$25 million probate battle pits Florida's slayer statute against its pretermitted-spouse statute

A NY Times article entitled A Lurid Aftermath to a Hedge Fund Manager’s Life reports on a brewing dispute over a Jupiter, FL estate reportedly "worth at least $25 million."  The following excerpts from the linked-to article give us a sense of what kind of case this will be (ugly!) and where the battle lines are being drawn:

JUPITER, Fla. — A life of private jets and black-tie balls ended with Seth Tobias, a wealthy investment manager and a familiar presence on CNBC, floating face down in the swimming pool of his mansion here.

*     *     *     *     *

Mr. Tobias, who was 44 years old, had apparently suffered a heart attack, his brother Spence said at the time. The police did not consider his death suspicious.

But now an unfolding drama over Mr. Tobias’s estate is providing a lurid account of fast money and faster living in the volatile world of hedge funds. Mr. Tobias’s four brothers and Mrs. Tobias are locked in a legal battle over the estate, which is worth at least $25 million. And, in a civil complaint, they have gone so far as to accuse her of murder.

The brothers, Samuel, Spence, Scott and Joshua, claim Mrs. Tobias drugged her husband and lured him into the pool. Bill Ash, a former assistant to Mr. Tobias, said he had told the police that Mrs. Tobias confessed to him that she had cajoled her husband into the water while he was on a cocaine binge with a promise of sex with a male go-go dancer known as Tiger.

*     *     *     *     *
At the center of the dispute is Mr. Tobias’s will, which designates his brothers as beneficiaries but does not name Mrs. Tobias. She contends that she is entitled to the estate because the will was signed before the couple married. In court filings, the Tobias brothers invoke Florida’s “slayer statute,” which prohibits inheritance by a person who murders someone from whom they stand to inherit. They claim she “intentionally killed” her husband “by asphyxiation and drowning.”

Florida's "pretermitted spouse" statute:

Mrs. Tobias' argument is based on Florida's version of the pretermitted spouse rule.  Here's how that argument is played out:

Mr. Tobias married Mrs. Tobias after making his will.  As such, pursuant to F.S. §732.301, regardless of what the will says, Mrs. Tobias is entitled receive a share of his $25+ million estate equal in value to that which she would have received if Mr. Tobias had died intestate, unless 1) provision has been made for, or waived by, Mrs. Tobias by a nuptial agreement; 2) Mrs. Tobias is otherwise provided for in the will (she apparently is not); or 3) the will discloses an intention not to make provision for Mrs. Tobias.

Pursuant to F.S. §732.102, the intestate share to which Mrs. Tobias would be entitled is as follows: a) If there are no living lineal descendants of Mr. Tobias, she gets the entire intestate estate; b) if there are surviving lineal descendants of Mr. Tobias, all of whom are also Mrs. Tobias' lineal descendants, she gets  the first $60,000 of the intestate estate, plus one-half of the balance of the intestate estate; and c) if there are surviving lineal descendants of Mr. Tobias, one or more of whom are not lineal descendants of Mrs. Tobias, she gets one-half of the intestate estate.

Florida's "slayer" statute:

Mr. Tobias' surviving brothers argue that Mrs. Tobias murdered her husband, and thus she shouldn't get a penny of the estate under Florida's version of the "slayer" rule, a doctrine I've written about before [see here, here, here]. 

Florida’s slayer statutes are found at F.S. § 732.802 (probate estates) and F.S. § 736.1104 (trust estates).

Although a murder conviction would make things easier for the Tobias brothers, it's not a pre-condition to their lawsuit. If Mrs. Tobias were convicted of the murder, that would conclusively divest her of all of her interest in Mr. Tobias' estate; but if Mrs. Tobias were acquitted of the murder (or never charged), the probate court could still weigh the evidence and determine "by the greater weight of the evidence" whether or not she should be divested. Here is the key language from F.S. § 732.802:

(1) A surviving person who unlawfully and intentionally kills or participates in procuring the death of the decedent is not entitled to any benefits under the will or under the Florida Probate Code, and the estate of the decedent passes as if the killer had predeceased the decedent.

