisotsky’s right of survivorship in the condo. Wisotsky and the trust now each owned an undivided interest in the condo.

A year later, in 2005, there was a third deed, which Kaporovsky and Wisotsky signed as co-trustees. This deed partially revoked the trust with respect to the condo. Specifically, the deed granted Kaporovsky a life estate in the condo, and upon her death, with Wisotsky holding a “remainder interest.” Basically, this again meant that when Kaporovsky died, Wisotsky would become sole owner of the condo.

Kaporovsky died in 2009. Wisotsky then sold the condo to Jack Scholssberg. But that was not the end of the matter. Kaporovsky’s son, Matthew Hirschhorn, was named personal representative of his mother’s estate. Litigation ensued between Hirschhorn, Wisotsky, and Schlossberg.

According to Hirschhorn, the 2005 deed partially revoking the trust and granting a life estate in the condo to Kaporovsky was invalid, and that her estate still owned a one-half interest in the condo. Hirschhorn argued his mother violated her own trust by gifting the condo back to herself. The Fourth District disagreed. It held “the trustees had the authority to convey the property to [Kaporovsky] within the terms of the trust, either as a principal distribution for her use or as a partial revocation of the trust.” Kaporovsky could then sign a life estate deed naming Wisotsky as the remainder beneficiary.

Contact a Pompano Beach Trust Litigation Attorney Today

Even where a trust document is clear about a settlor’s rights, family members may still choose to pursue litigation after the settlor’s death if they think they have a solid case. If you find yourself a party to such a dispute, our Pompano Beach estate and trust litigation attorney may be able to help. Contact the offices of Mark R. Manceri, P.A., today to schedule a consultation.

Source:

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