Nelson v. Nelson

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
LEAH ANN WILTGEN NELSON, )
n/k/a LEAN ANN WILTGEN, )
)
Appellant, )
)
v. ) Case No. 2D15-4585
)
RAYMOND L. NELSON, )
)
Appellee. )
)
Opinion filed December 16, 2016.
Appeal from the Circuit Court for Collier
County; Joseph G. Foster, Judge.
Lisa P. Kirby of The Law Offices of Lisa P.
Kirby, P.A., Naples, for Appellant.
John C. Clough, Rebecca Zung-Clough, and
David S. Schnitzer of Zung Clough, PLLC,
Naples, for Appellee.
BADALAMENTI, Judge.
This is an appeal from a final judgment of dissolution of the marriage of
Raymond L. Nelson (the Former Husband) and Leah Ann Wiltgen (the Former Wife).
During their marriage, the Former Husband purchased a residential home in Palm
Desert, California (the California home), and titled it in both his and the Former Wife's
names. The parties then transferred the California home into the Leah W. Nelson
Marital Trust (the Trust), an irrevocable trust established in 2010 by the Former
Husband for the benefit of the Former Wife and her descendants. The Former Husband
named the Former Wife as the sole trustee of the Trust. The Former Wife argues that
the trial court erred by characterizing the California home as a marital asset subject to
equitable distribution. We agree. We thus reverse the trial court's equitable distribution
and remand with instructions for the trial court to address the equitable distribution of
the marital assets anew.
As a threshold matter, our de novo review yields that the trial court
properly construed the Trust as irrevocable. We discern the settlor's intent from the
plain and ordinary meaning of the terms set forth in the Trust instrument. See Jervis v.
Tucker, 82 So. 3d 126, 128-29 (Fla. 4th DCA 2012) ("[W]here the terms of an
agreement . . . are unambiguous, its meaning and the intent of the maker are discerned
solely from the face of the document, as the language used and its [plain] meaning
controls." (citing In re Estate of Barry, 689 So. 2d 1186, 1187-88 (Fla. 4th DCA 1997))).
Section 736.0602(1), Florida Statutes (2015), provides that a settlor may
"revoke or amend" a trust unless "the terms of [the] trust expressly provide that the trust
is irrevocable." Tracking the language of section 736.0602(1), the terms of the Trust
instrument unambiguously state that the Former Husband, as settlor, "waive[s] all right,
power and authority to alter, amend, modify, revoke or terminate this trust instrument
and the trust hereby evidenced." Moreover, the Trust instrument sets forth no terms
authorizing the Former Husband, as settlor, to amend or revoke the Trust. Further still,
the Trust instrument does not contain a provision dissolving the Trust upon divorce. Cf.
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Hansen v. Bothe, 10 So. 3d 213, 216 (Fla. 2d DCA 2009) ("Ms. Bothe incorrectly argues
that the marital settlement agreement 'dissolved' the trust because the grantors and
trustees divorced. The trust has no such provision."). Because there is no ambiguity on
the face of the Trust instrument, we do not look beyond the terms set forth in the
instrument to derive the settlor's intent. See Vigliani v. Bank of Am., N.A., 189 So. 3d
214, 219 (Fla. 2d DCA 2016); Hansen, 10 So. 3d at 215; Jervis, 82 So. 3d at 128-29.
As such, the Former Husband created an irrevocable trust for the benefit of the Former
Wife and her descendants.
Having determined that the Trust is irrevocable, we now review de novo
the trial court's characterization of the California home, an asset of the Trust, as a
marital asset subject to equitable distribution.1 See Tradler v. Tradler, 100 So. 3d 735,
738 (Fla. 2d DCA 2012). The legislature has set forth a statutory scheme to guide the
trial court's equitable distribution of assets upon dissolution of a marriage. See §
61.075, Fla. Stat. (2015). Under Florida's equitable distribution statute, marital assets
include "[a]ssets acquired . . . during the marriage, individually by either spouse or
jointly by them." § 61.075(6)(a)(1)(a). Nonmarital assets include "[a]ssets acquired . . .
by either party prior to the marriage, and assets acquired . . . in exchange for such
assets . . . ." § 61.075(6)(b)(1). The statute also creates a rebuttable presumption that
assets acquired by either spouse during the marriage are presumed to be marital
assets: "All assets acquired . . . by either spouse subsequent to the date of the marriage
and not specifically established as nonmarital assets . . . are presumed to be marital
1
The parties transferred the California home to the Trust seven months
after the Former Husband initially funded the Trust with $10 cash.