*     *     *     *     *

(5) A final judgment of conviction of murder in any degree is conclusive for purposes of this section. In the absence of a conviction of murder in any degree, the court may determine by the greater weight of the evidence whether the killing was unlawful and intentional for purposes of this section.

Income Tax Planning in Probate: IRS Rules Gain from Post-Death Sale of Decedent's Real Property under Pre-Death Contract Wasn't IRD

Clients are often surprised to learn that, for the most part, inherited assets are received income tax free. In addition to being income tax free, the appreciation on capital assets received from a decedent is also forgiven. The tax mechanism that allows for the forgiveness of the appreciation is known as a “step-up” in basis. A step-up in basis allows the beneficiary to sell an asset received from a decedent income tax free.

Income in Respect of a Decedent (“IRD”)

The primary exception to the general step-up-in-basis rule is income in respect of a decedent (“IRD”). Common examples of IRD include pension, IRA and 401(k) distributions, certain annuity payments and the decedent’s final paycheck.  For a detailed explanation of IRD from a CPA's perspective, see Maximizing the Tax Deduction for Income in Respect of a Decedent.

IRD can also include post-death sales of the decedent's property if the sales contract was finalized prior to death.  This can be a very big deal.

For example,  assume Dad owned real property with a basis of $1,000 and a fair market value of $1,000,000 on the day he died.  Usually, this property would receive a step-up in basis to its date-of-death value.  So Son would inherit the property with a basis of $1,000,000.  If Son sells the property 1 day after Dad dies, he pays zero income tax on the sale.  However, if the real property was subject to a pre-death sales contract, and the sale closes 1 day after Dad dies, the gain would be considered IRD and Dad's estate would have to pay income tax on $999,000 in gain.  Assuming a 15% tax rate, the tax bite would be $149,850!

IRS Rules Gain from Post-Death Sale of Decedent's Real Property under Pre-Death Contract Wasn't IRD: "Economically material contingencies might have disrupted the sale prior to Decedent's death." 

Obviously, spotting IRD issues in a probate proceeding and knowing how to best manage them can save your client big bucks; and turn your average probate lawyer into the family hero.  In Private Letter Ruling 200744001, the IRS provides an excellent road map for understanding what IRD is and, most importantly, how to avoid paying income taxes on IRD if the pre-death contract is subject to "economically material contingencies that might have disrupted the sale prior to Decedent's death."  Remember that phrase, it's the key to everything that's going on in this private letter ruling.

IRS Private Letter Ruling 200744001:


The information submitted states that Taxpayer, Decedent’s revocable trust, entered into a contract to sell a plot of real property on D1, with an intended closing date of D2. Before D2, however, a gas pipeline was discovered underneath the property, causing the parties to delay the sale until Taxpayer, the buyer and the pipeline’s operating company could resolve a number of issues. The parties needed to address matters such as providing for an easement for the pipeline company to enter onto the property as well as providing that the pipeline company would provide restitution for any damage to the property. Before the parties could resolve these issues, Decedent died on D3. The sale did not actually close until D4.


Section 691(a)(1) provides that the amount of all items of gross income in respect of a decedent (IRD) which are not properly includible in respect of the taxable period in which falls the date of the decedent's death or a prior period (including the amount of all items of gross income in respect of a prior decedent, if the right to receive such amount was acquired by reason of the death of the prior decedent or by bequest, devise, or inheritance from the prior decedent) shall be included in the gross income, for the taxable year when received, of: (A) the estate of the decedent, if the right to receive the amount is acquired by the decedent's es tate from the decedent; (B) the person who, by reason of the death of the decedent, acquires the right to receive the amount, if the right to receive the amount is not acquired by the decedent's estate from the decedent; or (C) the person who acquires from the dec edent the right to receive the amount by bequest, devise, or inheritance, if the amount is received after a distribution by the decedent's estate of such right.

