$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.

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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.

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(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.

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.

'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.

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.

Tenancy by the entirety as shield in wrongful death litigation

Berlin v. Pecora, --- So.2d ----, 2007 WL 2710764 (Fla. 4th DCA Sep 19, 2007)

In 2003 Michael Pecora shot and killed his partner Jerome Berlin, then committed suicide.  They were the co-owners of Signature Gardens, a well-known banquet hall company in South Florida [click here for back story].

In the linked-to case the issue was whether Pecora's share of the company was owned as tenants by the entireties (TBE) with his wife.  If it was, then his share of he company would not be subject to claims by creditors, including any wrongful death action Berlin's estate might be pursuing.

I think this case is another example of "lateral thinking" [click here] in the probate litigation context.  Rather than defending against a wrongful death claim, Pecora's estate simply argued the estate had no significant assets: the estate's most valuable asset (a one-half stake in the business) went directly to Pecora's surviving spouse as TBE property.  "Presto," no assets.

Road map for proving TBE ownership:

  • Step 1: Corporate documents are NOT conclusive evidence; trial testimony and other evidence may trump corporate documents when deciding TBE 

On appeal, Berlin argues that the trial court erred because it overlooked the corporate documents. Berlin cites to several documents as evidence that both corporations established stock ownership in Michael alone. These documents include the minutes of Deux Michel, Inc. showing that Michael owned 200 shares; a February 1984 resolution and stock certificate showing an additional hundred shares issued to Michael, individually; July 1993 minutes of Grand Partners, Inc. reflecting Michael owning 200 shares in the company; and K-1 tax schedules for Deux Michel, Inc. and Grand Partners, Inc. showing Michael as the shareholder.

“[C]orporate records provide a prima facie evidentiary basis for determining ownership of corporate stock.” Sackett v. Shahid, 722 So.2d 273, 275 (Fla. 1st DCA 1998). However,

[I]t is within the trial judge's province, when acting as trier of both fact and law, to determine the weight of the evidence, evaluate conflicting evidence, and determine the credibility of the witnesses, and such determinations may not be disturbed on appeal unless shown to be unsupported by competent and substantial evidence, or to constitute an abuse of discretion.

Jockey Club, Inc. v. Stern, 408 So.2d 854, 855 (Fla. 3d DCA 1982).

The above mentioned documents provide evidence that Michael was the only recognized name mentioned with stock ownership in the companies. Nevertheless, these documents are contradicted with testimony at trial that the stock was held jointly; evidence and testimony that Michael and Arlene made purchases through a joint account; and other documents admitted at trial indicating joint ownership, thereby providing competent and substantial evidence for the trial court's ruling.

  • Step 2:  Business purchased with joint bank account funds may create TBE property

Bank accounts are afforded the same presumption of tenancy by the entireties as is real property. Beal Bank, 780 So.2d at 58. Property purchased with joint funds may create a tenancy by the entirety in that property so long as the unities are met. For example, in Winterton v. Kaufmann, 504 So.2d 439 (Fla. 3d DCA 1987), the court found that after the husband died, the wife owned bonds that were purchased with joint funds and kept in a joint safe deposit box. See also Estate of Fields v. Fields, 581 So.2d 1387, 1388 (Fla. 3d DCA 1991) (“The bearer bonds, purchased with joint funds and maintained in the couple's joint safe deposit box, passed to the wife upon the husband's death. The bearer bonds were held by the spouses as tenants by the entirety; ownership vested in the wife as the survivor.”). Once tenancy by the entirety property is established, its subsequent transfer to another asset does not terminate the unities of title or possession. See Passalino v. Protective Group Sec., Inc., 886 So.2d 295, 297 (Fla. 4th DCA 2004) (“Transferring the proceeds of the sale of entireties property to a trustee for the benefit of the husband and wife does not terminate the unities of title or possession....”); Lerner v. Lerner, 113 So.2d 212 (Fla. 2d DCA 1959).

  • Step 3: Meet your burden of proof at trial

Under a tenancy by the entirety, “[u]pon the death of one spouse, the surviving spouse continues to be seized of the whole. Thus ... after death of one spouse the surviving spouse continues to hold the entire estate....” Cacciatore v. Fisherman's Wharf Realty Ltd. P'ship, 821 So.2d 1251, 1254 (Fla. 4th DCA 2002). Property held as a tenancy by the entireties possesses six characteristics:

(1) unity of possession (joint ownership and control); (2) unity of interest (the interests in the account must be identical); (3) unity of title (the interests must have originated in the same instrument); (4) unity of time (the interests must have commenced simultaneously); (5) survivorship; (6) unity of marriage (the parties must be married at the time the property became titled in their joint names).

Beal Bank, SSB v. Almand & Assocs., 780 So.2d 45, 52 (Fla.2001) (footnote omitted).

*     *     *     *     *

Here, the six characteristics needed to prove the tenancy by the entirety are largely based upon the assumption that joint funds were used in the inception of the companies, even though the proof of the use of joint funds is illustrated only by checks dated after the inception of the companies and witness testimony.

“[U]nless a tenancy by the entireties is clearly expressed in the instrument, the parties must prove they intended to create a tenancy by the entireties.” Hurlbert v. Shackleton, 560 So.2d 1276, 1279 (Fla. 1st DCA 1990); Morse v. Kohl, Metzger, Spotts, P.A., 725 So.2d 436, 438 (Fla. 4th DCA 1999). The trial court heard testimony from witnesses as well as the admission of several documents in which it found that the intention was to create a tenancy by the entirety. This is a factual question which the court ultimately determined by competent substantial evidence in favor of Arlene. See Sitomer v. Orlan, 660 So.2d 1111, 1115 (Fla. 4th DCA 1995) (“Whether the parties created a tenancy by the entireties in a bank account-whether they were each taking the whole of the account-is a question of fact.”).

"Crowdsourcing" appellate briefs in million dollar malpractice verdict against Gunster

The level of interest expressed in connection with the million dollar malpractice verdict against Gunster recently upheld by the 4th DCA [click here] is so high, I've decided to post copies of the 200+ pages of appellate briefs filed in that case as follows:

What do you make of the briefs; what could Gunster have done differently?

The 4th DCA's opinion is woefully lacking in the sort of factual detail needed to provide real day-to-day guidance to practitioners or future litigants.  To make any sense out what happened here, you need to read the briefs.  Rather than attempting to figure out the briefs on my own, I'd like to tap into the collective wisdom of the readers of this blog.  After you've read the briefs, please post a comment answering the following question:


Assuming the 4th DCA correctly decided the case, and everyone was acting in good faith and in the best interest of the client, what could Gunster could have done differently to avoid being sued?

Your comments will hopefully help all of us avoid being the target of the next estate-planning/ probate malpractice claim.  If you're a law student, banker, accountant, etc., I'd like to hear from you too.  Every Florida attorney who reads this blog will appreciate your thoughts (which can be posted anonymously), and I'm guessing that "crowdsourcing" these appellate briefs will result in collective insights none of us on our own would have ever dreamed of.

Service by publication: how to get it right

Wolfe v. Stevens, --- So.2d ----, 2007 WL 2891413 (Fla. 2d DCA Oct 05, 2007)

Florida is the largest recipient of state-to-state migration in the U.S.  Here are a few stats from State-to-State Migration Flows: 1995 to 2000, a U.S. census report:

Florida’s net domestic migration of 607,000, the largest of any state, came primarily from states in the Northeast, particularly New York, which had a net contribution of 238,000 to Florida. Illinois, New Jersey, Ohio, and Pennsylvania also had substantial net outmigration to Florida.

Is it any wonder then that Florida probate proceedings often require service by publication when an individual cannot be located in Florida?

The linked-to case is instructive because it reports on a personal representative that got service by publication WRONG.  Which means we now all have a specific example of what NOT to do if we want to make our next attempted service by publication stick.

Here's why the 2d DCA said the PR got it wrong:

Stevens, as personal representative of her mother's estate, sued Wolfe alleging that he had defrauded their mother out of her home by falsifying Stevens' and the mother's signatures on a “Deed to Trust .” Approximately two months after filing suit, Stevens filed a sworn statement for constructive service pursuant to sections 49.031 and 49.041, Florida Statutes (2005), and subsequently served Wolfe by publication. Wolfe did not respond, and the trial court entered a default final judgment against him. Approximately seven months later, Wolfe moved to set aside the final judgment under Florida Rule of Civil Procedure 1.540 on the ground that service was defective because Stevens had failed to conduct a diligent search before resorting to service by publication. The trial court denied Wolfe's motion finding that he had actual notice of the final judgment and that in failing to act diligently to set it aside, “he was not reasonable.”

