How Choice of Law Can Affect Trust Litigation

A Trust is a legal document that gives certain property a trustee, which must then be administered on behalf of certain beneficiaries. But if a legal dispute arises over the administration–or even the validity–of the Trust, what state’s laws actually apply to the interpretation and enforcement of the trust documents? Put another way, where is a trust located for purposes of litigation?

What Florida Law Says

When a Florida court hears a trust dispute, state law provides the Trust should be interpreted according to the “law of the jurisdiction designated in the terms of the Trust,” with certain caveats. In other words, if the Trust instrument itself says which state’s law governs the Trust, then that’s the law the judge should apply.

The caveat is that there must be a “sufficient nexus to the designated jurisdiction at the time of the creation of the trust or during the trust administration.” This can mean a few different things, but here are some common examples:

• If the Trustee administers real property in Florida, then there is “sufficient nexus” between the Trust and Florida.
• Similarly, if either the Grantor, the Trustee, or any of the beneficiaries of the Trust live in Florida, there is also a sufficient nexus with this state.

If the Trust documents do not specify a choice of jurisdiction, then Florida law assumes that the law of the jurisdiction where the Grantor resided at the time the Trust is created should apply.

Choice of Law vs. Situs

It is also important to understand the distinction between the choice of law governing a Trust and the situs of the trust–that is to say, where the Trust is located for purposes of litigation. Even if a trust says it is subject to Florida law with respect to interpretation, another state may be considered the legal situs with jurisdiction to actually hear a lawsuit.

For example, in a 2005 trust lawsuit, Perry v. Agnew, three beneficiaries of a Trust sued the Trustee in Florida court. The Trust itself said it was governed by Florida law. But the Trustee lived and administered the trust in Massachusetts. Under the circumstances, the Florida Second District Court of Appeal said the beneficiaries had to file their complaint in Massachusetts court. This was consistent with Florida law, which states that unless the Trust provides differently, the situs of a Trust is “the Trustee’s usual place of business where the records pertaining to the trust are kept.”

Speak with a Florida Trust Litigation Attorney Today

Figuring out which law–and which state–has jurisdiction over a trust dispute is often a critical matter. This is why it is important to engage an experienced Pompano Beach estate and trust litigation lawyer who understands the complex rules governing these matters. If you need legal advice or representation in connection with a trust, contact the offices of Mark R. Manceri, P.A., Attorney at Law today to schedule a consultation.

Sources:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0736/Sections/0736.0107.html

3dca.flcourts.org/content/download/716870/opinion/200736_DC05_02032021_104233_i.pdf