## Facts

- A testatrix executed a will creating a testamentary trust that paid trust income to her three sons for life, with principal and undistributed income to the sons’ lineal descendants after the last son’s death.
- The will directed trustees to determine “income and principal” in accordance with Florida’s income-and-principal statutes.
- At the testatrix’s death, Florida law generally treated cash dividends on corporate shares held in trust as income and stock dividends in the same corporation as principal.
- After the testatrix’s death, Florida amended its principal-and-income statute to provide that distributions of capital of mutual investment trusts would be deemed principal.
- Years later, the trustees invested trust assets in mutual funds and received substantial cash dividends and capital gains distributions.
- The trustees allocated mutual-fund cash dividends to income and capital gains distributions to principal, prompting a dispute between the life income beneficiaries and the remainder beneficiaries.
- The trustees filed an action for declaratory relief to determine whether mutual-fund cash dividends should be classified as income or principal.

## Issues

1. Whether a will’s direction to apply Florida’s income-and-principal statutes incorporates the statutes as they existed at the testatrix’s death or includes later statutory amendments.
2. Whether mutual-fund cash dividends received during trust administration must be treated as income under the statute in force at death or as principal under a post-death amendment.

## Decision

- The Florida Supreme Court granted certiorari and quashed the district court’s affirmance of the trial court’s ruling.
- The Court held the statutory reference in the will incorporated the income-and-principal law in effect at the testatrix’s death, not later amendments.
- Under the law in force at death, the mutual-fund cash dividends at issue were classified as income payable to the life beneficiaries.
- The case was remanded for further proceedings consistent with the Court’s construction of the trust.

## Legal Principles

- A testator’s intent is determined as of the time the will takes effect at death, and the law in force at death is treated as part of the will for purposes of construction.
- A will’s incorporation of a statutory scheme by reference is generally construed as static (fixed to the statute in force at death) unless the instrument clearly indicates an intent to adopt future legislative changes.
- Courts disfavor applying later statutory amendments to reclassify receipts in a way that would alter the allocation of economic benefits between income beneficiaries and remainder beneficiaries absent clear retroactive direction.

## Conclusion

The court construed the trust’s directive to follow Florida’s income-and-principal statutes as a reference to the statutes in effect at the testatrix’s death, thereby requiring mutual-fund cash dividends to be treated as income and preventing a post-death amendment from shifting those distributions to principal.


Jenkins v. Donahoo, 231 So. 2d 809 (Fla. 1970)