Section 1.691(a)-1(b) of the Income Tax Regulations provides that the term “income in respect of decedent” refers to those amounts to which a decedent was entitled as gross income but which were not properly includible in computing the decedent's taxable income for the taxable year ending with the date of the decedent's death or for a previous taxable year under the method of accounting employed by the decedent. Thus, the term includes income to which the decedent had a contingent claim at the time of the decedent's death.

Section 1014(a) provides that the basis of property in the hands of a person acquiring the property from a decedent or to whom the property passed from a decedent shall, if not sold, exchanged, or ot herwise disposed of before the decedent's death by such person, be the fair market value of the property at the date of the decedent's death.

Section 1014(b)(1) provides, in part, that for purposes of section 1014(a), property acquired by bequest, devise or inherit ance, or by the decedent's estate from the decedent shall be considered to have been acquired from or to have passed from the decedent.

In Rev. Rul. 78-32, 1978-1 C.B. 198, prior to death, a decedent had entered into a binding contract to sell real estate, had substantially completed all of the substantive prerequisites of consummation of the sale, and was unconditionally entitled to the proceeds of the sale at the time of death. The ruling holds that the gain realized from the sale of the real estate that was completed by the decedent's executor is income in respect of a decedent within the meaning of § 691(a).

In Taxpayer's case, important issues needed to be addressed before the sale of the property could be closed. The closing was delayed until D4 because of these issues. Taxpayer needed to attend to substantive as well as ministerial matters. The pipeline was not discovered until after the original contract was entered into; this created economically material contingencies that might have disrupted the sale prior to Decedent's death.


Based solely on the facts and representations submitted, we conclude that any gain realized from the sale of the property after Decedent's death does not constitute income in respect of a decedent within the meaning of § 691. We further conclude that basis of the property in Taxpayer's hands before the sale should be determined under § 1014(a).

The wife of missing adventurer Steve Fossett has asked a court to declare him dead

In Florida a death certificate is prima facie proof of the “fact, place, date, and time of death as well as the identity of the decedent.” § 731.103(2), Fla. Stat. (2007). It is not conclusive proof of any fact related to the death.  If insurance proceeds are at stake, you'll need a lot more than a death certificate to prove the insured is dead [click here and here for real-life examples of this point].

In a CNN article entitled Wife of missing adventurer wants him declared dead, we get a glimpse of the quantity and quality of the circumstantial evidence Steve Fossett's wife will be submitting in Illinois to legally establish the fact of his death.  I am assuming insurance proceeds are at stake in this case.  Excerpts from the linked-to CNN article demonstrate that Mrs. Fossett is going far beyond simply filing a copy of his death certificate:

"As difficult as it is for me to reach this conclusion, I no longer hold out any hope that Steve has survived," wrote Peggy V. Fossett in court documents filed Monday with the Cook County [Illinois] Circuit Court.

She asked that the will of her husband of 38 years be admitted to probate.

*     *     *     *      *

"No one involved in the search holds out any hope that Fossett is still alive," the petition said.

Rick Rains, a sheriff's supervisor of the San Diego County Sheriff's Department, said Fossett's plane was last spotted at 11 a.m. less than 20 miles from the ranch's airport. "Given the timeline and the sighting of Fossett's plane, I believe he was within 20 to 25 miles of the ranch when he crashed," Rains said.

But, he noted, "the terrain is very difficult to search, with many areas where the crevices, deep ravines and closely grown trees make it impossible to see from the air what is on the ground."

"If Fossett was physically able to find water to survive on in the Nevada desert, he would have been physically capable of signaling searchers, by doing something as simple as crafting a large X of sticks or rocks, or by starting a signal fire," Rains said.

In affidavits supporting his wife's petition, Fossett's doctor described the 63-year-old man as physically and mentally fit.