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assets . . . . Such presumption is overcome by a showing that the assets . . . are
nonmarital assets . . . ." § 61.075(8).
Section 736.04113(1) states: "Upon the application of a trustee of the trust
or any qualified beneficiary, a court at any time may modify the terms of a trust that is
not then revocable . . . ." (Emphasis added.) Once a trustee or any qualified
beneficiary makes such an application to the trial court, the statute states that the trial
court "shall consider the terms and purposes of the trust, the facts and circumstances
surrounding the creation of the trust, and extrinsic evidence relevant to the proposed
modification." § 736.04113(3)(a). The Former Husband argues that he, as the settlor of
the Trust, presented unrebutted testimony that the Trust was created as an estate
planning mechanism intended to protect the California home from claims made by his
heirs in the event he were to predecease the Former Wife during the marriage. He
asserts that the purpose of the establishment of the Trust is no longer necessary now
that the parties have divorced and contends that section 736.04113 authorized the trial
court to modify the Trust and thus reach the assets of the Trust for the purpose of
equitable distribution. The unambiguous language of section 736.04113(1) compels us
to decline the Former Husband's invitation to construe section 736.04113 in that
manner.
Furthermore, the record is devoid of any evidence that the Former Wife,
as trustee and beneficiary, filed an application to request modification or termination of
the Trust in the first instance. There is also no record evidence that the Former Wife's
adult daughter, who is named as a beneficiary in the Trust instrument, made application
for such a modification or revocation. Absent an application made by a trustee or
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beneficiary of the Trust requesting modification or termination, the text of section
736.04113 yields but one conclusion—the trial court had no authority to modify the Trust
and reach the California home, an asset of the irrevocable Trust. See § 736.04113; cf.
In re Marriage of Epperson, 107 P.3d 1268, 1274 (Mont. 2005) (affirming trial court's
termination of family irrevocable trust under judicial termination statute similar to section
736.04113, where husband trustee petitioned for termination, finding purpose of trust
defeated upon family's disintegration).
Although the California home became a marital asset pursuant to section
61.075(6)(a)(1)(a) at the time the Former Husband purchased the home and jointly titled
it in the parties' names, the California home ceased in character to be a marital asset
upon its transfer into the Trust. At that point, the California home became part of the
assets of the Trust, an entity distinct from the Former Husband and the Former Wife.
See Juliano v. Juliano, 991 So. 2d 394, 396 (Fla. 4th DCA 2008) (treating a trust as a
distinct entity from husband settlor); 2 Brett R. Turner, Equitable Distribution of Property
§ 6:94 (3d ed. 2005) (providing that an irrevocable trust is a distinct entity capable of
holding title to property). Transferring the home into the Trust placed the home beyond
the trial court's reach for purposes of equitable distribution. See Juliano, 991 So. 2d at
396; In re Chamberlin, 918 A.2d 1, 17 (N.H. 2007) (holding that assets used to fund an
irrevocable trust were not marital assets because they ceased being property belonging
to either spouse once the assets were placed in the trust and beyond the reach of the
parties).2
2
Although the Florida Trust Code contains a statute voiding revocable trust
provisions affecting a settlor's spouse upon the dissolution of marriage, § 736.1105, and
the Florida Probate Code likewise contains a statute voiding will provisions affecting a
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Although section 736.04113 does not abrogate the trial court's common
law authority to modify or terminate an irrevocable trust, the trial court here made no
mention of modifying or terminating the Trust under the common law. § 736.04113(4)
("The provisions of this section are in addition to, and not in derogation of, rights under
the common law to modify, amend, terminate, or revoke trusts."). One common law
vehicle by which a trial court can modify an irrevocable trust, for example, would be with
the consent of the settlor and all beneficiaries. See Peck v. Peck, 133 So. 3d 587, 591
(Fla. 2d DCA 2014). But we do not have the consent of all the beneficiaries here, as not
all of the beneficiaries were before the trial court. The Trust instrument states that the
Former Husband created the Trust "for the primary benefit of [his] spouse and
secondarily for the benefit of [his] spouse's descendants." The Former Wife obviously
did not consent to the termination of the Trust. Furthermore, there is no record
evidence that the Former Wife's daughter, a descendant of the Former Wife, consented
to modification or termination of the Trust. Without consent from all beneficiaries to the
Trust, the trial court did not have the authority to distribute any asset of the Trust. See
Sylvester v. Sylvester, 557 So. 2d 599, 600 (Fla. 4th DCA 1990) ("[T]he court did not
have the trust before it and could not have absent the joinder of the trustee and the
contingent remainder beneficiaries, the husband's minor children, all of whom, in the
case of an 'irrevocable' trust, are indispensable parties . . . ." (citing Hanson v. Denckla,
357 U.S. 235, 245 (1958); Huttig v. Huffman, 9 So. 2d 506, 507 (Fla. 1942); First Nat'l
Bank of Hollywood v. Broward Nat'l Bank of Fort Lauderdale, 265 So. 2d 377, 378 (Fla.
