## Facts

- Leonard Contella was the life-income beneficiary of an irrevocable spendthrift trust created by Leonard and his father.
- Leonard’s children were named as remainder beneficiaries entitled to receive the trust principal upon Leonard’s death.
- The trust corpus consisted primarily of real property, and legal title to the property remained in the trustee rather than in Leonard personally.
- Leonard had no express power under the trust instrument to revoke or terminate the trust, or to take the principal for himself.
- The trustee executed a certificate authorizing Leonard to act for the trust in significant day-to-day matters, including directing sales, making investments, and handling distributions of trust income.
- In connection with the Contellas’ dissolution of marriage proceedings, Leonard’s wife, Alice Contella, sought to terminate the trust under the doctrine of merger.
- Alice argued that Leonard’s extensive authority over trust administration effectively placed both the legal and equitable interests in Leonard.
- The trial court entered an order dissolving the trust and appointing a receiver to sell trust assets.
- Leonard appealed the portion of the order terminating the trust and authorizing liquidation through the receiver.

## Issues

1. Does the doctrine of merger terminate an irrevocable spendthrift trust when the life-income beneficiary has broad management authority, but the trustee retains legal title and remainder beneficiaries hold equitable interests in the principal?

## Decision

- The Fifth District Court of Appeal reversed the portion of the order dissolving the trust and providing for liquidation through a receiver.
- The court held that merger did not apply because Leonard did not hold both the entire legal interest and the entire equitable interest in the trust property.
- The case was remanded for further proceedings consistent with the appellate court’s ruling.

## Legal Principles

- A trust ends by merger only when the same person holds the full legal title and the full beneficial interest, and those interests are coextensive and commensurate so that no separation of ownership remains.
- Merger does not occur when a life beneficiary holds a present right to income but other persons hold remainder interests in the principal.
- Broad delegated administrative authority given to a beneficiary does not, by itself, transfer legal title to that beneficiary or make the beneficiary the sole owner of the trust property.
- Where a trustee retains legal title to the trust res and other beneficiaries hold remainder interests, the required unity of legal and equitable ownership for merger is absent, and an irrevocable spendthrift trust cannot be terminated on that theory.

## Conclusion

Because the trustee retained legal title to the trust property and Leonard’s children held remainder interests in the principal, Leonard did not own both the entire legal and equitable interests needed for merger; therefore, the appellate court reversed the order terminating the irrevocable spendthrift trust and ordering liquidation and remanded for further proceedings.


Contella v. Contella, 559 So. 2d 1217 (1990)