Robert Keilholtz, a captain in the California Civil Air Patrol who was involved in the search, noted that the difficulty in finding wreckage was underscored by the fact that World War II-era plane wreckage was discovered last spring in the mountain range.

In the search for Fossett, wreckage from eight other crashes was discovered, one of them from the 1960s, the lawyers said.

Indictments issued in Brooke Astor estate feud

In the latest twist to the Brooke Astor estate litigation [click here for a chronology of the case], Ms. Astor's son, Anthony D. Marshall, has been indicted on charges of plundering his mother's $198 million estate.  Here’s an excerpt from an AP article headlined Brooke Astor's son accused of plundering estate:

An indictment charges Marshall, 83, with grand larceny, criminal possession of stolen property, forgery, scheme to defraud, falsifying business records, offering a false instrument for filing and conspiracy.

The top count, grand larceny, is punishable by up to 25 years in prison.

Marshall's former attorney, Francis X. Morrissey Jr., also has been indicted on those charges.

"The indictment charges that Marshall and Morrissey took advantage of Mrs. Astor's diminished mental capacity in a scheme to defraud her and others out of millions of dollars," said District Attorney Robert Morgenthau.

Marshall's son, Philip, prompted the criminal investigation last year after he accused his father of neglecting Astor's care and stealing her money.

While a criminal indictment may seem like a win for the parties suing Mr. Marshall in the NY probate proceedings, in the long run it will likely cause more harm than good in the civil litigation.  For example, as previously reported by the NY Times in Talks on Astor Estate Halted to Clear Way for a Criminal Inquiry, settlement discussions that were apparently making good progress have now been halted at the behest of the prosecutor's office:

The district attorney’s office wants the settlement talks, being held under the auspices of the Westchester County Surrogate’s Court, held at bay to prevent prosecutors from losing a strategic edge, should indictments and a criminal trial result, according to the people who have been briefed.

This could happen, for example, if their key witnesses were deposed in the Westchester case by Mr. Marshall’s lawyers, who could then learn details of the district attorney’s line of inquiry, the people said.

*     *     *     *     *

During a half-hour hearing .  .  . Judge Anthony A. Scarpino asked a representative for the attorney general if the office’s position regarding settlement talks remained the same. He was told that it did.

“Negotiations are on hold status, as far as we’re concerned,” the judge then said, without mentioning the specific reason behind the stalled talks.

He reiterated that protracted litigation as a result of an inability to settle the case was “going to cost the charities a lot of money” by eroding their bequests. The settlement discussions spanned two weeks or so last month. The talks, spurred by the question of which of Mrs. Astor’s wills should be the valid one, focused on how much money the main charities would receive from her estate, which is valued at about $132 million, in addition to a trust estimated to be worth more than $60 million.

Not only do the civil litigants lose control of the case once a criminal indictment is issued, discovery becomes much more challenging because the other side can now "plead the 5th" and simply refuse to answer your questions in a deposition.  I've written before about this tactic [click here].  Ask yourself: who really benefits when the other side is indicted?

Lesson learned:

Criminal indictment = more expensive and time consuming civil litigation = unhappy client.

The 11th Circuit on estate tax valuation discounts; dissent decries "doctrine of ignoble ease"

Estate of Jelke v. C.I.R., --- F.3d ----, 2007 WL 3378539 (11th Cir. Nov 15, 2007)

The best nugget of wisdom - and most entertaining quote - found in this opinion comes from Judge Carnes' dissent:

The death of a human being is profoundly important to the person who dies, but it matters not one whit to the laws of economics, which dictate the self-interest of the living.

At the end of the day, once you strip away all the extraneous drama inherent to most trusts-and-estates litigation, that's what it all boils down to: the laws of economics, dollars and cents, i.e., "show me the money."  Forget that bit of insight in the heat of a case and you're toast.

Now back to the scintillating world of estate-tax valuation law.

