Florida Court Dismisses Trust’s Lawsuit Against Grantor’s Estate Over “Unpaid Rent”

Estate planning trusts are commonly used to hold and manage real estate. Indeed, many Florida residents take advantage of trusts to own and transfer their personal residences outside of the normal probate process, while still preserving their ability to keep living at home during their lifetimes. While such arrangements usually benefit all parties involved, there are situations where litigation may arise.

A recent decision from the Florida Third District Court of Appeal, The Duffner Family 2012 Irrevocable Trust v. The Lee R. Duffner Revocable Living Trust, offers a case in point. This somewhat complicated scenario involved a father, mother, and their three adult daughters. The father and mother purchased a home in Golden Beach, Florida, in the 1970s. In 2008, the wife moved into a long-term nursing care facility while the father remained in the house.

At that point, one of the daughters persuaded the father to revise his estate plan. In 2021, the father created what became known as the Family Trust. This was a revocable trust with the father as grantor and trustee and the three daughters as beneficiaries. The trust expressly retained the father’s right to control the property in the trust, which included the family home in Golden Beach.

To that end, the father then signed a deed transferring title to the property to the Family Trust. He then signed a 99-year lease on behalf of himself and his wife renting the property back from the trust. (This is known as a “leaseback” transaction.) Under the terms of the lease, the tenant–the father and mother–were responsible for paying fair-market value rent to the Family Trust each month. In the event of default, the trust could terminate the lease or commence eviction proceedings.

Two years after creating this new estate plan, the father sued his daughters in Florida court. He sought to rescind the trust and the lease, alleging he acted under the undue influence of one of his daughters. Unfortunately, both the father and the mother died while this litigation was pending. The court ended up dismissing the lawsuit.

But that was not the end of the litigation. The Family Trust proceeded to sell the home and divide the proceeds between the daughters. The Trust then filed a new lawsuit against the father’s estate, alleging the Trust was owed 99 years of unpaid rent under the lease. The estate objected to the claim. The probate court determined that under the terms of the lease, the Trust’s only options were termination or eviction. There was no available remedy for seeking unpaid rent.

The Third District affirmed that decision. It noted that under Florida law, a landlord must first obtain an eviction judgment before “standing idly by” and suing to collect any unpaid rent. Here, the Trust never sought eviction or termination for obvious reasons–the father remained in control of the Trust during his lifetime. And since the whole point of the Trust was to allow him to remain in the house, it was never in his interest to initiate such proceedings.

Contact a Pompano Beach Trust Litigation Lawyer Today

Ideally, an estate plan helps prevent family members from fighting one another in court over a loved one’s property. Unfortunately, that is not always the reality. If you need legal advice or representation from a skilled Pompano Beach estate and trust litigation attorney, contact the offices of Mark R. Manceri, P.A., today to schedule a consultation.

Source:

3dca.flcourts.gov/content/download/2438430/opinion/Opinion_2023-1626.pdf