Friday, May 22, 2020
In the May 2020 case Demircan v. Mikhaylov, Florida's Third District Court of Appeal determined that the Florida probate court appropriately applied Florida's common law of trusts to modify an irrevocable trust.
The settlor of the trust, Igor Mikhaylov, created the Igor Mikhaylov 2015 Irrevocable Trust ("Trust") to fund a business involving the development of a shopping mall and also to benefit his children. The trust appointed Genna Demircan as the trustee and named Anatoly Zinoviev as the only person with the power to remove the trustee.
When disagreements arose between the settlor, Demircan, and Zinoviev, the settlor stopped all funding from the Trust for the business. The settlor and beneficiaries then filed suit to strip Zinoviev of his powers and to remove Demircan as trustee. Zinoviev and Demircan moved to dismiss the action and were successful. The settlor and beneficiaries later voluntarily dismissed the suit.
The settlor and beneficiaries refiled their lawsuit in the probate division, but left out Zinoviev as a defendant because they found out that Zinoviev appointed Nelson Rincon as the current trustee. The plaintiffs added Rincon as a defendant and sought to have him removed from the Trust.
Rincon argued that Zinoviev was an indispensable party who had not been joined, that the beneficiaries' consent to the modification was not sufficiently shown, and that common law modification required consideration of factors other than consent.
The trial court allowed modification of the Trust pursuant to the common law rule expressed in Preston v. City National Bank of Miami.
The Court ultimately held that a current trustee has standing to appeal a trial court's modification of the trust and also that Zinoviev was not an indispensable party because a complete and efficient determination of the equities and rights was possible without joining him.
The main takeaway is that modification of the irrevocable trust was agreed to by the settlor and beneficiaries and therefore, under the common law of trusts, the probate court could modify the trust without making requisite findings under the Florida Trust Code.
See Florida Court Applies Common Law To Modify Irrevocable Trust, Probate Stars, May 22, 2020.