In this case the 11th Circuit reversed the Tax Court by holding that the proper valuation approach for estate tax purposes of stock interest owned by the decedent in a closely-held, investment holding company, was to apply a dollar-for-dollar reduction of the company's entire built-in capital gains tax liability.  The logic of this approach is best understood in terms of a concrete example, which the court provided at Footnote 25:

FN25. The Second Circuit used an example from tax treatise, Bittker & Eustice, Federal Income Taxation of Corporations and Shareholders ¶ 10.41 [4] n. 11 (Warren, Gorham & Lamont, 6th ed.1998), to illustrate that a hypothetical buyer and seller would allow a discount for built in capital gains tax:

In the example, A owns 100% of the stock of X corporation, which owns one asset, a machine with a value of $1,000, and a basis of $200. Bittker assumes a 25% tax rate and points out that if X sells the machine to Z for $1,000, X will pay tax of $200 on the $800 gain. Bittker adds that if Z buys the stock for $1,000 “on the mistaken theory that the stock is worth the value of the corporate assets,” Z will have lost $200 economically “because it paid too much for the stock, failing to account for the built-in tax liability (which can be viewed as the potential tax on disposition of the machine, or as the potential loss from lock of depreciation on $800 [of] basis that Z will not enjoy.”) Because of Z's loss, Bittker concludes, “Z will want to pay only $800 for the stock, in which even A will have effectively ‘paid’ the $200 built-in gains tax.”

Estate of Eisenberg, 155 F.3d at 58 n. 15.

Now that I've hit the tax issue, I want to come back to Judge Carnes' dissent.  He argues that the majority took the easy road when it overruled the Tax Court.  For Judge Carnes, taking the easy road is a much bigger SIN than calling a tax issue the wrong way.  Taking the easy road leads to the downfall of civilization!!  So saith Judge Carnes:

The tax code is nowhere near the center of my intellectual life, and generally I find estate tax law about as exciting as Hegel's metaphysical theory of the identity of opposites. There is, however, more involved in this case than just the estate tax issue presented, which is how to determine the fair market value of the decedent's distinctly minority interest in CCC, a closely held corporation whose assets consist primarily of marketable securities with a built-in capital gains tax liability.

The broader principles implicated by the majority opinion are timeless. They were discussed by Teddy Roosevelt at the close of the century before last:

I wish to preach not the doctrine of ignoble ease but the doctrine of the strenuous life; the life of toil and effort; of labor and strife; to preach that highest form of success which comes not to the man who desires mere easy peace but to the man who does not shrink from danger, from hardship, or from bitter toil, and who out of these wins the splendid ultimate triumph.

Vice President Theodore Roosevelt, The Strenuous Life, Address before the Hamilton Club in Chicago, Illinois (April 10, 1899), in The Penguin Book of Twentieth-Century Speeches 1 (Brian MacArthur ed., 1992). By adopting and extending the arbitrary assumption rule of least effort from Estate of Dunn v. Commissioner, 301 F.3d 339 (5th Cir.2002), the majority gives in to the judicial equivalent of the doctrine of ignoble ease. To avoid the effort, labor, and toil that is required for a more accurate calculation of the estate tax due, the majority simply assumes a result that we all know is wrong. We can do better than that. The tax court did.

Blatant self promotion: NBI Seminar - "The Probate Process from Start to Finish"

I will be speaking on December 11 and 12 on probate litigation at an NBI seminar entitled The Probate Process from Start to Finish."  Click here for a PDF copy of the brochure.  The dates and locations for the seminar are:

  • Miami, Florida - December 10, 2007
  • Dania, Florida - December 11, 2007
  • West Palm Beach, Florida - December 12, 2007

If you're an attorney looking to expand your practice into probate-administration matters, this introductory-level seminar is probably a good idea for you.  Here's how to register:

  • WEB: register online at www.nbi-sems.com
  • PHONE: (800) 930-6182 - weekdays 7:00 AM - 5:30 PM CST
  • FAX: (715) 835-1405
  • MAIL: NBI, Inc. P.O. Box 3067, Eau Claire, WI 54702

