In short: In Ercolani v. Coyne (Fla. 3d DCA 2014), the grandchildren of a settlor’s predeceased daughter sought construction and modification of a 1999 trust whose funding formula was tied to the generation-skipping transfer tax exemption. The trial court entered summary judgment on those counts, and the Third District affirmed without opinion on December 31, 2014.
Trusts written around tax formulas can produce results nobody intended when the tax law changes.
The Case
As described at oral argument, the settlor signed two sets of estate planning documents. Her 1999 trust contained formula funding language built around the generation-skipping transfer (GST) tax exemption then available. Had she died that day, the trust would have divided roughly equally between her son’s family and the family of a daughter who died in her forties, leaving four children. Those grandchildren sought construction and modification of the 1999 trust. The Miami-Dade trial court entered summary judgment on those two counts of a four-count complaint (No. 3D14-957).
The Result
The Third District affirmed without opinion on December 31, 2014. A per curiam affirmance (PCA) means the appellate court agreed with the result below without writing an opinion. It sets no precedent, and because there is no opinion, the Florida Supreme Court generally can’t review it. The issues described here are the ones argued; the court didn’t say which arguments it accepted.
The Law on Modifying Trusts for Tax Reasons
- Tax modification: a court may modify an irrevocable trust to achieve the settlor’s tax objectives, in a way not contrary to the settlor’s probable intent, and may make the modification retroactive (§ 736.04114).
- Reformation for mistake: a court may reform even unambiguous terms to conform to the settlor’s intent if a mistake of fact or law is proven by clear and convincing evidence (§ 736.0415).
- Construction: when terms are ambiguous, courts construe them according to the settlor’s intent.
Why Formula Clauses Cause Disputes
The federal GST exemption has grown dramatically since 1999. A formula keyed to "the maximum amount that can pass free of GST tax" can shift almost everything to one share, changing how much each branch of the family receives.
Lessons
- Review old formula clauses whenever the tax law changes.
- If a trust no longer works, consider decanting, nonjudicial modification, or a court petition before the settlor dies.
Source: Ercolani v. Coyne, No. 3D14-957 (Fla. 3d DCA Dec. 31, 2014).
Watch the Oral Argument
This is the recording of the actual oral argument, posted on the channel. The court affirmed without a written opinion, so nothing said at argument should be read as the court’s reasoning.
A 1999 Trust, a Generation-Skipping Formula, and a Daughter Who Died in Her Forties
Go Deeper
Frequently Asked Questions
Can a Florida court modify a trust to achieve tax objectives?
Yes, under § 736.04114, if the modification isn’t contrary to the settlor’s probable intent.
Can a trust be reformed for mistake in Florida?
Yes, under § 736.0415, with clear and convincing evidence of the settlor’s intent and the mistake.
Why do GST formula clauses cause problems?
Changes in the exemption amount can dramatically change how much passes to each share.
What happened in Ercolani v. Coyne?
The Third District affirmed summary judgment without opinion in 2014.
Talk to a Florida trust litigation lawyer
Weidner Law, P.A. handles Florida trust disputes and probate appeals from St. Petersburg. If you need a trust litigation lawyer, call (727) 954-8752 or email weidner@mattweidnerlaw.com.
Read the law yourself, free: the full Florida Probate Code and Probate Rules and the Florida Trust Code are on floridarules.net.
This article is general information about Florida law, not legal advice about your situation. Reading it, watching the videos, or contacting the firm does not create an attorney-client relationship. Every case turns on its own facts, and past results do not guarantee a similar outcome. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.
