Genna Demircan, etc., et al. v. Igor Mikhaylov, et al.

Summary

The Florida Third District Court of Appeal affirmed modification of an irrevocable trust under the common law *Preston* rule, holding that the Florida Trust Code does not abrogate the right of a settlor and all beneficiaries to jointly consent to modification. The court also held that a trustee has standing to appeal as an “interested person,” and that a person with only the power to appoint trustees is not an indispensable party. The denial of attorney’s fees to the former trustee was reversed because the trust’s indemnification clause required payment absent a finding of bad faith or reckless indifference.

Holdings

1. The current trustee has standing to oppose modification on appeal because the trust conferred upon trustees standing to seek modification or sue for a declaration against removal, and trustees are 'interested persons' under sections 736.0811 and 86.041(3).
2. Zinoviev was not an indispensable party because a complete and efficient determination of the equities and rights between the other parties was possible without joining him; his interest as a person designated to appoint trustees is not greater than that of the trustees he appoints.
3. Common law trust modification under Preston—based on consent of the settlor and all beneficiaries—is not abrogated by chapter 736 and does not require findings under section 736.04113; section 736.04113(4) expressly preserves common law rights.
4. A waiver of revocation or amendment power by the settlor does not preclude Preston modification unless the trust expressly conditions modification on the trustee's assent, which this trust did not; a trustee has no reason in law or equity to oppose modification where settlor and all beneficiaries consent.
5. The trial court erred as a matter of law in denying the former trustee's attorney's fees mandated by the trust's indemnification provision, as the trust required such fees to be paid absent a final determination of bad faith or reckless indifference, and no such finding was made.

Questions Presented

1. Whether the current trustee has standing to appeal modification of the trust.
2. Whether an indispensable party was not joined.
3. Whether the trial court erred as a matter of law in modifying the trust under the common law rule of Preston v. City National Bank of Miami.
4. Whether the trial court erred in denying attorney's fees mandated by the trust terms.

Disposition

affirmed in part; reversed and remanded in part