Fintak v. Fintak, — So.3d —-, 2013 WL 4483103 (Fla. 2d DCA August 23, 2013)
There’s nothing wrong with hedging your bets in litigation by asserting alternate — or even inconsistent — arguments. In fact, under our rules of civil procedure it’s explicitly authorized. See Fla. R. Civ. P. 1.110(g) (“A party may … state as many separate claims or defenses as that party has, regardless of consistency and whether based on legal or equitable grounds or both.”). But there are limits. Generally speaking, you can’t have it both ways in inheritance disputes. In other words, you can’t simultaneously benefit from and contest the validity of the same legal instrument, be it a will, trust, deed, contract, etc. There are two doctrines that put this general principle into effect: the “renunciation” rule and the “estoppel-by-acceptance-of-benefits” rule.
The renunciation rule and the estoppel-by-acceptance-of-benefits rule are two sides of the same coin. The renunciation rule requires that a beneficiary renounce or divest himself of benefits under the instrument he’s contesting as a precondition to prosecuting his claims against its validity. This is usually viewed as a pleading rule. As in, if you’re representing a beneficiary of a trust who wants to contest the validity of his trust, your complaint needs to contain a renunciation allegation. The doctrine of equitable estoppel holds “that a person should not be permitted to unfairly assert, assume or maintain inconsistent positions.” Head v. Lane, 495 So.2d 821, 824 (Fla. 4th DCA 1986) (emphasis added). One “form of estoppel occurs where a person attempts to repudiate the obligations and validity of a transaction after accepting the benefits resulting from it.” Id.
At the heart of the linked-to-case above is an irrevocable self-settled trust a father funded with his own life savings. The trust was to be administered by dad and two of his sons as co-trustees. Dad’s current wife gets nothing under the trust. All of dad’s six children from a prior marriage, including his two co-trustee sons, get it all when dad dies. When dad’s current wife learned of the trust all h_ll broke lose, triggering years of litigation. As the 2d DCA put it:
This is a particularly contentious case involving the dangerous amalgam of family and money.
After the case had been going on for several years and after dad had passed away (surviving spouse continued the litigation as PR of his estate), the two co-trustee sons moved for summary judgment on the grounds that dad had accepted benefits from his trust while simultaneously contesting its legitimacy. In short, dad had run afoul of both the renunciation rule and the estoppel-by-acceptance-of-benefits rule. The trial-court judge agreed with them and granted final summary judgment in their favor.
The problem with the trial-court’s order is that neither rule applies if the “benefit” you’ve accepted under the trust you’re contesting is property you already had a legal claim to. In this case the trust was funded with dad’s own assets (it was a self-settled trust). Any distribution of trust assets dad received was income or principal he would have owned regardless of the trust’s existence. It was his property before the trust was funded, and it would remain his property afterward if the trust were invalidated. This central fact determined the outcome of this appeal.
Here’s how the 2d DCA summed up its analysis of why the renunciation-rule didn’t apply in this case:
[B]ecause Edmund owned all of the assets within the Trust prior to its creation, he would be entitled to the income and principal in any event, and the renunciation rule would not do equity. Under the facts of this case, requiring renunciation would be to elevate form over substance. See Medary v. Dalman, 69 So.2d 888, 890 (Fla.1954). The case of Medary v. Dalman is illustrative of this point. In Medary, the husband was a devisee of a one-fourth interest in certain property bequeathed to him under his deceased wife’s will. Id. at 889. When the will was admitted to probate, the husband filed suit in equity to have a trust declared in his favor as to the entire property because he supplied all the funds to purchase the property and the title was taken in his wife’s name for convenience only. He did not intend for the property to be a gift or advancement to the wife. The husband did not renounce the devise to him under his wife’s will prior to filing suit and the action was dismissed. On appeal, the Florida Supreme Court held that the husband was not required to renounce the devise to him of the one-fourth interest in the same property prior to filing suit because the husband:
. . . either owns the entire property, or title to one-fourth of it has vested in him by virtue of his wife’s will. This is a case where the donee would not receive under the will a benefit to which he would not be entitled except for the will, in which event no election is required. A renunciation in such a case would be more of form than of substance, for even if he lost in his suit to establish a resulting trust on the theory that the property is not part of the wife’s estate and consequently not subject to devise, he would still be entitled to take under the will.
Id. at 890 (internal quotation marks and citations omitted).
In light of the foregoing, we find that the renunciation rule is inapplicable to the facts of this case and the trial court erred in granting summary judgment for Thomas and John on the ground that Shirley’s claims were barred by the renunciation rule.
For the same reasons the estoppel-by-acceptance-of-benefits rule didn’t apply either. Here’s how the 2d DCA summed up its analysis on this point:
[A]s we held in the context of the renunciation rule, an individual cannot be estopped from challenging an instrument by accepting that which he or she is legally entitled to receive regardless of whether the instrument is sustained or overthrown. . . . As discussed at length above, Edmund would have been legally entitled to the assets of the Trust if the Trust was never created and in the event the Trust is declared invalid.
Under these circumstances, the trial court erred in granting summary judgment . . . based on the doctrine of estoppel by the receipt and acceptance of benefits.
If you don’t know the “why” of a rule, blindly following it often ends up elevating form over substance. That’s what appears to have happened in this case. The renunciation rule is one of those pleading technicalities we read about in CLE materials and hear mentioned from time to time at Bar conferences, but few of us take the time to drill down into the “why” of the rule. The 2d DCA did that for us in this case, hopefully both demystifying it and demonstrating how infrequently it really has any real-world significance.