“‘When a complainant resorts to constructive service, he should make an honest and conscientious effort, reasonably appropriate to the circumstances, to acquire the information necessary to fully comply with the controlling statutes, to the end that the defendant, if it be reasonably possible, may be accorded notice of the suit.’“ Gmaz v. King, 238 So.2d 511, 514 (Fla. 2d DCA 1970) (quoting Klinger v. Milton Holding Co., 186 So. 526, 534 (1939)). If constructive service is challenged on the ground that the plaintiff failed to conduct a diligent search, the trial court must determine whether the plaintiff “reasonably employed knowledge at his command, made diligent inquiry, and exerted an honest and conscientious effort appropriate to the circumstances, to acquire the information necessary to enable him to effect personal service on the defendant.” McDaniel v. McElvy, 108 So. 820, 831 (Fla.1926); see Gmaz, 238 So.2d at 514. Further, “when a ‘red flag’ is waved to a complainant notifying or warning him of facts which put him on a reasonable course of inquiry as to the whereabouts or residence of a party-defendant to his law suit, he is bound to follow that course to its logical end.” Id.

Stevens had notice of facts that she should have followed before resorting to service by publication. The record indicates that when Stevens filed her complaint she and her attorney knew that Wolfe was represented by counsel. However, instead of contacting Wolfe's attorney regarding the lawsuit, Stevens filed an affidavit of diligent search and inquiry and proceeded to serve Wolfe by publication. At the hearing on Wolfe's motion to set aside the final judgment, Stevens' attorney admitted he had the address and phone number of Wolfe's attorney and that he could have notified him of the lawsuit but he “made the decision, knowing all the circumstances regarding the accusations that were going back and forth, that I would rather go the statutory route.” Under these circumstances, we cannot conclude that Stevens exercised due diligence in attempting to locate Wolfe. Accordingly, service by publication was improper. See Levenson v. McCarty, 877 So.2d 818 (Fla. 4th DCA 2004) (holding that where the plaintiff made no attempt to contact the defendant by telephone or through his known attorneys, service by publication was improper); Torelli v. Travelers Indem. Co., 495 So.2d 837 (Fla. 3d DCA 1986) (holding that the plaintiff did not exercise due diligence in attempting to locate the defendant where she failed to follow an obvious lead to the defendant's whereabouts by inquiring of the defendant's known attorney).

Court says NO to family members vying to be mom's guardian

In re Guardianship of Stephens, --- So.2d ----, 2007 WL 2811591 (Fla. 2d DCA Sep 28, 2007)

Who gets appointed to be mom's guardian isn't decided by family members, and it isn't even decided by mom . . . it's decided by a judge.  This fact of life under Florida law usually doesn't sit well with family members, which I've written about before [click here].

The facts:

From a practitioner's perspective, however, the real question is: "What does it take to convince a trial court that family members should NOT be appointed as guardian?"  To answer that question you need appellate decisions with lots of facts, the more detailed the better.  The linked-to case delivers on this front in spades.  Here's why the judge in this case appointed Lutheran Services Florida as guardian of mom's property and person - and NOT any of her 9! adult children:

The Magistrate was presented with evidence that the family was “dysfunctional,” that the siblings were unable to get along and cooperate with each other to care for their mother, and that there were serious conflicts about how the family business should be run, inclusive of the Ward's assets and money in general. Some of the siblings had made choices which could be in conflict with and affect the Ward's financial stability, such as, for example, setting up an irrevocable trust containing questionable terms. Some of the siblings had created “alliances” to the exclusion of other siblings. They were unable to come together on simple issues, including the core issue concerning their mother's care. As evidenced by this appeal, they could not even agree on the designation of a guardian. In view of family dynamics, appointing one of the siblings as a guardian for any purpose would clearly not be in the Ward's best interests.

The law:

The linked-to case also provides a solid summary of Florida law governing the appointment of a guardian in contested proceedings:

Section 744.312(1), Florida Statutes (2006), styled “Considerations in appointment of guardian,” provides that “the court may appoint any person [FN3] who is fit and proper and qualified to act as guardian, whether related to the ward or not.” (Emphasis added.) Section 744.312(2) adds:

The court shall give preference to the appointment of a person who:

(a) Is related by blood or marriage to the ward;

(b) Has educational, professional, or business experience relevant to the nature of the services sought to be provided;

(c) Has the capacity to manage the financial resources involved; or

(d) Has the ability to meet the requirements of the law and the unique needs of the individual case.

(Emphasis added.) While the wishes of the ward shall be considered in appointing a guardian, they are not controlling. § 744.312(3)(a); Ahlman v. Wolf, 413 So.2d 787, 788 (Fla. 3d DCA 1982).

[FN3.] The reference to “person” in this context includes individuals or corporate entities that typically represent wards when no qualified family members are available or willing to serve as guardian. See §1.01(3), Fla. Stat. (2006).

*     *     *     *     *

We  .  .  .  realize that family members would naturally believe they should be “entitled” to appointment. However, in the guardianship arena, the legislature has rightly determined that such expectations are not binding on the court. Thus any “preference” for family applies only within certain discretionary bounds. The guardianship statute does not confer upon certain family members an absolute and automatic right to be appointed guardians. See In re Guardianship of R.N.B., 429 So.2d 796, 797 (Fla. 4th DCA 1983) (“Indeed, the statute provides that the court may appoint any person ‘who is qualified to act as guardian, whether related to the ward or not.’ “ (quoting section 744.312(1), Fla. Stat. (1981))). The best interests of the Ward-which include choosing a qualified guardian for the Ward-come first. Family member preference in and of itself is secondary, regardless of how well qualified the family members are.

Malpractice insurance carrier: wills and estates-related legal malpractice claims on the rise

I've received a number of inquiries regarding the $1 million estate-planning/probate malpractice verdict recently upheld on appeal, which I previously wrote about [click here].  I think many practitioners are trying to figure out what went wrong in that case and what they can do to avoid making the same mistakes.

Against this backdrop, a recently published article by LawPRO, a Canadian professional liability (malpractice) insurance provider, should be of interest.  Wills & estates law claims on the rise by Deborah Petch and Dan Pinnington provides claims statistics and risk management advice specifically focused on the probate/estate planning practice area.  Although written for a Canadian audience, the advice seems equally applicable in Florida.

I was especially interested to see that "lawyer/client communication failures" was far and away the single most common cause of malpractice claims.  This finding is in line with the med-mal statistics and "don't-be-a-jerk" risk management advice given to doctors I previously wrote about [click here].  Another way of stating the don't-be-a-jerk rule is: respectfully listen to and communicate with your clients.

Here are a few excerpts from the linked-to article:

In both count and cost, wills and estates-related legal malpractice claims have slowly increased over the last several years. By area of law, wills and estates is the fifth most common area of claims: Only litigation, real estate, corporate and family claims are higher. 

Over the last five years, wills and estates-related claims averaged 6.0 per cent of LAWPRO’s claims count (112 claims per year), and 5.4 per cent of our claims costs ($3.9 million per year). On average, resolving a wills and estates claim costs LAWPRO $34,404.

This article examines the reality behind the numbers: It highlights the most common errors, and the steps you can take to reduce the likelihood of a claim.

The most common errors

In the wills and estates area, the most common causes of claims
are the following:

  1. lawyer/client communication failures;
  2. inadequate discovery of facts or inadequate investigation;
  3. failure to know or properly apply the law;
  4. time and deadline-related errors;
  5. conflicts of interest; and
  6. clerical/delegation.
What is striking to most lawyers is that law-related errors rank third.  Lawyer/client communication-related errors are actually the most common, representing almost 40 percent of the errors in the wills and estates area.

*     *     *     *     *

Avoiding communications errors

When it comes to avoiding or reducing the likelihood of a communications-related claim, the importance of putting things in writing cannot be over-emphasized. While the failure to have written confirmation of instructions and advice is not negligence in and of itself, such written communication can be extremely helpful in defending you in the unhappy event that a claim is made against you. Why? Because more often than not, this type of claim involves the lawyer recalling that one thing was said or done, or not said or not done, and a disappointed beneficiary that alleges something different. This type of claim is very hard for LAWPRO to defend successfully. At the end of the day it essentially comes down to a question of credibility. Unfortunately, we frequently find inadequate documentation in the lawyer’s file to back up the lawyer’s version of what occurred. All too frequently, we see files with no correspondence or reporting letters whatsoever.

Fortunately this error is one of the easiest to prevent. You can significantly reduce your claims exposure by documenting your work. Confirm the information that your client provided to you, your advice to the client, the client’s instructions to you, and what steps were taken on those instructions. Document the time spent reviewing the provisions of the will, including what issues were discussed. This can be done in your notes, and in interim or final reporting letters, or even in an e-mail message.

Even taking a few seconds to make more detailed dockets can be a lifesaver. "Conference with client re review of draft will, including provisions re cottage” is much better than just "Conference with client re draft will."

A special caution is warranted for matters involving family members and close friends: We do see claims on these matters, and quite often find almost no documentation in the file. This probably happens because the lawyer is familiar with the personal circumstances of the client, and fails to make and document all appropriate inquiries. It would be best not to act for them; but, if you feel that you must, treat them as though you had never met them before. Remember, often it is not your client who is the potential claimant, rather it is a beneficiary or disappointed beneficiary, with whom you have no personal relationship.

