Reno v. Hurchalla, — So.3d —-, 2019 WL 3938297 (Fla. 3d DCA August 21, 2019)
When Janet Reno executed a trust in 2008, it was just a few years after she’d concluded her run as the second-longest serving Attorney General in U.S. history.
And what was top of mind for her? It wasn’t some grand plan to immortalize herself. Based on the text of her trust agreement, her focus was on what would happen to the family home once she was gone.
The Reno home:
When her mother died in 1992, Reno inherited the family’s built-by-hand, un-airconditioned, rambling Cracker-style house that had served as the launching pad for her career and remained an emotional touchstone for life. Here’s how the house and surrounding 3+ acres were described in a 2002 Miami Herald story:
The image of Reno’s marooned-in-the-tropics upbringing has become South Florida legend over the years, a tale whittled and polished in countless political speeches into one enduring symbol: the house. …
Once located as far west as her mother could build without hitting swamp land, the house now sits — unchanged and unbowed — in the heart of Kendall in suburban Miami, a leafy oasis at the end of an unmarked driveway. Ungainly on the outside, an unruly jumble on the inside, it was sturdy enough to weather Hurricane Andrew with the loss of just one shingle. (The lost shingle is nailed to the wall by the kitchen, enscribed: “Andrew, Aug. 24, ’92.”)
… In eight years as attorney general and 15 as state attorney in Miami, Reno has summoned up “the ranch” as proof of her Old Florida roots until the house has become virtually indistinguishable from the woman herself.
“Mother built it, and Daddy helped with the heavy work when he came home from work at night,” Reno says whenever she’s asked about the house. “That taught me that you can do anything you put your mind to, if you have some time.”
The dangers of “over” drafting:
A well-drafted trust agreement should be elegant, clear, and unambiguous; it should be organized, cohesive and thoughtful. Ironically, your client can be her own worst enemy when it comes to drafting her documents if there’s an issue she really, really cares about, which often leads to “over” drafting.
What I mean by over drafting is the tendency to treat a will or trust agreement like a long family letter vs. the carefully crafted, technical legal instrument it needs to be to avoid future disputes. That’s what I see in the Reno trust.
Reno never married or had children. The focus of her planning was instead on what was supposed to happen with the family home she herself had inherited from her mother. This concern is so important to Reno the word “homestead” gets repeated 18 times in her trust. Unfortunately, this gave rise to internal inconsistencies that ultimately lead to the outcome no one wants: intra-family litigation.
Reno died on November 7, 2016. In Art. V.D. of her trust, the trustee is instructed to sell the Reno home and split the proceeds equally among her nieces and nephews if Reno’s brothers, Mark and Robert, predecease her (which they did).
Upon the death of MARK and ROBERT, in the event the homestead is still owned by the Trust, such property shall be sold and the proceeds of the sale, together with any other corpus and undistributed income still owned by the Trust shall be distributed to Settlor’s nephews and nieces, share and share alike, free of any Trust.
In Art. VI.C. of her trust, the trustee is given contrary instructions. In this section of the document the trustee is instructed to gift the Reno home to the University of Miami (UM) to be preserved “in perpetuity.”
Upon the death of Settler, in the event the homestead is still owned by the Trust, the Trustee shall offer to gift the homestead to the University of Miami upon such terms and conditions as the Trustee deems appropriate and in the best interest of the Trust … The University will preserve and maintain the homestead in perpetuity and may utilize the homestead for such uses as it deems appropriate so long as such use does not destroy the homestead or its unique character …
Following Reno’s death, one of her nieces claimed the trust should be construed as forcing a sale of the family home. The rest of the family sided with preserving the home. The case wasn’t framed as a trust-construction action, but was instead litigated as a cy-près proceeding involving an alternate gift to Miami-Dade College (MDC) following UM’s declination.
“Cy-près” is an old Norman French term meaning “as near as possible” or “as near as may be.” When a settlor’s original “charitable purpose” becomes impossible, impracticable, or illegal to perform, the cy-près doctrine, which has been codified in section 736.0413 of Florida’s Trust Code, allows a court to amend the terms of the trust as closely as possible to the original intention of the settlor to prevent the donation from failing.
When UM declined, MDC and the estate negotiated a Real Estate Transfer and Preservation Agreement and Trustee’s Distributive Deed effectuating the donation and preserving the Reno home. MDC’s south campus is just a half-mile away and the home’s expected to become an extension of the school’s environmental center.
Based on this agreement the trial court and the 3d DCA both ruled the Reno home should go to MDC instead of being sold. Here’s how the 3d DCA explained its rationale:
In the present case, the specified charitable donee had not “ceased to exist” when Ms. Reno passed away, but the statute’s use of the terms “impracticable” or “impossible to achieve” addresses the Successor Trustee’s alternative. The University of Miami’s declination to accept the charitable transfer made the original disposition impossible to achieve. But the Successor Trustee identified an even-closer charitable, educational institution to accept the gift and to comply fully with Ms. Reno’s conditions “in perpetuity,” respecting the “unique character” and “historical importance” of the Reno Homestead.
Article VII of the Trust, “Trustee’s Powers,” specified in section A that in administering the Trust, “the Trustee shall have all powers granted a trustee by the Statutes of the State of Florida and laws of Florida ….” One such statutory power is that conferred by the cy pres statute, section 736.0413, invoked by the Successor Trustee in this case.
After losing at the 3d DCA, the objecting niece asked the Florida Supreme Court to weigh in. Both sides filed briefs (see here, here). The Florida Supreme Court declined to intervene, which means the 3d DCA’s ruling stands.
Bonus: Drafting gift agreements that are enforceable by family members:
As explained in my write up of the Bower Foundation case, in the absence of a written gift agreement preserving standing for a donor’s family, they simply have no legal say in how the gift is administered in future years. For example, if MDC decided 10 years from now that the best way to “preserve” the Reno home was to build a parking garage over it, Reno’s family wouldn’t have standing to challenge that decision in court in the absence of a family-standing clause.
Any action to remedy an alleged breach of the conditions set forth in this paragraph 3 must be brought in the Circuit Court in and for Miami-Dade County, Florida and shall only be brought by no less than a majority of the named beneficiaries identified in the second paragraph of Article III of the RENO TRUST. For this purpose, a majority in interest of the lineal descendants of a deceased beneficiary identified in the second paragraph of Article Ill of the RENO TRUST may constitute a required beneficiary referred to in the preceding sentence. However, before an action may be brought, COLLEGE must be given written notice detailing the alleged breach and be provided no less than thirty (30) days within which to cure or begin to cure the alleged breach.
If you’re a practicing trusts and estates attorney, sample documents vetted by well-represented parties in real life transactions are gold. You’ll want to add both of these documents to your tool box for future reference.