'Vexatious' Attorney Conduct Results in Removal of Executor

The statute governing removal of personal representatives ("PR") in Florida is 733.504Acrimony - no matter how heated - is usually NOT sufficient to warrant removal of a PR [click here for recent example].  However, the outcome may be different if you can establish a detailed factual record proving that the acrimony is such that a significant portion of the estate will be eaten up in litigation expenses if the designated PR is not removed.  Note the shift in emphasis from "I don't like him" so please remove him as PR, to "the estate assets will be wasted" so please remove him as PR.

Mark Fass of the New York Law Journal recently published an article entitled 'Vexatious' Attorney Conduct Results in Removal of Executor.  In that NY case, the PR (referred to as "executor") was removed based upon a detailed factual record proving that a PR's representation by a particular law firm was so likely to result in litigation and waste of estate assets, that the PR should be removed.  The court agreed, and removed the PR.  Here's an excerpt from the linked-to article:

The "vexatious conduct" of the attorneys in the distribution of a woman's estate has led to the disqualification of their client as executrix of the estate.

The complex familial dispute began with the intestate death of 83-year-old Roseanna DeLaune, in 1997. Pursuant to statute, her sister, Paula M. Venezia, was appointed administrator; her heirs included her disabled nephew, William Pennington III.

Venezia hired her childhood friend from Manhattan's Little Italy, attorney Alfred Sica, to serve as counsel. He in turn hired the firm now known as Vaneria & Spanos.

In 2003, Venezia, 85, died, leaving the entirety of her own million-dollar estate to the same nephew, Pennington. She nominated her goddaughter, Joanne Zaccaria, to serve as executrix. Zaccaria, who had no role in the disbursement of the first estate, hired the same counsel -- Sica and Vaneria & Spanos.

Meanwhile, over the intervening six years, the administration of DeLaune's estate had devolved into what Sica later termed "combat" between himself and Pennington.

Loath to let history repeat itself, Pennington objected to Zaccaria's appointment, based in part on her selection of the attorneys he crossed swords with following the death of his first aunt.

Brooklyn Surrogate Margarita Lopez Torres has granted the petition, disqualifying Zaccaria from overseeing Venezia's estate. The surrogate cited the "vexatious conduct" of Zaccaria's chosen attorneys during the administration of the previous estate.

"To permit Zaccaria to serve as executor, along with her chosen counsel of Vaneria & Spanos and Alfred Sica, Esq., would be detrimental to this estate," Surrogate Lopez Torres held in Estate of Venezia, 2100/2003.

"Because of the excessively hostile and bitter relationship between the nominated fiduciary, her counsel and Pennington, the appointment of Zaccaria as fiduciary ... would have the practical effect of rendering the bequests of decedent to her nephew a nullity, as this estate would surely be taken down the inevitable road to further combative litigation," she said.

Lesson learned:

The concept of "issue framing" is nothing new in politics [click here].  Same idea applies in litigation. How an issue is "framed" in estate proceedings is everything.  If a litigant frames the issue in terms of his or her personal interests, a probate court is not likely to respond favorably.  By contrast, as the linked-to article shows, if the litigant frames the issue in terms of preserving estate assets - the likelihood of success goes way up.

The Trustee's Duty to Inform and Report Under Florida's New Trust Code

At it's core, the job of trustee is as much about keeping beneficiaries adequately informed as anything else.  Most trust litigation can be traced back to a trustee's inability to adequately explain him or herself to the trust beneficiaries.  The importance of the trustee's duty to "inform and report" is summarized nicely in The Trustee's Duty to Inform and Report Under the Uniform Trust Code," 40 Real Property, Probate and Trust J. 373 (Summer 2005), by author and Denver, Colorado, trusts-and-estates attorney Kevin Millard:

To be able to enforce the trustee’s duties, the beneficiary of a trust must know of the existence of the trust and be informed about the administration of the trust. If there were no duty to inform and report to the beneficiary, the beneficiary might never become aware of breaches of trust or might be unaware of breaches until it is too late to obtain relief. In addition, providing information to the beneficiary protects the trustee from claims being brought long after events that allegedly constituted a breach, because the statute of limitations or the doctrine of laches will prevent the beneficiary from pursuing stale claims. As a result, the duty to inform and report to the beneficiary is fundamental to the trust relationship.

