Thursday, October 17, 2013
The decedent’s trust made a gift of cash to his surviving spouse conditioned on her disclaiming her interest in a trust created under the trust agreement and making a valid disclaimer of her right of election. The spouse brought a declaratory judgment action requesting a judgment saying the election provisions were invalid under Florida law. Florida Law invalidates any provision in a trust instrument “purporting to penalize any interested person for contesting the trust instrument” or instituting proceedings relating to the trust or to the trust assets.
The court in Dinkins v. Dinkins, No. 5D12–1292, 2013 WL 3834371 (Fla. Dist. Ct. App. July 26, 2013), held that a clause providing an alternative to a statutory minimum benefit, here the elective share, is not a prohibited penalty clause because the beneficiary remains free to reject the alternative offered for any reason.
Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.