Florida's spousal elective share statute survives constitutional challenge

In re Estate of Magee, --- So.2d ----, 2007 WL 2781131 (Fla. 2d DCA Sep 26, 2007)

When all else fails, one way to win a probate dispute is to challenge the portion of the probate code at issue on constitutional grounds.  A successful example of this approach was the Florida Supreme Court's 1990 decision in Shriners Hospital for Crippled Children v. Zrillic, 563 So.2d 64 (Fla.1990), where the court struck down Florida's mortmain statute, then codified at section 732.803, because it violated article 1, section 2 of the Florida Constitution by impermissibly infringing on the decedent's testamentary rights.

How hard is it to set aside a statute on constitutional grounds? VERY

Courts will bend over backwards to uphold a probate statute being challenged on constitutional grounds.  In Shriners Florida's Supreme Court ruled that the “reasonable relationship” or “rational basis” standard applies to review a statute that potentially infringes on (but does not destroy entirely) property or testamentary rights.  This is the lowest level of scrutiny applied by courts deciding constitutional issues through judicial review. The higher levels are typically referred to as intermediate scrutiny and strict scrutiny.

Is Florida's spousal elective share statute constitutional? YES

In the linked-to case Florida's spousal elective share statutes [click: 732.201 to 732.2155] were challenged on constitutional grounds.  The argument was that Florida law requiring that at least 30% of every married person's estate be set aside for a surviving spouse -- regardless of whether the surviving spouse had any financial need whatsoever -- violated the decedent's constitutionally protected property rights.

Nice try, but no cigar.  The 2d DCA upheld the constitutionality of Florida's elective share statutory scheme under the rational basis test.  The following excerpt from the linked-to opinion sums up the court's reasoning and also provides good guidance for anyone considering a future constitutional challenge to any other portion of Florida's probate code.

Fortunately, the Florida Supreme Court has recently clarified that the test to be applied in evaluating statutes and regulations that infringe on property rights or testamentary rights-at least those that do not require the absolute destruction of property-is not the “least restrictive means” test urged by Judith here, but rather a “reasonable relationship” test. In Haire v. Florida Department of Agriculture & Consumer Services, 870 So.2d 774, 783 (Fla.2004), the court explained,

[W]e have held that “[a]ll ... property rights are held subject to the fair exercise of the [police] power,” Golden v. McCarty, 337 So.2d 388, 390 (Fla.1976) (emphasis supplied), and have used the reasonable relationship test ... to evaluate statutes and regulations that infringe on property rights.

Id. (footnotes omitted).

As support for this proposition, the court expressly cited Zrillic. Haire, 870 So.2d 783 n. 9. In reconciling the cases, therefore, the Florida Supreme Court has now established that the “reasonable relationship” or “rational basis” standard applies to review a statute that potentially infringes on (but does not destroy entirely) property or testamentary rights.

As further explained in Haire,

Under this standard of review ... a “state statute must be upheld ... if there is any reasonable relationship between the act and the furtherance of a valid governmental objective.” Lane v. Chiles, 698 So.2d 260, 262 (Fla.1997) (emphasis supplied). Specifically, with respect to substantive due process, a statute is valid if it “bears a rational relation to a legitimate legislative purpose in safeguarding the public health, safety, or general welfare and is not discriminatory, arbitrary, or oppressive.” Chicago Title Ins. Co. v. Butler, 770 So.2d 1210, 1215 (Fla.2000).

870 So.2d at 782.

As noted above and acknowledged by Judith, this state has a “strong public policy concerning the protection of the surviving spouse of [a] marriage in existence at the time of the decedent's death.” See Via, 656 So.2d at 461. The provisions of the elective share statute thus serve a legitimate legislative purpose. The statutes are rationally related to that purpose in that they seek to provide any surviving spouse who has not waived such protections a minority share in the assets of the decedent in the event that spouse did not receive as much through testamentary dispositions. [FN3] This legislative scheme has strong historical roots in the common law, in existence before the enactment of our state constitution and undisturbed until now.

We therefore affirm the order on appeal.

How To Prepare For Mediation: The Mediator's Check List Of Key Legal And Factual Issues

One of the primary benefits of mediating trusts-and-estates disputes is that the mediation session focuses everyone's attention and brings the case "to a head" in much the same way as a trial date; except it happens before the parties pour huge sums of money - and time - into pretrial discovery and motion practice. Taking full advantage of this window of opportunity requires thorough preparation, and nothing beats a good checklist when it comes to making sure you've covered all your basis.

California attorney and mediator David Laufer has just published the "mother" of all premediation checklists in How To Prepare For Mediation: The Mediator’s Check List Of Key Legal And Factual Issues.  The next time you're getting ready to mediate a case pull this checklist, you'll be happy you did . . . and so will your client.





1. Identify each party and title of all participants involved in the dispute.

2. Identify each Disputant required to be present during the mediation process.

3. Identify each decision maker who will not be present during the entire mediation process.

4. Describe any special needs, demands, interests and goals of each Disputant and Counsel.


5. Describe each claim, dispute and defense.

6. Describe each Disputant’s demands –the best case outcome-to be achieved in the Mediation.

7. Identify and quote the key statutes governing the claims and defenses.

8. Identify and quote the key cases governing the outcome of the liability issues. For example: Stout v. Turney (1978) 22 Cal.3d 718: “Of the two measures the ‘out-of-pocket’ rule has been termed more consistent with the logic and purpose of the tort form of action (i. e., compensation for loss sustained rather than satisfaction of contractual expectations) while the ‘benefit-of-the-bargain’ rule has been observed to be a more effective deterrent (in that it contemplates an award even when the property received has a value equal to what was given for it.)”

9. Identify the legal support for each demand for special, general and punitive damages.

10. Identify all defenses to the claims for special, general damages and punitive damages.

11. Identify key disputed facts discussed in the legal briefs.

12. Identify any key facts and legal issues overlooked by Counsel and the Disputants.

13. Identify other issues that may have an effect on the dispute, including change in case and statute law, change in management, change in key decision maker, vacations, trial dates, motions for summary judgment, divorce, employment termination, surgery, promotion, restructure of company, bankruptcy, sale of business, cancellation of insurance coverage, and the need for closure.

14. Should the mediation be conducted in segments? For example, if the claimant is rehired in wrongful terminations claim will the damage claim be resolved? If the franchisor reinstates a franchise will the damage claim be resolved? If the insurance company renews the insurance policy will the claim for bad faith claim be dismissed?

15. Identify possible resolutions of dispute by restoring, creating or enhancing a commercial relationship that the defendant may be able to provide as an alternative to payment of money damages. For example, a HR Director may be able to re-hire an employee without consulting with a higher authority, whereas the payment of a damage claim may have to go through several levels of review and approval and consultations with the company’s risk manger for reporting to an insurance carrier or audit committee.


16. Identify and quote the key provisions of the key documents each party relies on to support a claim or defense.

17. Identify key witnesses necessary to support each Disputant’s claim or defense, and summarize the testimony.

18. Identify key authenticated documents that have been exchanged to support or refute the damage claims.

19. Identify all out of pocket expenses (loss of earnings, medical bills , repairs) exchanged to support or refute the claim.

20. Identify a key decision maker who has surfaced during the mediation.

21. Have arrangements been made to assure that the identified decision makers will be present during the mediation?

22. Which newly identified decision makers will not be able to participate in the mediation process? Should the mediation be rescheduled?

23. Identify all people who have had input on the value of claim.

24. Will an expert (and describe the area of expertise) be helpful in resolving the Dispute.

25. Will it be necessary to postpone the mediation pending a verification of an appraisal, an expert opinion or other information that needs to be made available to key decision makers.


26. Identify all sources of insurance or other funds that will be available to pay a settlement.

27. What has been offered, demanded and rejected in any prior settlement discussions?

28. Describe what each Disputant demands as the minimum acceptable settlement to avoid a trial or other consequence.

29. Identify other cases or settlements of similar cases that have resulted in the minimum acceptable settlement value demanded during the mediation.

30. Is there a settlement in kind or a source of creating settlement value other than the payment of money that may result in resolution of the dispute? For example, in a dispute over the under-sized beams for a construction project, will the under-sized beams create value for another use for another project? In looking for value or settlements in kind, the Disputants should be encouraged to look for all potential sources of value.


31. Is a partial resolution possible?

32. Have the parties documented the settlement and final resolution in an enforceable format in compliance with the law?

33. Is the settlement confidential? If so, under what conditions may it be disclosed?

34. Has the mediator completed her case file, closure documents and procedures for any future references to the mediation. In court-annexed mediations the Mediator must file a form stating the matter resulted in partial agreement, total agreement or non-agreement.

35. For any information that has been disclosed to the Mediator in confidence, state how disclosure of that information affected the mediation?


36. Is there a dispute between the parties and their lawyers about the amount that is owed to the lawyers?

37. Is there a dispute between a party and her insurance company over coverage, legal fees and costs?

38. Identify the legal basis for the claim of recovery of reasonable attorney fees and costs.

39. Identify all objections to the claim for attorney’s fees and costs.

40. List all legal fees, expert fees and costs incurred by each party through the date of the first mediation session.

41. How much of any settlement payment will be paid to the lawyers?

42. Has the Mediator made arrangement for final payment of her fees, received evaluation forms of her performance and obtained permission to use favorable evaluations by Counsel and Disputants as references for marketing purposes?

