BARNETT BANKS TRUST COMPANY, N.A., APPELLANT,
v.
LOIS RENE HERR, APPELLEE
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A trustee appealed a declaratory judgment construing a residuary trust provision regarding principal encroachment for the testator's widow. The court affirmed the lower court's interpretation, holding that the trustee must invade the trust corpus to maintain the beneficiary's standard of living at the testator's death, considering only current income sources and not the beneficiary's non-income producing assets.
The trustee must compare the beneficiary's standard of living at the time of an encroachment request to her standard of living at the testator's death, and if it has declined, must invade the corpus to restore it. However, the trustee may only consider income presently available from all sources and cannot consider the beneficiary's current non-income producing assets.
[1] A trustee's discretion to invade the principal of a trust for a beneficiary's health, maintenance, and support is limited by the beneficiary's accustomed standard of livi…
[2] A trust provision requiring a trustee to consider a beneficiary's accustomed standard of living necessitates comparing the beneficiary's standard of living at the time of…
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Join FLexlaw to unlock all legal intelligence“the trustee is required to compare the standard of living enjoyed by the beneficiary at the time of the encroachment request with the standard of living enjoyed by the beneficiary at the time of the testator's death”
Establishes the core comparative standard for determining whether principal encroachment is necessary.
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Join FLexlaw to unlock all legal intelligenceA will created a residuary trust providing that the trustee may pay principal to the testator's wife as the trustee deems necessary for her health, ma…
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PER CURIAM.
This is an appeal by the trustee of a residuary trust created by a will [Barnett Banks Trust Co., N.A.] from a final declaratory judgment construing a provision of the subject trust. The trust provision in the will provided:
“The Trustee shall pay to or for the benefit of my wife such part of the principal of the Residuary Trust as the Trustee, in its discretion, shall consider necessary or advisable for her health, maintenance and support, taking into consideration the standard of living to which she is accustomed at my death and all other income available to her from all sources known to the Trustee; provided, however, that no distribution of principal shall be made to my wife until the principal of the Marital Deduction Trust described in Item V has been exhausted.”
The final declaratory judgment construed the above provision to mean that (1) upon an encroachment request by the beneficiary of the trust [Lois Rene Herr, the testator’s wife], the trustee is required to compare the standard of living enjoyed by the beneficiary at the time of the encroachment request with the standard of living enjoyed by the beneficiary at the time of the encroachment request with the standard of living enjoyed by the beneficiary at the time of the testator’s death; (2) if the beneficiary’s standard of living at the time of the encroachment request is less than the beneficiary’s standard of living at the time of the testator’s death, the trustee must invade the corpus of the trust for the benefit of the beneficiary; and (3) in determining the amount of the corpus encroachment required to bring the beneficiary’s standard of living to the level of the beneficiary’s standard of living at the time of the testator’s death, the trustee “can look only to income [presently] available from all sources” to the beneficiary, but not to the beneficiary’s current non-income producing assets.
We conclude that the above construction of the residuary trust fully comports with the plain language of the will, as well as the testator’s intent to provide adequate income for his wife so that she could continue to maintain the standard of living she enjoyed at the time of the testator’s death without selling off her non-income producing assets. We have not overlooked the trustee’s extensive arguments to the contrary, but are not persuaded thereby. See Sarasota Bank & Trust Co. v. Rietz, 297 So. 2d 91, 92 (Pla. 2d DCA 1974); In re Johnson’s Estate, 46 Misc.2d 52, 258 N.Y.S.2d 922 (Surr.Ct.1965); In re Robichon’s Will, 105 N.Y.S.2d 491 (Surr.Ct.1951). See generally Annotation, Propriety of Considering Beneficiary’s Other Means Under Trust Provision Authorizing Invasion of Principal for Beneficiary’s Support, 41 A.L.R.3d 255 (1972).
The final declaratory decree under review is therefore, in all respects,
Affirmed.
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Citator
Cited By
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Richter v. Hofmann, 731 So. 2d 36 (Fla. 3d DCA 1999)…PER CURIAM. Affirmed. Barnett Banks Trust Company v. Herr, 546 So. 2d 755 (Fla. 3d DCA 1989); Sarasota Bank & Trust Co. v. Rietz, 297 So. 2d 91 (Fla. 2d DCA 1974).…
Authorities Cited
- Sarasota Bank & Tr. Co. under the agreement with Henry E. Jones v. Rietz, 297 So. 2d 91 (Fla. 2d DCA 1974)