Florida Trust Code: Duty to Inform and Account

Under F.S. 736.0813 a Florida trustee has the duty to keep the "qualified beneficiaries" of an irrevocable trust reasonably informed of the trust and its administration.  The extent of this duty - which is limited solely to qualified beneficiaries - includes, but is not limited to, the following 5 specifically defined reporting duties:

  1. Within 60 days after acceptance of the trust, the trustee shall give notice to the qualified beneficiaries of the acceptance of the trust and the full name and address of the trustee.
  2. Within 60 days after the date the trustee acquires knowledge of the creation of an irrevocable trust, or the date the trustee acquires knowledge that a formerly revocable trust has become irrevocable, whether by the death of the settlor or otherwise, the trustee shall give notice to the qualified beneficiaries of the trust's existence, the identity of the settlor or settlors, the right to request a copy of the trust instrument, and the right to receive trust accountings.
  3. Upon reasonable request, the trustee shall provide a qualified beneficiary with a complete copy of the trust instrument.
  4. A trustee of an irrevocable trust shall provide a trust accounting, as set forth in F.S. 736.08135, to each qualified beneficiary annually and on termination of the trust or on change of the trustee.
  5. Upon reasonable request, the trustee shall provide a qualified beneficiary with relevant information about the assets and liabilities of the trust and the particulars relating to administration.
Qualified Beneficiaries:

The term “qualified beneficiary” is used pervasively throughout the Florida Trust Code, not just with respect to a trustee's duty to inform and report.  So if you're a Florida trustee, you need to know this term cold.

As used in the Florida Trust Code, the term “beneficiary” refers to the universe of persons who have a beneficial interest in a trust, as well as to any person who has a power of appointment over trust property in a capacity other than as trustee. F.S. 736.0103(4)  It is immaterial for this purpose whether the beneficial interest is present or future, vested or contingent, or whether the person having the interest is ascertainable or even living. By contrast, the term “qualified beneficiary” encompasses only a limited subset of all trust beneficiaries. In effect, the class is limited to living persons who are current beneficiaries, intermediate beneficiaries, and first-line remainder beneficiaries, whether vested or contingent.  Here's how its defined in F.S. 736.0103(14):

(14) "Qualified beneficiary" means a living beneficiary who, on the date the beneficiary's qualification is determined:

(a) Is a distributee or permissible distributee of trust income or principal;

(b) Would be a distributee or permissible distributee of trust income or principal if the interests of the distributees described in paragraph (a) terminated on that date without causing the trust to terminate; or

(c) Would be a distributee or permissible distributee of trust income or principal if the trust terminated in accordance with its terms on that date.

Jurisdictional Competition for Trust Funds: Florida's Competitive Strengths

I recently had the pleasure of speaking at a luncheon hosted by the Miami Branch of the "Society of Trusts and Estates Practitioners" (STEP).  Originating in the U.K., this organization has grown exponentially in the last few years by attracting international planners from around the world.

I was asked to explain Florida's new trust code - in 30 minutes or less.  Feeling a bit overwhelmed by the scope of the topic, I did what any good litigator would do: I redefined the question to my liking, speaking instead on how Florida's new trust code fits into competition for trusts-and-estates business at the "macro" state level.  Entitled Jurisdictional Competition for Trust Funds: Florida's Competitive Strengths, the discussion outline should be of interest to anyone who's ever been asked to explain why Florida is better/just as good as jurisdiction "X" [you fill in the blank] for trust "situs" purposes.