New Florida legislation expressly authorizes mandatory arbitration clauses in wills and trusts

Effective July 1, 2007, Florida adopted legislation expressly authorizing mandatory arbitration clauses in wills and trusts.  The new statute provides as follows:

731.401 Arbitration of disputes.--

(1) A provision in a will or trust requiring the arbitration of disputes, other than disputes of the validity of all or a part of a will or trust, between or among the beneficiaries and a fiduciary under the will or trust, or any combination of such persons or entities, is enforceable.

(2) Unless otherwise specified in the will or trust, a will or trust provision requiring arbitration shall be presumed to require binding arbitration under s. 44.104.

Two of the Florida attorneys instrumental in passage of the new legislation, Bruce M. Stone and Robert W. Goldman, also co-authored a 2005 ACTEC article discussing mandatory arbitration clauses in wills and trusts entitled Resolving Disputes with Ease and Grace.  The ACTEC article does a good job of summarizing the pros and cons of arbitration, concluding that arbitration is likely "ideal" in the following circumstances:

  1. Fee disputes, including fiduciary and legalfees
  2. Prudent investing disputes
  3. Document construction
  4. Principal and income disputes, includingadjustment powers
  5. Trust terminations or severances
  6. Accounting disputes
  7. Declaratory relief in general

This list of "ideal" abritration senarios implicitly recognizes that arbitration is NOT the best solution for resolving ALL disputes, a view I share and have written about [click here].

Sample arbitation clauses:

Sample clauses are often the best way to understand in concrete terms how a general concept may be applied in the real world.  Note that all of the sample clauses do two things:

  • require arbitration; and
  • define the procedural rules that would govern the arbitation proceeding (for example, who appoints the arbitrator, how many arbitrators are required, what are the discovery rules, etc). 

Under the new Florida arbitration statute, if the settlor does not identify  the procdural rules he or she would like to apply the default rules are provided by F.S. 44.104.

The AAA's website [click here] provides specific procedural rules for arbitrating such wills-and-trusts claims and the following sample arbitration clause:

AAA Standard Arbitration Clause:

In order to save the cost of court proceedings and promote the prompt and final resolution of any dispute regarding the interpretation of my will (or my trust) or the administration of my estate or any trust under my will (or my trust), I direct that any such dispute shall be settled by arbitration administered by the American Arbitration Association under its Arbitration Rules for Wills and Trusts then in effect. Nevertheless the following matters shall not be arbitrable questions regarding my competency, attempts to remove a fiduciary, or questions concerning the amount of bond of a fiduciary. In addition, arbitration may be waived by all sui juris parties in interest.

The arbitrator(s) shall be a practicing lawyer licensed to practice law in the state whose laws govern my will (or my trust) and whose practice has been devoted primarily to wills and trusts for at least ten years. The arbitrator(s) shall apply the substantive law (and the law of remedies, if applicable) of the state whose laws govern my will (or my trust). The arbitrator's decision shall not be appealable to any court, but shall be final and binding on any and all persons who have or may have an interest in my estate or any trust under my will (or my trust), including unborn or incapacitated persons, such as minors or incompetents. Judgment on the arbitrator's award may be entered in any court having jurisdiction thereof.

The authors of Resolving Disputes with Ease and Grace also provided four sample arbitration clauses, including the following two:

Generic provision—Short version:

It is my hope and expectation that there will be no dispute in relation to this Trust [my estate]. Nevertheless, if there is any dispute or controversy among any of the Trustee [personal representative] and the beneficiaries involving any aspect of this Trust [my estate] or its administration, the parties to the dispute may agree on the manner of resolution. If there is no such agreement, the disputing parties shall submit the matter to mediation, and, if unresolved by mediation, to binding arbitration. If a party to the dispute fails to participate in good faith in the mediation or arbitration, the arbitrator or the court having jurisdiction over this trust [my estate] is authorized to award costs and attorney’s fees from that party’s beneficial share or from other amounts payable to that party (including amounts payable to that party as compensation for services as a fiduciary).

Generic provision—Long version with forfeiture clause:

[Comment: As with other language in these sample clauses, the forfeiture provision in paragraph (c) below has not been tested in the courts. Assuming that a mandatory arbitration provision in a will or trust is otherwise enforceable in a given jurisdiction, it is believed that a forfeiture provision is likely to be enforceable also, including in jurisdictions that do not recognize the validity of no-contest provisions.]

(a) It is my hope and expectation that there will be no dispute in relation to this Trust [my estate]. Nevertheless, if there is any dispute or controversy among any of the Trustee [personal representative] and the beneficiaries involving any aspect of this Trust [my estate] or its administration, the parties to the dispute may agree on the manner of resolution. If there is no such agreement, the disputing parties shall submit the matter to mediation, and, if unresolved by mediation, to binding arbitration. If the parties are unable to agree on the selection of a mediator or arbitrator, the court having jurisdiction over this Trust [my estate] shall select the mediator or arbitrator. [The mediator or arbitrator shall have the following qualifications: ACTEC fellow; attorney with at least 10 years’ experience in trusts and estates; etc.]

(b) In the case of arbitration, the arbitrator shall establish the procedure for arbitrating the matter or matters and recognizing the goals of privacy, efficiency, less formality than in a judicial tribunal, and less expense than might be incurred in a judicial forum, while reaching a fair result. The decision of the arbitrator shall be final and binding on the Trustee [Executor], all beneficiaries, and their heirs, successors, and assigns. If the arbitrator determines that a guardian ad litem is needed to represent the interests of unborn, unascertained, or incapacitated interested persons, a guardian ad litem shall be appointed by the court having jurisdiction over this Trust [my estate].

(c) If a disputing beneficiary fails to participate in good faith in the agreed-on procedure for resolution, or in the mediation or arbitration if there is no such agreement, the disputing beneficiary’s interest in this Trust [my estate] shall be forfeited and the beneficiary, if an individual, shall be treated as having predeceased the Settlor [me] [with no surviving issue]. If for any reason it is determined by the court having jurisdiction over this Trust [my estate] that the foregoing provision for forfeiture is not effective, the arbitrator or the court having jurisdiction over this trust [my estate] is authorized to award costs and attorney’s fees from the beneficiary’s share or from other amounts payable to the beneficiary.

(d) The provisions of subparagraph (c) above shall not apply to the beneficial interests of:

(1) the Settlor’s [my] spouse, to the extent that his [her] interest would otherwise qualify for an estate or gift tax marital deduction;

(2) any beneficiary, to the extent that the beneficial interest would otherwise qualify for an income, gift, or estate tax deduction for charitable purposes unless and until all such charitable beneficial interests have expired.

If, however, the Settlor’s [my] spouse or any such beneficiary who is a disputing beneficiary to whom the above forfeiture provisions do not apply nevertheless fails to participate in good faith in the agreed-on procedure for resolution or in the mediation or arbitration, the arbitrator or the court having jurisdiction over this trust [my estate] is authorized to award costs and attorney’s fees from his, her, or its beneficial share.

(e) The acceptance of the Trust by any trustee or co-trustee constitutes the trustee’s or co-trustee’s agreement to comply with the above provisions. If a trustee or co-trustee is a party to a dispute and fails to participate in good faith in the agreed-on procedure for resolution or in the mediation or arbitration, it shall be deemed that the trustee or co-trustee has breached its fiduciary duties and has resigned, and the court having jurisdiction over this Trust is authorized to surcharge the trustee or co-trustee for costs, attorney’s fees, and any other sums deemed appropriate. [The personal representative’s consent to act constitutes his, her, or its agreement to comply with the above provisions. If a personal representative is a party to a dispute and fails to participate in good faith in the agreed-on procedure for resolution or in the mediation or arbitration, it shall be deemed that the personal representative has breached his, her, or its fiduciary duties and has resigned, and the court having jurisdiction over my estate is authorized to surcharge the personal representative for costs, attorney’s fees, and any other sums deemed appropriate.]

(f) If the validity of these provisions requiring arbitration is contested, the court having jurisdiction over this Trust [my estate] shall resolve that issue prior to resolution of the balance of the dispute. If the arbitration provisions are determined to be valid, the balance of the disputed issues shall be resolved as provided in this Article __.

When does a trustee need court approval to pay its attorneys?

J.P. Morgan Trust Co., N.A. v. Siegel, --- So.2d ----, 2007 WL 2710957 (Fla. 4th DCA Sep 19, 2007)

Anytime trust beneficiaries object to a trust accounting or any aspect of a trust's administration the trustee is potentially subject to claims for damages.  This theoretical risk of damages arguably places the trustee's individual interests in conflict with those of the trust's beneficiaries, thus requiring the trustee to seek court approval under F.S. § 736.0802(10) prior to using trust funds to pay its attorney's fees.  Here's the text of the statute:

(10) Payment of costs or attorney's fees incurred in any trust proceeding from the assets of the trust may be made by the trustee without the approval of any person and without court authorization, except that court authorization shall be required if an action has been filed or defense asserted against the trustee based upon a breach of trust. Court authorization is not required if the action or defense is later withdrawn or dismissed by the party that is alleging a breach of trust or resolved without a determination by the court that the trustee has committed a breach of trust.

