Should a Beneficiary Always Have to Renounce Their Trust Interest Before a Challenge?

In Florida, the “renunciation rule” forces a beneficiary to renounce their interest in a trust before challenging the validity of the trust instrument. This rule is premised on the fact that it would not be equitable for a beneficiary to obtain a benefit from a trust instrument that they claim to be invalid.

In Gossett v. Gossett, the court of appeals made it clear that this is not a hard-and-fast rule. A surviving spouse, who was serving as trustee, began to make distributions to the decedent’s son in hopes that he would not challenge the validity of the trust; the trust had been amended five times before the decedent’s death with one particular amendment disinheriting his surviving spouse whom he was in divorce proceedings with. The son accepted the distributions but soon filed a claim seeking to invalidate the trust. After reaching the court of appeals, the main issue was whether the renunciation rule applies to the son under the facts of this case. Because the son would be entitled to more than he had already received under any amended trust instrument, the court concluded that the son’s trust action was successful. Ultimately, this case shows that courts can look at the facts of each case to determine whether it is equitable to force a beneficiary to return distributions before filing a contest action.

See Elizabeth Bowers, Renunciation of Trust Interest Before Challenge, Wealth Management, August 2, 2016.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.