Sibling Rivalry and Florida Trust Litigation

One of the commonly cited benefits of revocable trusts over wills is that the former affords families greater privacy when it comes to estate planning. The probate of a will is usually a matter of public record. A trust, in contrast, can remain private. Only the settlor of the trust, the trustees, and the named beneficiaries need know the contents of the trust. This is because as a general rule, a trust is not subject to probate or any form of ongoing judicial supervision.

Federal Court Declines to Dismiss Entire Lawsuit Based on Probate Exception

Of course, that is not the case if there is litigation involving the trust. A lawsuit against the trustee can make the entire trust a public matter. And while most people who make a trust do so because they believe it will minimize the chance for intra-family conflict after their death, we all know that is not always how things work out.

Consider this ongoing federal lawsuit, Gunton v. Lofquist, which involves a dispute between adult siblings over their late parents’ trust. The mother executed the original trust, which named her daughter as the sole trustee. When the mother died in 2020, the trust instrument created a new subtrust, called the Spouse’s Trust, for the benefit of the father. The father served as sole trustee of the Spouse’s Trust. When the father died two years later, in 2022, the mother’s trust directed that the couple’s two children–their daughter and son–each receive half of any remaining trust assets.

The son subsequently sued the daughter in Fort Myers federal court. He alleged the daughter, acting as trustee of the main trust, failed to appoint a trustee to take over the Spouse’s Trust upon their father’s death. This, in turn, has allegedly prevented the necessary funding of the son’s subtrust from the Spouse’s Trust. In short, the son accuses his sister of breaching her fiduciary duty as trustee.

The daughter replied by arguing the federal court had no jurisdiction over this case, it was essentially a Florida probate dispute. Under a longstanding legal principle known as the “probate exception,” federal courts must abstain from interfering with state courts’ exclusive jurisdiction over probate matters. In this case, the mother’s estate is still pending before a Florida probate court. But as the federal judge noted, it was not clear how this involved any of the trust assets, as in fact trust assets are typically not part of a probate estate.

Nevertheless, the federal judge found there was “overlap” between the assets of the mother’s estate and “the assets of some of the sub trusts.” Specifically, the judge held that a federal court could not order distribution of assets to the son’s subtrust until the mother’s estate was administered. As such, the court dismissed that specific part of the son’s lawsuit, although the judge allowed the rest of the case to proceed.

Contact Attorney Mark R. Manceri Today

The administration of any trust is an important responsibility. Family members who feel wronged by a trustee’s actions will not hesitate to take legal action to vindicate what they consider their rights. If you are involved in such a dispute and need legal advice from a qualified Pompano Beach trustee dispute lawyer, contact the office of Mark R. Manceri, P.A., today to schedule a consultation.

Source:

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