I recently wrote about this rule in the context of a 2006 case out of the 3d DCA [click here].

But how clear must the conflict of interest be before the trustee's obligation to seek court approval prior to paying legal fees is triggered?  In the linked-to case the trial court determined that answers to interrogatories filed by trust beneficiaries in the context of an accounting proceeding hinting at possible future breach-of-trust claims were enough.  The corporate trustee in this case, J.P. Morgan, cried foul, arguing that in the absence of a breach-of-trust action being filed, it shouldn't be obligated to seek court approval prior to paying its legal fees with trust funds.  The 4th DCA saw it differently, and upheld the trial court's ruling:

J.P. Morgan argues that under the trial court's ruling all trustees are placed in a position of uncertainty as to when to seek court approval before paying attorneys' fees from trust assets. However, we hold that in this case J.P. Morgan should have known from the Siegels' answers to interrogatories in the 2003 action that it would face an action based on the alleged breaches of fiduciary duty and trust mismanagement. At the very least, J.P. Morgan should have realized it was in a position of conflict at that point. Based on the foregoing, we affirm.

Lesson learned:

What's most important about the linked-to case is that it's a prime example of the type of ambiguity the legislature was seeking to avoid when it amended F.S. 737.403(2)(e) in 2005 (this was the predecessor statute incorporated verbatim into new F.S. § 736.0802(10)).  Here's how the new legislation was addressed in the linked-to case:

Section 737.403(2), Florida Statutes, was amended effective July 1, 2005. Section 737.403(2)(e) now provides, in pertinent part:

(2) If the duty of the trustee and the trustee's individual interest or his or her interest as trustee of another trust conflict in the exercise of a trust power, the power may be exercised only by court authorization.... Court authorization is not required for any of the following:

(e) Payment of costs or attorney's fees incurred in any trust proceeding from the assets of the trust unless an action has been filed or defense asserted against the trustee based upon a breach of trust. Court authorization is not required if the action or defense is later withdrawn or dismissed by the party that is alleging a breach of trust or resolved without a determination by the court that the trustee has committed a breach of trust.

§ 737.403(2)(e), Fla. Stat. (2005) (emphasis supplied).

The legislature has resolved the issue in favor of the interpretation urged by J.P. Morgan that requires a pleading be filed.
However, as J.P. Morgan acknowledges, the new statute was not in effect for the vast majority of the time period at issue.[FN1]

[FN1.] The Siegels' 2006 lawsuit against J.P. Morgan and Judith Novak asserted various causes of action relating to the time period of January 1, 2003 through September 1, 2005.

Cautionary tale: why funding a revocable trust REALLY matters when it comes to real property

Vaughan v. Boerckel, --- So.2d ----, 2007 WL 2428516 (Fla. 4th DCA Aug 29, 2007)

If an estate plan involves real property, all of the formalities for conveying real property must be observed.  When it comes to conveying real property, Florida law treats wills and trusts very differently.  Forgetting this distinction can cause an entire estate plan to collapse in on itself (and maybe get the estate planning attorney in big trouble).

The law:

The key statute to keep in mind in this regard is F.S. 689.06, which provides that real property must be conveyed by deed or will.  Therefore, as a general rule, a declaration of trust alone will not be sufficient to convey real property to a trustee unless the declaration of trust contains language that both:

  • purports to convey the real estate from the present owner to the trustee; and
  • complies with the formalities required for a deed. 
An exception to this general rule applies to owners of real property who become trustees of their own property for the benefit of third parties. In this situation, a valid trust is created as long as there is a written declaration of trust in compliance with F.S. 689.05.

The facts:

In the linked-to case the decedent executed a pour-over will and revocable trust.  The decedent owned 5 separate items of real property in New York, all of which were titled in the name of a single holding company called Eloise Management Corporation, Inc., a New York Corporation ("Eloise").  At the time of his death the decedent owned 100% of the stock of Eloise.  The decedent never deeded the real property to his revocable trust.

The decedent's revocable trust expressly identified the 5 items of real property and expressly provided for the conveyance of each separate item of real property from the trust to 5 separate family members (excluding second wife). The revocable trust complied with the formalities required for a deed, but contained NO language purporting to convey the real estate from its present owner to the trustee. Here's the key revocable trust language:

Upon my death, the Trustee shall distribute the then Trust Estate as follows:

a) I or the ELOISE MANAGEMENT CORPORATION, INC., a New York corporation wholly owned by me, are the owners of certain real property situated in the State of New York, as follows:

(i) 1430 Omega Street, Elmont, New York;

(ii) 1422 Omega Street, Elmont, New York;

(iii) 217 Franklin Avenue, Franklin Square, New York;

(iv) 205 Franklin Avenue, Franklin Square, New York;

(v) 20 Ronald Avenue, Hicksville, New York.

b) Upon my death, I direct that my Trustees distribute to my wife, MARY INTERLANDI, to have sole use and possessions during her lifetime, the real property situated at 1422 Omega Street, Elmont, New York, together with the furniture and furnishings therein contained. Upon her death or upon my death if she shall predecease me, said real property and contents shall be distributed to my grandson, BRETT BOERCKEL, outright and free of trust.

c) Upon my death, I direct that my Trustees distribute the real property situated at 1430 Omega Street, Elmont, New York, together with the furniture and furnishings therein contained, to my daughter, IRENE VAUGHAN, outright and free of trust. If IRENE VAUGHAN shall predecease me, then said real property shall be distributed to my grandson, CRAIG FIELDING.

d) Upon my death, the Trustees shall distribute the real property at 20 Ronald Avenue, Hicksville, New York, together with the furniture and the furnishings therein to my son, ROBERT BOERCKEL, outright and free of trust.

e) Upon my death, the Trustees shall distribute the real property at 217 Franklin Avenue, Franklin Square, New York, together with the furniture and the furnishings therein to my grandson, BRETT BOERCKEL, outright and free of trust.

f) Upon my death, the Trustees shall distribute the real property at 205 Franklin Avenue, Franklin Square, New York, together with the furniture and furnishings therein to my grandson, BRETT BOERCKEL, outright and free of trust.

The litigation:

When the decedent died his second wife claimed all of the real property for herself - and won at the trial court level on summary judgment.  Here's how the court summarized the widow's winning argument:

Mrs. Boerckel filed a motion for summary judgment, arguing that because Decedent failed to execute the deeds transferring the Properties from Eloise either to himself,FN1 individually, or to the Trust,FN2 the Properties were owned by Eloise at the time of Decedent's death and thus did not become a part of the corpus of the Trust. Because the Properties did not pass to the Trust, Paragraphs 7.3(a)-(f) of the Trust were ineffective, and the Eloise stock passed to Mrs. Boerckel as part of the residue of the Trust under Paragraph 7.4(a).

FN1. Thereby allowing the Properties to pass to the Trust pursuant to the pour-over provision of the Will.

FN2. Thus making the Properties part of the corpus of the Trust.

The decedents' children and grandchildren argued that because the holding company holding title to the real property became an asset of the trust, and the trust owned 100% of the stock of the holding company, the trustee was obligated to convey the real property out to the intended beneficiaries.  The court rejected this argument relying principally on the following 1986 3d DCA opinion:

We conclude that this case is more analogous to Flinn v. Van Devere, 502 So.2d 454 (Fla. 3d DCA 1986), wherein the Third District concluded that realty owned by the decedent was not validly transferred to a trust she established during her lifetime and thus remained an estate asset and the property passed under the residuary clause of her will rather than the trust. Id. at 454. The court held that the decedent's execution of a form instrument creating a standard inter vivos “living trust” of property owned by her and listed in an accompanying schedule was ineffective with respect to the real estate described because the settlor did not, as is required, also execute a deed which conveyed the realty to the trustees. Id. at 455. The court explained that the trust documents themselves plainly cannot be regarded as such a deed “for the obvious reason that, although they comply with the necessary formalities of two witnesses and an adequate legal description, they contain no expression which purports to convey, grant or transfer the real estate.” Id. The court also reasoned that the “only reference in the simultaneously executed will to the trust is the direction that the personal representative make demand upon the trustees for the trust's share of any estate taxes.” Id. The court found this language to be clearly insufficient to manifest an intention to incorporate the provisions of the trust for the disposition of the assets after the settlor's death into the will, so as to render them, in effect, testamentary in nature. Id. at 455-56. The court noted that such a result was required even though it would run contrary to the decedent's “actual desires and intentions.” Id. at 456. Even though the Will in this case did incorporate the Trust instrument by reference, the property in Flinn was not corporately-owned as in this case, and the corporate existence cannot be disregarded.

In sum, we conclude that the trial court did not err in finding that Mrs. Boerckel was entitled to summary judgment as a matter of law as to Counts I and II of the Petition. The Properties never became a part of the corpus of the Trust because the Decedent failed to execute the deeds that would have resulted in a funding of the Trust, thereby causing Paragraphs 7.3(a)-(f) to lapse. The Final Summary Judgment in favor of Mrs. Boerckel is affirmed.