testator's spouse upon the dissolution of marriage, § 732.507(2), Fla. Stat. (2015), the
legislature has not enacted a similar statute voiding irrevocable trust provisions affecting
a settlor's spouse upon the dissolution of a marriage.
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4th DCA 1972))); Fla. Nat'l Bank & Trust Co. at Miami v. Blake, 155 So. 2d 798, 800
(Fla. 3d DCA 1963) (holding spendthrift trust termination improper because all parties
were not before the court and did not consent); First Nat'l Bank of Miami v. Kerness,
142 So. 2d 777, 780 (Fla. 3d DCA 1962) ("[I]t is well settled that a court must decline to
dissolve or terminate a trust where there may be persons interested therein who are not
before the court." (citing Huttig, 9 So. 2d at 507; Byers v. Beddow, 142 So. 894, 896
(Fla. 1932))).
At bottom, the trial court here impermissibly adjudicated the property rights
of a nonparty to this dissolution proceeding—the Trust. See Juliano, 991 So. 2d at 396
(explaining that, as a general matter, "a trial court cannot, in a dissolution proceeding,
'adjudicate property rights of a non-party' " (quoting Barabas v. Barabas, 923 So. 2d
588, 590 (Fla. 5th DCA 2006))); see also Minsky v. Minsky, 779 So. 2d 375, 377 (Fla.
2d DCA 2000). Indeed, this court has disavowed the equitable distribution of assets
held by nonparty corporations, limited liability companies, and partnerships. See
Ehman v. Ehman, 156 So. 3d 7, 8 (Fla. 2d DCA 2014) (limited liability company);
Mathes v. Mathes, 91 So. 3d 207, 208 (Fla. 2d DCA 2012) (corporation); Lassett v.
Lassett, 768 So. 2d 472, 474 (Fla. 2d DCA 2000) (partnership).
Akin to assets owned by a corporation, limited liability company, or
partnership, "[t]he individual assets owned by an irrevocable trust are . . . ordinarily
third-party property which cannot be divided upon divorce." Turner, supra, § 6:94
(citing, inter alia, Seggelke v. Seggelke, 319 S.W.3d 461, 467 (Mo. Ct. App. 2010)
(holding that a bank account owned by an irrevocable trust was not marital property);
Wilburn v. Wilburn, 743 S.E.2d 734, 742 (S.C. 2013) (noting that where spouses
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created an irrevocable trust, "the trust corpus is not the property of either spouse and
thus cannot be marital property")).
Because we reverse as to the trial court's equitable distribution, we also
reverse as to the trial court's order requiring the Former Wife to list the home for sale.
Because our decision affects the overall equitable distribution scheme, we remand with
instructions for the trial court to address the equitable distribution and alimony
determinations anew. See Ehman, 156 So. 3d at 9. We express neither an opinion as
to equitable distribution upon remand nor as to entitlement, if any, to alimony upon
remand. We leave those determinations to the sound discretion of the trial court. We
affirm the trial court's dissolution of the parties' marriage.
Affirmed in part, reversed in part, and remanded with instructions.
CASANUEVA and SILBERMAN, JJ., Concur.
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