Creditor claims in probate: substance trumps form

In re Estate of Koshuba, --- So.2d ----, 2007 WL 2934936 (Fla. 2d DCA Oct 10, 2007)

Florida law doesn't cut creditors any slack when it comes to blowing limitations periods [click here, here for recent examples], but creditors do get some leeway when it comes to "how" they make it known to the world that the estate owes them money.  As long as the creditor files something in the probate proceeding with sufficient detail to put interested parties on notice of "the character and extent of his claim," that should be sufficient.

Petition for Administration as "Claim" Form:

In the linked-to case the creditor filed a petition for administration of the decedent's estate in an attempt to enforce a real estate sales contract.  Here's how the court described his petition:

On September 12, 2003, Mr. Koshuba signed a contract agreeing to sell real property to Mr. Zilewicz. Mr. Koshuba died on December 1, 2003, before the parties closed on the contract. In order to enforce his right to purchase the property under the agreement, Mr. Zilewicz filed a Petition for Administration of the estate of Mr. Koshuba on June 17, 2005. The petition alleged, in part:

[Mr. Zilewicz] has an interest in these proceedings because of an obligation between [Mr. Zilewicz] and decedent's estate. Said obligation consists of a purchase and sales agreement made by and between petitioner and decedent as evidenced by the Notice of Interest in Real Estate recorded in the Public Records of Sarasota County, Florida, under instrument number 2004099787. [Mr. Zilewicz] is willing to act as petitioner because the heirs have made no application to administer the estate.

The trial court appointed Robin Vasquez as personal representative of the estate. On September 16, 2005, Mr. Zilewicz filed an Amended Petition for Appointment of Guardian ad Litem to represent the interests of unidentified heirs. In this document, Mr. Zilewicz alleged: “Petitioner and the decedent entered into a sales and purchase agreement for the purchase of real property located in Sarasota County, Florida. A copy of said agreement is attached hereto as Exhibit A.” This document also lists the nature of assets in the estate as “Unimproved Real Property” and lists the approximate value at time of death as $7000.

Trial Court Says "No," 2d DCA Says "Yes":

The probate court effectively struck the creditor's claim because "no cause of action was timely filed by the purchaser in accordance with F.S. 733.702(1), F.S. 733.702(6) and F.S. 733.710.”  The 2d DCA reversed on two grounds: "Form" and "Timeliness."


Here's how the 2d DCA addressed the "form" issue, basing it ruling on the pivotal Florida Supreme Court opinion in May v. Illinois National Insurance Co., 771 So.2d 1143 (Fla.2000).

We agree with the Personal Representative's assertion on appeal that Mr. Zilewicz's written statements, made within his Petition for Administration and the Amended Petition for a Guardian ad Litem, were substantially sufficient to place interested persons on notice of his claim. The documents filed in the probate proceeding by Mr. Zilewicz are defective as to form, but they sufficiently state the character and extent of his claim.


Here's how the 2d DCA addressed the "timeliness" issue, focusing on a key 2002 legislative change:

We further conclude that a claim by Mr. Zilewicz was timely filed in accordance with sections 733.702 and 733.710, Florida Statutes (2003). In May, 771 So.2d at 1150, the court held that section 733.702, Florida Statutes (1991), is a statute of limitations that operates as a bar to claims not “ ‘filed within the later of 3 months after the time of the first publication of the notice of administration or, as to any creditor required to be served with a copy of the notice of administration, 30 days after the date of service of such copy of the notice on the creditor.’ “ Section 733.702(1) has since been amended to substitute “on or before” for “within,” thus allowing claims to be filed before the notice of administration. Ch.2002-82, § 6, Laws of Fla. (eff. April 23, 2002). The amendment is pertinent to the instant case and renders the claim timely under section 733.702. Also, Mr. Zilewicz's claim would not be time barred by the two-year statute of nonclaim in section 733.710, which bars claims not filed within two years after a person's death.