Lesson learned:

Serious estate planning doesn’t stop when the documents are executed. Step two always focuses on ensuring the client’s assets are properly titled and if there’s a revocable trust involved, that the trust gets funded. If real property is involved, funding the trust entails executing deeds. In this case the client skipped step two and his estate plan was turned on its head. Maybe this is what he wanted all along? Who knows, but at the very least this case is an excellent case study to share with planning clients the next time they ask “do we really need to spend the money funding our revocable trusts?”

By the way, don't shed too many tears for the decedent, as noted in the linked-to case, his estate planning attorney gave him clear warning of what was going to happen if he didn't execute the necessary deeds and he chose to ignore those warnings:

Petitioners deposed Fred Weinstein, Esq., the Decedent's estate-planning attorney who prepared both Decedent's Will and the Trust. Weinstein testified that at the time the Trust was written, the Properties were not in the Trust, and prior to the Trust being signed, it was indicated that Weinstein would prepare deeds conveying the New York Properties from Decedent to the Trust. Weinstein testified that at the time the Trust was signed, Decedent's intent was to have the Properties go to the named distributees. However, after the Trust was signed, Weinstein prepared such deeds and advised Decedent that the failure to sign the deeds “would defeat the purpose of the rest of the Trust,” but Decedent refused to sign the deeds.

Freezing assets in guardianship proceedings

Ripoll v. Comprehensive Personal Care Services, Inc., --- So.2d ----, 2007 WL 2043483 (Fla. 3d DCA Jul 18, 2007)

If the estate assets disappear while the parties litigate their claims against each other it doesn't really matter who wins or loses, the assets are gone.  The way to address this risk is to ask the court for a temporary injunction freezing the assets.  In general commercial litigation these types of orders should be rarely granted. In contested guardianship and probate proceedings they should be freely granted.  The trick is to make sure you, your opponent, and your trial judge all understand this dramatically different standard.

There's loads of case law out there saying temporary injunctions should be rarely granted.  All of that precedent comes from commercial litigation cases.  Don't get caught in that trap.  In probate and guardianship proceedings the key temporary-injunction case to focus on is In re: Estate of Barsanti, 773 So.2d 1206 (Fla. 3d DCA 2000), in which the probate court was reversed for failing to apply the different and much more liberal standard for granting temporary injunctions in contested probate proceedings:

Based on the record before us, we find that the probate court abused its discretion in failing to grant the temporary injunction and in finding that the P.R. failed to establish either a clear legal right or an inadequate remedy at law. In addition, we agree with the Estate that the probate judge failed to adhere to established law that the traditional standards controlling the issuance of temporary injunctions in other civil actions do not constrain the probate court in the exercise of its inherent jurisdiction over a decedent's estate.

The linked-to case is important because it explicitly extends the Barsanti rule to guardianship proceedings as follows:

A circuit court has the inherent authority to monitor a guardianship and to take action it deems necessary to preserve the assets for the benefit of the beneficiaries. See In re: Estate of Barsanti, 773 So.2d 1206 (Fla. 3d DCA 2000). To that end, the court:

has the authority to issue temporary injunctions freezing assets claimed to belong to [a guardianship], even though ultimate ownership of those assets may be in dispute. See Wise v. Schmidek, 649 So.2d 336, 337 (Fla. 3d DCA 1995); Sanchez v. Solomon, 508 So.2d 1264 (Fla. 3d DCA 1987).

Barsanti, 773 So.2d at 1208.

Lesson learned:

Niche practitioners distinguish themselves by delivering better results for their clients, at less cost, in a shorter time period, and with greater certainty of success.  One of the reasons why niche practitioners can distinguish themselves this way is that their expertise and experience in a particular area of the law makes it infinitely more likely that they will spot the key issues of a particular case early on and know how to effectively proceed.  If your niche is probate or guardianship law, make sure you know the cases cited above.  One day the key issue you spot will be the need for a temporary injunction freezing the estate assets, and when you do, these cases will make you look good.

Evidence (or the lack thereof) in probate proceedings

Ramunno v. Terranova, --- So.2d ----, 2007 WL 2480980 (Fla. 4th DCA Sep 05, 2007)

It happens all the time.  One side or the other in a probate proceeding files an un-sworn petition seeking an order that clearly determines someone's property rights.  For example, who benefits from a life insurance policy.  The petitioning party then argues the issue at a hearing where absolutely NO testimony or documentary material that's admissible in evidence ever makes an appearance.  And then the court rules.  Usually the economic stakes aren't high enough to appeal a no-evidence ruling.  But when they are, be careful, because as the linked-to case demonstrates, you just might end up getting reversed:

Lorenzo Ramunno appeals an order entered by the probate court, contending the court miscalculated the amount he owes under a final judgment obtained by the personal representative against him. We affirm the order in all respects, except as to that portion of the order which charges Mr. Ramunno $16,758.61 for life insurance proceeds he received from Metropolitan Life Insurance Co. upon his mother's death. This amount represents four-fifths of the proceeds, which the trial court concluded should have been shared equally by Lorenzo and his siblings.

We reverse as to this portion of the order because the only evidence presented to the trial court concerning the life insurance proceeds was Mr. Ramunno's testimony that he properly received the money. The trial court's contrary findings are supported only by the arguments of the estate's counsel and the unsworn pleadings and attachments from the estate's previous action against Metropolitan Life. These do not suffice as competent, substantial support for the trial court's ruling. See Romeo v. Romeo, 907 So.2d 1279, 1284 (Fla. 2d DCA 2005) (unauthenticated documents and arguments of counsel were not evidentiary support for general master's ruling); Loiaconi v. Gulf Stream Seafood, Inc., 830 So.2d 908, 910 (Fla. 2d DCA 2002) (document and argument of counsel were not sufficient proof to support venue determination); see also Leon Shaffer Golnick Adver., Inc. v. Cedar, 423 So.2d 1015, 1016-17 (Fla. 4th DCA 1982).

We therefore reverse only as to this $16,758.61 charge to Lorenzo Ramunno.

Lesson learned: evidence matters.

Most probate practitioners chose this practice area to specifically avoid anything having to do with civil litigation, including evidentiary rulings.  In 99% of probate proceedings, that's fine.  But when it's a contested proceeding, evidence, civil procedure, discovery, it's all there.  And it all matters. 

If you're the petitioning party, even when your side of the argument is a slam dunk, take the time to make sure you've created a solid evidentiary record.  If the probate court rules in your favor, the odds of surviving an appellate challenge are astronomically higher if the order is supported by evidence reflected in the record.  As the winning side learned in the linked-to case, in the absence of such evidence your victory may be short lived indeed.

"Thin-slicing" trusts and estates malpractice claims

I previously wrote here about a $71 million jury verdict entered against a large Texas firm for estate planning malpractice even though this same jury found that the client had suffered zero economic damages; and here about a $1.2 million jury verdict against a large Florida firm for estate planning malpractice even though the plaintiff in that case alleged only $1 million in damages.

In both of these cases it appeared to me that the attorneys were first sued then fared very poorly at trial not because of the economic harm caused, but rather because the plaintiffs felt that the trust they had placed in their attorneys' good faith had been betrayed.  In other words, non-economic factors were far more important than economic factors in determining the outcome of these cases.  A study of medical malpractice claims discussed in Malcolm Gladwell's 2005 book, Blink: The Power of Thinking Without Thinking, supports my theory.

In Blink Gladwell explores the power of the trained mind to make split second decisions, the ability to think without thinking, or in other words using instinct.  The author describes this phenomenon as "thin slicing": our ability to gauge what is really important from a very narrow period of experience. In other words, spontaneous decisions are often as good as—or even better than—carefully planned and considered ones.  When it comes to client interactions with professionals, be it lawyers or doctors, if the client's initial impression, hunch or instinct is that he or she isn't being seriously listened to, or that he or she is being talked down to or isn't being treated with respect, then the likelihood of a malpractice claim materializing somewhere down the line skyrockets.  Here's an excerpt from Blink discussing this phenomenon in the context of medical malpractice claims:

Believe it or not, the risk of being sued for malpractice has very little to do with how many mistakes a doctor makes. Analyses of malpractice lawsuits show that there are highly skilled doctors who get sued a lot and doctors who make lots of mistakes and never get sued. At the same time, the overwhelming number of people who suffer an injury due to the negligence of a doctor never file a malpractice suit at all. In other words, patients don’t file lawsuits because they’ve been harmed by shoddy medical care. Patients file lawsuits because they’ve been harmed by shoddy medical care and something else happens to them.

What is that something else? It’s how they were treated, on a personal level, by their doctor. What comes up again and again in malpractice cases is that patients say they were rushed or ignored or treated poorly. “People just don’t sue doctors they like,” is how Alice Burkin, a leading medical malpractice lawyer, puts it. “In all the years I’ve been in this business, I’ve never had a potential client walk in and say, ‘I really like this doctor, and I feel terrible about doing it, but I want to sue him.’ We’ve had people come in saying they want to sue some specialist, and we’ll say, ‘We don’t think that doctor was negligent. We think it’s your primary care doctor who was at fault.’ And the client will say, ‘I don’t care what she did. I love her, and I’m not suing her.’”

