Permissible Appointees v. Trust Beneficiaries In Florida

In Ammeen v. Sjogren, a January 11, 2021 opinion from Florida’s First District Court of Appeal, the Court distinguished permissible appointees from trust beneficiaries to determine that summary judgment was correctly entered against permissible appointees for lack of standing.

The Facts of Ammeen v. Sjogren

Jeffrey Ammeen and Kirsten Ammeen married in 2001 and divorced in 2008.  They shared two daughters, J.A. and A.A.

In 2002, Kirsten’s mother, Jane Sjogren established the Kirsten Ammeen and Issue Year 2002 Trust (the “Trust”).  Kirsten was the beneficiary of the Trust and held a testamentary power of appointment over the Trust, exercisable at her death and only in her will.

The Terms of the Trust

The Trust contained the following provisions:

(2)(b) Upon the death of Settlor’s daughter, Kirsten Ammeen, the then remaining balance of the Trust estate shall be distributed to, or held in trust for the benefit of, such person or persons among the issue of Settlor’s daughter, Kirsten Ammeen, and upon such estates and conditions as Settlor’s daughter, Kirsten Ammeen, shall appoint by Will, making specific reference to this power. Any unappointed property shall be held for the benefit of the spouse of Settlor’s daughter, Kirsten Ammeen, if he is then living and if he was married to and living with Settlor’s said daughter at the time of her death[.]

. . . .

(2)(c) Upon the death of Settlor’s daughter’s spouse, or if Settlor’s daughter, Kirsten Ammeen, did not have a spouse (or such spouse was not married to and living with Settlor’s said daughter) at the time of her death, the then remaining balance of the Trust estate, or such unappointed property, as the case may be, shall be distributed to, the then living issue of Settlor’s daughter, Kirsten Ammeen, per stirpes[.]

. . . .

(4)(a) Whenever Trustees, in their discretion, determine that a trust, or any part thereof, should be terminated for any reason, Trustees, without any liability to any person whose interest may be affected, shall terminate such trust, or part thereof, and shall distribute the terminated portion of the trust to the individual or individuals at that time eligible to receive the income therefrom.

The Family Litigation And Settlement Agreement Relinquishing Trust Interests

In 2007, Kirsten and her two sisters sued their brother Wade Sjogren (the trustee of the Trust), another brother, and Jane (their mom and the settlor of the Trust) in a dispute over family assets.  The parties settled their disputes in a mediated settlement agreement in 2009.

As part of the 2009 settlement, the sisters (including Kirsten) agreed to transfer their interests in their individual 2002 Trusts (along with their spouses’ and children’s interests) to the brothers and the Settlor.

Disputes arose over the settlement.  After a binding arbitration, a New Jersey court found that the settlement was valid, binding, and enforceable in 2014.

Kirsten Dies Without a Will

In March 2015, Kirsten died without a will.  Appellant Jeffrey Ammeen opened an estate for her.

The Duval County Circuit Court found that Kirsten’s estate was bound by the terms of the Settlement, and that “the sisters consented to the appellee exercising his power to terminate each of their 2002 trusts in order to effectuate the Settlement and such exercise of this power was not a breach of his fiduciary duty to the sisters.”

In 2016, after receiving confirmation under Florida law, the New Jersey court entered a final order effectuating the settlement.

Breach of Trust Lawsuit

Earlier in 2016, Jeffrey (Kirsten’s ex-husband and father of J.A. and A.A.) initiated a breach of trust lawsuit against the trustee.  Summary judgment was granted in favor of the trustee.  The court found that Kirsten had consented to the relinquishment of any interests in, and the termination of, the Trust before her death and that her interests were deemed to have passed in June 2009 when the settlement was entered in open court.

The court found that J.A. and A.A. were only permissible appointees before 2009, not trust beneficiaries under Florida law.  Therefore, J.A. and A.A. were bound to Kirsten’s relinquishment of rights.

Final summary judgment was granted in favor of the trustee because J.A. and A.A. lacked standing to sue for breach of trust.

Trust Beneficiaries v. Permissible Appointees Under Florida Law

Section 736.0103(4), Florida Statutes (2019), defines “beneficiary” as follows:

“Beneficiary” means a person who has a present or future beneficial interest in a trust, vested or contingent, or who holds a power of appointment over trust property in a capacity other than that of trustee.

Section 736.0103(4) also states that:

An interest as a permissible appointee of a power of appointment, held by a person in a capacity other than that of trustee, is not a beneficial interest for purposes of this subsection. Upon an irrevocable exercise of a power of appointment, the interest of a person in whose favor the appointment is made shall be considered a present or future beneficial interest in a trust in the same manner as if the interest had been included in the trust instrument.

Therefore, a permissible appointee is someone who could at some point have an interest in the Trust, but only after the occurrence of a certain act — in this case exercise of the power of appointment given to Kirsten, and only if the Trust was still in existence.

J.A. and A.A. were only permissible appointees, not trust beneficiaries, while Kirsten was alive.

Here, appellant assumed that J.A. and A.A. were beneficiaries of the Trust.  This assumption was incorrect.  Only Kirsten was a beneficiary of the Trust.  The Trust could have been terminated during Kirsten’s lifetime and all assets distributed to Kirsten alone.  If that had happened, J.A. and A.A. would have received nothing from the trust.  Further, the Trust makes clear that J.A. and A.A. could not have any interest in the Trust until Kirsten’s death and after she appointed them as beneficiaries in her will.  Under Florida law, they were permissible appointees, not trust beneficiaries of the Trust, while Kirsten was alive.

Power of Appointment Under Florida Trust Law

“The holder of a power of appointment may represent and bind persons whose interests, as permissible appointees, takers in default, or otherwise, are subject to the power.” See § 736.0302(1), Fla. Stat.

Here, Kirsten’s decision to relinquish any interest in the Trust and to consent to its termination meant that any potential interests J.A. and A.A. had in the Trust as permissible appointees were also relinquished in 2009 when the settlement agreement was entered and approved by the New Jersey Court.

The Florida appellate court concluded:

Based on the foregoing, the trial court appropriately determined that J.A. and A.A. were not beneficiaries and that Kirsten relinquished any potential interest they could have had in the Trust when she entered into the Settlement in 2009. As such, they lacked standing to sue the appellee for breach of trust. Summary judgment was appropriately entered in favor of the appellee.

Standing is a threshold issue in any Florida trust litigation.  Knowing the difference between a trust beneficiaries, qualified beneficiaries, and permissible appointees is critical to determining a party’s right to bring a breach of trust action in Florida.

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