November 1, 2012
An attorney might want to consider checking any wills or trusts that they draft for scrivener's errors. While most errors that occur are harmless leaving little for courts to interpret, some errors can make all the difference in the world about what the testator intended. For example, the attorney could write the beneficiary's name wrong or spell the beneficiary's name incorrectly. If this occurs then an ambiguity exists. If an ambiguity exists, it could give a court license to look at materials that are outside the terms of the trust or will. At the very least, this could lead to difficulty understanding the testator's intent. At the worst, it could lead to large and expensive court battle.
For example, in Miami Children's Hospital Foundation, Inc. v. Estate of Hillman, the court implied that there is a need for precision when listing beneficiaries. The trust instrument in dispute listed the following:
Upon my death, the trustee shall distribute some of the assets of this Trust as follows: . . . All the remaining property, annuities, stocks, bonds and assets in the trust shall be split among the following charities:. . . TWENTY-FIVE PERCENT (25%) to MIAMI CHILDREN’S HOSPITAL FOUNDATION, CRANIAL/FACIAL FOUNDATION, located at 3000 S.W. 62nd Avenue, Miami, FL 33155, ATT: Dr. Anthony Wolf [sic].
It appears that the hospital is the intended beneficiary of the residual of the trust. However, a trial court in Florida disagreed and determined that the settlor intended to bequeath the residual to the foundation that was under the management of the listed doctor in the paragraph, Dr. Anthony Wolfe. The appellate court disagreed and stated that there was no ambiguity within the instrument and that the particular hospital listed was the intended beneficiary. The true problem emerged when the trial court attempted to use outside information after it thought there was an ambiguity. Thus, the lesson here is to make sure that the beneficiary's name is right so that the potential for an ambiguity is avoided.
See Luke Lantta, Making Sure You Get The Beneficiaries' Names Rights, BryanCaveFiduciaryLitigation, Oct. 17, 2012.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
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In the Miami case, the trial court ruling was that:
"Miami Children’s Hospital Foundation, Inc. (MCHF), appeals a trial
court’s order finding Miami Care Foundation, Inc. (Miami Care), to be the
intended beneficiary of a pourover trust from the Estate of Elaine B.
Hillman. At issue in this case is whether the trial court erred in
concluding that there was an ambiguity in the trust document in order to
conclude that Miami Care should be the beneficiary of the pourover
trust. We find that the trust documents are clearly not ambiguous and
that the trial court erred in concluding that MCHF was not the intended
beneficiary of the pourover trust."
The post's statement that "a trial court in Florida disagreed and argued that the residual belonged to the listed doctor in the paragraph, Dr. Anthony Wolfe.", is not accurate.
The theory of the trial court's ruling was that the settlor's intent was to benefit the foundation managed by Dr. Wolfe (which was MCHF at the time the document was executed and Miami Care at the time of administration), rather than the particular named foundation in particular. No one argued that a charitable foundation bequest was not intended.
The appellate court noted that Miami Care did not exist when the Settlor drafted the document, that Dr. Wolfe was the director of MCHF when the trust was executed (confirming the language of the trust), and that Miami Care had been in existence more than a year before the Settlor's death providing her an opportunity to change the beneficiary if she wished.
Neither the trial court nor the appellate court was confused in any way by an incorrect spelling of Dr. Wolfe's name in the trust instrument.
The ruling by the trial court was quite surprising and its ruling really has little, if anything, to do with the quality of the trust drafting which the appellate court found to be clear and unambiguous.
Posted by: ohwilleke | Nov 2, 2012 4:25:43 PM