*     *     *     *     *

Malpractice sounds like one of those infinitely complicated and multidimensional problems. But in the end it comes down to a matter of respect, and the simplest way that respect is communicated is through tone of voice, and the most corrosive tone of voice that a doctor can assume is a dominant tone.

*     *     *     *     *

Next time you meet a doctor, and you sit down in his office and he starts to talk, if you have the sense that he isn’t listening to you, that he’s talking down to you, and that he isn’t treating you with respect, listen to that feeling. You have thin-sliced him and found him wanting.

Lesson learned: don't be a jerk

My experience has been that personal representatives or trustees or attorneys who treat estate beneficiaries dismissively or discourteously are exponentially more likely to have their fees challenged, accountings challenged, investment decisions challenged, distribution decisions challenged and generally end up in court over and over again until the beneficiaries resign themselves to the mistreatment or the professional resigns.  In other words, the best way to avoid getting sued if you are a personal representative or trustee or attorney is to be nice.  Nice trumps negligence any day of the week.  And just as importantly, being a jerk can get you sued, no matter how good you are at your job.

Can you sue a personal representative 41 years after he was appointed?

Kravitz v. Levy, --- So.2d ----, 2007 WL 2480538 (Fla. 4th DCA Sep 05, 2007)

Probate is often criticized as being too expensive and slow moving. Why the costs and delay? In large part because the probate code is full of protections against various forms of foul play, including fraud by the person who is primarily responsible for protecting the estate: the personal representative.  But these safeguards are limited, and sometimes it can be years - maybe decades - before foul play involving an estate comes to light.  Can the family do anything after all this time?

Continuing torts doctrine saves the day.

The linked-to case involves probate proceedings for Max Kravitz, a resident of Pennsylvania, who died in July 1958. Kravitz's will was admitted to probate in Pennsylvania in 1959, and Morris Passon, Max's brother-in-law and the family lawyer, was appointed executor of Kravitz's estate.  In 2000 - 41 years later! - Passon died in Florida.  In the course of administering Passon's estate it became clear he had improperly kept assets of Kravitz's estate for himself.  So 41 years after Passon was appointed executor, the heirs of Kravitz's estate sued Passon's estate in Florida for negligence, conversion, tortious interference with an inheritance, and breach of fiduciary duty.  The trial court dismissed all claims, finding that they were time barred under F.S. 95.031(2)(a)

In the linked-to case the 4th DCA reversed the trial court's dismissal of the breach of fiduciary duty claims based on the "continuing torts doctrine."  The 4th DCA's opinion is extremely useful because it provides a possible road map for attorneys/families pursuing claims that could be decades in the making, which is not unheard of in contested probate proceedings.  Here's how the 4th DCA applied the continuing tort doctrine to the breach of fiduciary duty claims in this case:

This case is most like Halkey-Roberts Corp. v. Mackal, 641 So.2d 445 (Fla. 2d DCA 1994). There, a corporation brought an action against its former president claiming that he had repeatedly used corporate funds for his own personal interests. The trial court granted summary judgment on the president's statute of limitations defense, but the appellate court reversed on the claims of breach of fiduciary duty. It explained that the complaint alleged what constituted a continuing tort:

In regard to counts I and II, HRC contends that Mackal's [the former corporate president] behavior constituted continuing torts, for which the limitations period runs from the date the tortious conduct ceases. The continuing torts doctrine is recognized under our state law. See Seaboard Air Line R.R. v. Holt, 92 So.2d 169 (Fla.1956). The question of whether Mackal's actions constituted continuing torts precludes the granting of summary judgment as to counts I and II. To what extent, if any, the concept applies to this case is an issue for the trier of fact to decide.

Id. at 447. See also Carlton v. Germany Hammock Groves, 803 So.2d 852 (Fla. 4th DCA 2002) (whether continuing torts doctrine applies to facts of case is for trier of fact).  .  .  .  We conclude that material issues of fact remain as to whether Passon engaged in a continuing tort of breach of fiduciary duty until the date of his death. If so, the statute of limitations would not have begun to run until Passon's death. These issues are for a jury to resolve.

Why sue trusts? Because that's where the money is

“I rob banks because that's where the money is.”  Celebrity bank robber Willie Sutton gets credit for that gem.  The same logic applies to why trusts are often enmeshed in litigation: because that's where the money is.  The opposite is also true: no trust money usually = no lawsuit.

Can you sue a testamentary trust to collect on a decedent's personal debts? NO

One way to pull off the no-trust-money disappearing act is to obtain a court ruling dismissing a lawsuit against the trust because the trust is an improper party.  In other words, the trustee argues that regardless of the merits of the plaintiff's claims, the plaintiff is simply suing the wrong party. 

A recent case out of the Middle District in Florida is a great example of this defense strategy.  In Ziino v. Baker, --- F.Supp.2d ----, 2007 WL 2433902 (M.D.Fla. Aug 22, 2007), a trust was created by a settlor who subsequently died.  The plaintiff in this case had pending claims against the settlor. The plaintiff sued the deceased settlor's testamentary trust directly rather than suing his probate estate.  Why? I'm guessing because that's where the money was.  Rather than getting caught up in the merits of the case, the trustee successfully diverted the lawsuit away from the trust to the probate estate.  "Poof," claim goes away.  Here's how the Ziino court explained its ruling:

The Trustees move to dismiss the Complaint as against themselves on the ground that Florida law prohibits a creditor from bringing a direct action against a trust or its trustees after the death of the settlor, if that action is dependent upon the individual liability of the settlor.  .  .  .  The Florida Trust Code provides that:

After the death of a settlor, no creditor of the settlor may bring, maintain, or continue any direct action against a trust described in s. 733.707(3), the trustee of the trust, or any beneficiary of the trust that is dependent on the individual liability of the settlor. Such claims and causes of action against the settlor shall be presented and enforced against the settlor's estate as provided in part VII of chapter 733, and the personal representative of the settlor's estate may obtain payment from the trustee of a trust described in s. 733.707(3) as provided in ss. 733 .607(2), 733.707(3), and 736.05053.

Fla. Stat. § 736.1014(1). Accordingly, the Trustees are not proper parties to Count I because the settlor, William Wellman, is deceased and in Count I the Plaintiff purported to allege actions that are dependent upon the individual liability of the settlor. See Tobin v. Damian, 723 So.2d 396 (Fla. 4th DCA 1999).

Can you sue a spendthrift trust because the trust beneficiary isn't paying child support or alimony? YES

However, the issue in Ziino that should be of most interest to estate planners is the issue the plaintiff won on: piercing the protective wall of a spendthrift trust.  These types of trusts are at the heart of many estate plans.  One of the primary arguments for these trusts is their well-deserved reputation as asset protection vehicles.  Ziino is important because it addresses the rare exceptions to the general asset-protection benefits of spendthrift trusts: claims for alimony and child support. 

Here's how the Ziino court articulated this point:

Although Count III is obliquely drafted, in that Count the Plaintiff seeks a writ of garnishment under Florida law. In other words, the Plaintiff is seeking to garnish any disbursement from the Trust to Laura Wellman in order to satisfy her child support obligations evidenced by the promissory notes. Moreover, the Plaintiff has alleged in Count III that traditional remedies are not available to recover the child support owed, in that Laura Wellman does not have sufficient assets to satisfy the promissory notes. When “traditional remedies are not effective,” Florida law permits a court to garnish disbursements from a spendthrift trust to effect the collection of alimony and child support. See Bacardi v. White, 463 So.2d 218, 222 (Fla.1985).

Why do you think the plaintiff in Ziino sued the trust to collect on claims against the beneficiary for unpaid child support?  Answer: "because that's where the money is!"

Trust Accounting: Remedy or Cause of Action?

Becker v. Davis, 491 F.3d 1292 (11th Cir.(Fla.) Jul 11, 2007)

In trusts-and-estates litigation there are certain remedies that take on a life of their own; often plead as stand-alone causes of action.  They're not, they're remedies.  Examples include "constructive trusts" (see here) and "accountings."

The remedy v. cause-of-action distinction is not just semantics.  Understanding the distinction can have real life consequences: and the linked-to-case is a great example.

In the linked-to case one of the parties sued for a trust accounting in connection with a business dispute subject to an arbitration clause.  The trial court ruled the trust accounting "count" was not subject to the arbitration clause because it was an independent cause of action.  Wrong answer.  A trust accounting is a remedy.  Not a cause of action, so it can't be litigated as a stand alone claim.  Here's how the 11th Circuit articulated this point in its reversal of the trial court's ruling:

[A]n accounting is a remedy attached to a separate independent cause of action. See Johnson v. Pullman, Inc., 845 F.2d 911, 913 (11th Cir.1988) (“Although plaintiff's complaint contained a count in which an accounting was sought, that relief would not be available here absent some independent cause of action.”).

