Eric Virgil of Virgil & Rubel LLP in Coral Gables was on the winning side of Fuentes v. Link, a fascinating case I wrote about here involving a revocable trust agreement that was found to be the functional equivalent of a deed. I invited Eric to share some of the insights he drew from this case with the rest of us and he graciously agreed.
What strategic decisions did you make that were particularly outcome determinative at the trial-court level? On appeal?
The key issue in the case was whether the decedent, Douglas Link, had during his lifetime validly transferred his homestead property to his revocable trust. There was no separate deed recording a transfer of the homestead into the trust during the decedent’s life. The trust itself was an unusual trust and appeared to be a pre-printed form trust such as you might have found pre-internet in an office supply store. The trust had very clear property conveyance language in its first clause, titled “Transfer of Property.” That clause referred to an Exhibit A to the trust and then Exhibit A contained the homestead legal description, folio number, and address.
Review of the trust language made me consider whether the trust itself could function as a deed. I realized, after review, that the trust met all the necessary requirements to function as a deed. At that point, strategically I shaped my case so that I could argue the decedent had validly conveyed his homestead to his trust by way of the trust instrument itself. No homestead law prevented that result since he was unmarried at the time of execution of the trust, so spousal joinder was not an issue.
The second strategic point was to aim for a summary judgment hearing as soon as possible under what was then the newly adopted federal summary judgment standard. In setting up my case for summary judgment quickly, I relied exclusively on the allegations made in my opponent’s pleadings. The factual allegations in those pleadings included admissions that the trust itself was valid and admissions concerning the contents and language of the trust, which was attached to and incorporated into a pleading. I was able to argue all material facts I used in my summary judgment motion using admissions from the other side.
On appeal, the opposition basically conceded a trust can function as a deed and sought to contest the intent of the decedent to make a transfer of the property to the trust at the time of execution since the trust was revocable and the decedent remained in physical possession of the property. My responsive arguments concentrated again on the language of the trust, which had clear intent to transfer language, and on the immediate acceptance of the trust property by a third-party trustee (not the settlor) who had immediate fiduciary duties. I also argued intent was demonstrated by the formal process that was undertaken, in this case a written trust document signed in front of two witnesses and a notary public.
I had to underline the distinction between the present transfer of legal title to the trustee and the later distribution of the beneficial interest upon the settlor’s death. The opposition’s argument conflated those two separate events. The trustee’s contemporaneous execution and acceptance of the trust was particularly important because it demonstrated that the transaction was not simply a statement of future testamentary intent. The trustee accepted legal responsibilities concerning the property.
Finally, on appeal, I sought to use Third District precedent where applicable and there were two good cases from the Third, Flinn v. Van Devere, 502 So. 2d 454 (Fla. 3d DCA 1986) and Aronson v. Aronson, 930 So. 2d 766 (Fla. 3d DCA 2006). I wanted the Third to view key issues as having already been addressed by them previously and to understand my client merely sought their confirmation of what had already been established as good law.
If you had to do it all over again, would you have done anything different in terms of framing the issues for your trial-court judge? On appeal?
Not in terms of framing at either level. On appeal, the case went to oral argument and I was focused on trying to see what issue could be a question mark for any of the panel. It seemed that they wanted to clearly understand how the trust satisfied the deed requirement of intent to transfer and so I focused on both the clear written intent of the document and the demonstration of intent by virtue of the execution ceremony. You don’t know what questions a panel may have until you deal with the live panel. Prior to the argument, I watched recordings of oral arguments that contained members of my panel and worked on potential panel question responses internally. You should expect the panel to ask you for the key case or cases that support your arguments.
Do you think there’s anything that could have been done in terms of better estate planning to avoid this litigation or at least mitigate its financial impact on the family?
From an estate planning perspective, the obvious precaution would have been to execute and record a separate deed conveying the property to the trustee. Although we established that the trust itself was sufficient, the absence of a conventional recorded funding deed created an opportunity for this litigation. The case illustrates the difference between a transaction that is legally effective and one that is documented in a manner by counsel that minimizes future disputes. Finally, the beneficiary of the trust was the stepmother of the contestant. The stepparent vs. child from prior marriage is a common litigation scenario that even careful planning may not avoid. But involving an experienced estate planning attorney in any drafting can help minimize risks.
Any final words of wisdom for estate planners and probate lawyers of the world based on what you learned in this case?
In any document dispute, a careful reading of all the document terms should be done and was very helpful here. In adversary proceedings, remember that parties-litigant are bound by allegations of their pleadings, and admissions contained in the pleadings are, as between parties themselves, accepted as facts without necessity of supporting evidence. Carvell v. Kinsey, 87 So. 2d 577, 579 (Fla. 1956); Ash v. Ash, 332 So. 3d 563, 567 (Fla. 3d DCA 2021). In terms of planning and probate, a key point from this case, and prior Third District precedent, is that a valid present transfer of real property to a revocable trust transfers legal title to the trustee, even though the settlor retains the power to revoke the trust.
One of the useful aspects of the decision is that the Third District confirmed that the substance of the instrument, rather than its title or conventional form, determines whether it can operate as a deed. But practitioners should not confuse that legal principle with a recommendation to dispense with conventional deeds when funding real property into trusts. A separate deed to fund real property into a trust is a better practice.