Florida Appeals Court: Deed Operates To Partially Revoke Trust

A deed can operate to partially revoke a Florida revocable trust when the trust permits revocation by written instrument.  In the May 2020 opinion of Schlossberg v. Estate of Kaporovsky, Florida’s Fourth District Court of Appeals reversed a trial court’s decision invalidating a deed executed by co-trustees as an impermissible act under the trust.

The Facts of Schlossberg

Sadie Kaporovsky owned a condominium in Palm Beach County.  In 2000, Sadie executed a deed conveying ownership of the condominium to herself and her daughter, Wisotsky, as joint tenants with right of survivorship.

In 2004, Sadie established a revocable trust, appointing Sadie and Wisotsky as co-trustees.  The trust, as amended, required that all acts and powers exercised by the trustees be performed by both trustees.

Also in 2004, Sadie executed a deed conveying her interest in the condominium from Sadie, “a single woman grantor” to Sadie as Trustee of the Trust “Grantee.”  At that point, the Trust and Wisotsky each owned an undivided interest in the condominium.

In 2005, another deed was executed, transferring the condominium from the Trust to Sadie and the remainder to Wisotsky.  The 2005 deed conveyed the condo unit as follows:

This Quit-Claim Deed, Executed this 16th day of September, A.D. 2005 by SADIE KAPOROVSKY, a single woman and CANDY WISOTSKY, a single woman, individually and as Trustees of the SADIE KAPOROVSKY INTERVIVOS TRUST AGREEMENT dated April 29, 2004 first party, to SADIE KAPOROVSKY, a life estate, with the remainder to CANDY WISOTSKY . . . . second party.

The deed was signed by both Sadie and Wisotsky, both individually and as trustees.

To recap, the deed chain was as follows:

  • 2000 deed: Sadie, grantor, to Sadie and Wisotsky as joint tenants with right of survivorship.
  • 2004 deed: Sadie, grantor, to Sadie, as trustee of the Trust.
  • 2005 deed: Sadie and Wisotsky, individually and as trustees, to Sadie, a life estate, with the remainder to Wisotsky.

Sadie died in February 2009.  Wisotsky held title to the entire condominium because of Sadie’s death.  Wisotsky sold the condominium to Schlossberg in July.

Inheritance Litigation Begins

Inheritance litigation began between Wisotsky and Sadie’s son, Hirschhorn.  Hirschhorn claimed that the 2005 deed of the remainder interest of Wisotsky was void, because “the trustees were only permitted by the trust to distribute/transfer Trust property to the settlor or for the benefit of the settlor. Hirschhorn claimed the transfer of the remainder interest to Wisotsky was not for the benefit of the settlor. By conveying the remainder interest, Hirschhorn claimed Wisotsky improperly gifted trust property to herself in violation of the terms of the Trust.”

Hirschhorn claimed that when Wisotsky sold the condominium to Schlossberg, she only had a one-half interest to convey (from the 2000 deed), and that the other half was owned by the Estate.

In response, Schlossberg argued that Sadie had the power to execute the deed, and that Schlossberg was a bona fide purchaser for value and therefore title passed to him as such.

The trial court determined on summary judgment that:

  • The 2005 deed gifting to Wisotsky the remainder interest in the condominium was beyond the trustees’ powers granted by the trust, because it was not for the settlor’s benefit.
  • The trustees did not have authority to gift the remainder interest to Wisotsky, who also acted with a conflict of interest in conveying the remainder interest to herself.
  • The 2005 deed was void as a matter of law, which left the half interest in the condominium in the Trust.

The court denied a motion on rehearing, finding that the deed did not partially revoke the Florida Trust as to the condominium.

A Settlor of A Florida Revocable Trust Has The Right To Revoke It

As recognized by the Florida Supreme Court:

A revocable trust is a unique type of transfer . . .. Since [the settlor] is the sole beneficiary of the trust during [the settlor’s] lifetime, [the settlor] has the absolute right to call the trust to an end and distribute the trust property in any way [the settlor] wishes.

Read How to Revoke a Revocable Trust in Florida.

The 2005 Deed Operated to Partially Revoke The Florida Trust

The Florida appeals court determined that the 2005 deed was valid in accordance with the trust for two reasons.

First, the trust allowed the settlor individually, as well as by both trustees, to revoke the trust in whole or in part by a written instrument delivered to the trustees.

The deed operated to partially revoke the Florida trust.  The court stated:

“Ordinarily a power to revoke the trust will be interpreted as including a power to revoke the trust in part by withdrawing a part of the trust property from the trust.” Restatement (Second) of Trusts § 330 (1959). The deed, withdrawing the condo from the trust, was a written instrument executed by both co-trustees and the settlor. It had the effect of removing the condo from the trust. Therefore, the settlor revoked the trust in part as to the condominium.

The 2005 Deed Was An Application Of The Trust Assets For The Settlor’s Use

 

Second, the trust authorized the trustees to apply any part of the trust assets to the settlor’s use.

The conveyance of the condominium to the settlor in the 2005 deed was an application of the trust assets for the settlor’s use.  The trustees were authorized to convey the property to the settlor.  Then, the settlor was permitted to convey the property to herself free of trust with a remainder to Wisotsky.

The Court cited to Countrywide Funding, 589 So. 2d 994 (Fla. 2d DCA 1991), where the Florida Second District Court of Appeals determined that there “is not point in requiring that property be conveyed twice when a single conveyance is just as effective and has the virtues of economy and efficiency.”  The Florida Fourth District Court of Appeals applied the principle of Countrywide Funding and stated:

the trustees had the authority to convey the property to the settlor within the terms of the trust, either as a principal distribution for her use or as a partial revocation of the trust. Then the settlor, individually could have conveyed the property to herself for a life estate, remainder to her daughter. Therefore, when the quitclaim deed was executed by both trustees and by the settlor individually, the deed accomplished with a single conveyance the same requirements as two separate conveyances. We see no need to demand two separate conveyances.

Viewing the one transaction as the combination of two transactions, it is apparent that the trustees did not gift the remainder interest to Wisotsky, Sadie did.

The Court concluded:

That the 2005 deed consolidated the two transfers is no reason to invalidate the settlor’s right to control her property, consistent with the terms of her revocable trust. Given the unique nature of the revocable trust and the settlor’s right to control the disposition of her own property, the trial court erred in declaring the deed invalid. Therefore, Wisotsky’s conveyance of the entire property to Schlossberg was also valid.

Was The Buyer A Bona Fide Purchaser For Value?

The court also addressed the additional claim that Schlossberg was a bona fide purchaser for value:

“Where all the essential legal requisites of a deed are present, it conveys legal title.” McCoy v. Love, 382 So. 2d 647, 649 (Fla. 1979). Generally, void deeds are limited to forged deeds or deeds that violate the constitutional protection of homestead.

The 2005 deed conveyed legal title, because it complied with all the legal requirements to do so.

Orange County (Orlando)

Philip W. Gunthert

Broward County (Ft. Lauderdale)

Natasha M. Dalton

Hillsborough County (Tampa)

R. Todd Burbine

Sarasota County

Dawn Bates-Buchanan

Lee County (Ft. Myers)

Scott Kuhn

Duval County (Jacksonville)

Long H. Duong

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