Accordingly, if the four substantive claims brought by the Trust against the defendants arise out of the agreements and are therefore subject to arbitration, as the parties agree, the Trust's claim for an accounting, which is merely a remedy for any liability, would also arise out of the agreements. Furthermore, to the extent that Becker's individual claims rely on the terms of the agreements and are therefore subject to arbitration, Becker's individual claim for an accounting of the Trust's assets also rely on the terms of the agreements and are subject to arbitration. Accordingly, we find that the district court erred in not sending Count Nineteen to arbitration.

Murder conviction = no insurance money

Barber v. Parrish, --- So.2d ----, 2007 WL 2384521 (Fla. 1st DCA Aug 23, 2007)

Justin Barber was convicted in 2006 of murdering his 27 year old wife to collect on a $2.3 million life insurance policy.  This case was the subject of intense media attention (see here, here).  Mr. Barber continues to profess his innocence . . . and he's still not willing to walk away from the insurance money.

In the linked-to opinion the 1st DCA upheld a trial court's decision applying F.S. 732.802, Florida's "slayer statute."  Mr. Barber argued that since his murder conviction was being appealed, Florida's slayer statute shouldn't apply.  As I've written before, Florida's slayer statute does NOT require a final murder conviction to apply (see here).  That's the same conclusion the 1st DCA came to in the linked-to opinion, based upon the following rationale:

On appeal, Appellant argues that the trial court erred in granting summary judgment because his conviction cannot be considered final before he has exhausted his appellate rights. This argument has previously been rejected. In Prudential Insurance Company of America, Inc. v. Baitinger, 452 So.2d 140, 141 (Fla. 3d DCA 1984), the insured's husband, who was the primary beneficiary of a life insurance policy, was found guilty of the insured's murder. The probate court entered an order directing the insurance company to pay the policy proceeds to the personal representatives of the insured's estate. Id. The insurance company appealed the order arguing that the husband's conviction could not be considered final due to a pending appeal. Id. at 142. The Third District Court of Appeal examined the legislative intent behind section 732.802 and determined that amendments to the statute demonstrated the Legislature's intent to make it more difficult for a killer to receive a financial benefit for his wrongdoing. Id. at 142-43. It concluded that the term “final judgment of conviction” meant an adjudication of guilt by the trial court, and it affirmed the trial court's order directing the insurance company to pay the proceeds to the personal representatives. Id. at 143. See also Cohen v. Cohen, 567 So.2d 1015, 1016 (Fla. 3d DCA 1990) (holding that irreparable harm would not occur to a primary beneficiary, even if her conviction was reversed on appeal, if the estate was distributed to the remaining beneficiaries because she would be able to seek money damages from those beneficiaries).

Arbitration vs. Mediation in Probate Litigation

A Legal Times article entitled Considering Arbitration's Costs and Dangers does a good job of pointing out arbitration's hidden costs within the context of commercial disputes.  The same pros/cons apply in the probate litigation context. The article concludes by asking:

Why not mediate instead? Because it is nonbinding, mediation may at first glance seem to be a waste of time -- if you're in a dispute, why would you want to spend time in a process that cannot guarantee a resolution? But in many respects, mediation offers all the benefits of arbitration -- lower costs, faster results -- without the limitations. It provides a less formal opportunity for both sides to present their views on a dispute, without having to engage in expensive discovery. It can be performed at the outset of a dispute, or later, within the context of a raging litigation (and in fact, courts more and more require parties to attend nonbinding mediation before permitting a case to be brought to trial). Mediation therefore does not preclude litigation, as arbitration does, but complements it. And the average mediation can be performed in a day.

The nature of the mediator's function is the hidden strength of the mediation process. Arbitrators are essentially private judges, paid to determine an outcome in an impartial fashion. Although arbitrators often seem interested in reaching equitable outcomes to the benefit of all parties, they in fact have no intrinsic interest in the outcome. Mediators, by contrast, are brought to a dispute expressly to find common ground, if possible, and thus have a strong interest in ending a dispute in a manner most fair to all parties.

In the probate-litigation context, mediation is almost always the right answer.  Probate disputes lend themselves to resolution in the mediation context because the costs of litigation are often prohibitive: for BOTH sides.  A good mediator will take a personal interest in brokering a deal both parties can live with . . . and making it happen all in one day.  When I take off my litigator hat and put on my "estate planner" hat, I usually include the following mediation language in my wills and trusts:

Dispute Resolution. If there is a dispute or controversy of any nature involving the disposition or administration of my estate, I direct the parties in dispute to submit the matter to mediation or some other method of alternative dispute resolution selected by them. If a party refuses to submit the matter to alternative dispute resolution, or if a party refuses to participate in good faith, I authorize the court having jurisdiction over my estate to award costs and attorney’s fees from that party’s beneficial share or from other amounts payable to that party (including amounts payable to that party as compensation for service as fiduciary) as in chancery actions.

When is arbitration a good idea?

In the probate litigation context, arbitration may be the right tool if formerly waring parties enter into a settlement agreement or some other type of deal requiring them to work together on multiple issues prior to finally parting ways forever. Examples would include closing down or selling a large family business, partitioning real property, or otherwise liquidating a large and complex estate.  In these cases you have two elements that argue for arbitration: [1] frequency and [2] no bet-the-farm decisions.

[1]  Frequency: In a complex settlement situation, there will be multiple "forks in the road" that all have the potential for bringing the entire process to a screeching halt.  An arbitrator can step in at any time, make a ruling, and keep the parties moving forward.  Here's how this point was made in the linked-to article:

Where companies are wise to think of arbitration as a means of resolving their contractual problems, the common denominator in all such circumstances is frequency. Companies whose businesses inevitably involve transactions with numerous entities are more likely to benefit from designating arbitration as a means of resolving disputes. Arbitration clauses can, in such circumstances, help companies avoid becoming entangled in multiple concurrent court proceedings. The savings and efficiencies clearly outweigh foreseeable disadvantages.

[2]  No bet-the-farm decisions: The fact that appellate rights are almost non-existent in arbitration means you have to be willing to live with wrong or manifestly unjust arbitration rulings from time to time.  In a complex settlement situation, all the arbitrator should be doing is resolving minor "intermediate-step" disputes so that all parties can arrive at a mutually-agreed upon end point.  In this context, the costs of a wrong arbitration ruling should be something the parties can live with.

If the issue being disputed is important enough that you want to make sure your client can appeal a wrong decision, then arbitration is probably not the way to go (mediation, however, remains an excellent choice).  Here's how the linked-to article addressed this point:

[I]t is extremely difficult, if not impossible, to get arbitral decisions overturned through the court system -- let alone reviewed. The proof is in the small number of decided cases in which an arbitral decision or procedure is challenged. For example, according to Stephen Huber's article "The Arbitration Jurisprudence of the Fifth Circuit" for the Texas Tech Law Review, between June 2002 and May 2003, the 5th Circuit issued 155 written opinions, with only 21 of them involving issues relating to arbitration. Indeed, the trend is for courts to conclude that an enforceable arbitration clause swallows up just about every dispute under the contract -- including whether a dispute could be decided by arbitration in the first place. Once you've committed to arbitrate a potential dispute, you're not likely to attract a lot of sympathy from a court if things don't work out as you would have hoped.

"Disengaged" PR + blown estate tax filing deadline = $233,359 late penalty

Estate of Zlotowski v. C.I.R., T.C. Memo. 2007-203 (Jul 24, 2007)

In a probate proceeding the person primarily responsible for getting the job done right is also the person primarily liable if things go wrong: the personal representative ("PR").  When a PR hires a lawyer to advise him or her, the PR is entitled to good advice, but the mantle of ultimate responsibility/ liability for the estate remains with the PR, not the lawyer.

"Disengaged" PR

In the linked-to case an 85-year old PR (referred to as "executor") who had assumed responsibility for administering the estate of a former business partner's widow apparently failed to recognize the gravity of his responsibilities.  The following excerpt from the linked-to opinion is how the Tax Court characterized his conduct:

Mr. Roisen testified about his administration of the estate, and, from that testimony, we draw the conclusion that he was almost completely disengaged from estate administration, relying on Mr. Ledley to do virtually all that was required of him and Mr. Helman. Specifically, we make the following findings, based on Mr. Roisen's testimony: He agreed to serve as an executor to accommodate his old business acquaintance, decedent's husband. He relied on decedent's attorney for the selection of Mr. Ledley as executors' counsel. He knew nothing about the estate and relied fully on Mr. Ledley, who, from his perspective, was in charge of the estate. Apart from signing the Form 706, he did not participate in filing it, which job, he believed, was in Mr. Ledley's hands. He never discussed with Mr. Ledley penalties for a late-filed return. He only discussed with Mr. Ledley whether the return was going to be filed on time after it already was late.

Mr. Roisen's almost complete disengagement from return preparation is captured by his final exchange with one of respondent's counsel:

Q: So, essentially your testimony is that they [i.e., Mr. Ledley] took care of everything relative to the filing of the return?

A: Absolutely. That is a hundred percent correct.

Q: And you had no participation in the filing of the return?

A: No, except that they required my signature, because being the executor of the will, I had to sign it, and which I did. I had full confidence in them.

Mr. Roisen signed the estate tax return, on August 28, 2001, after it was more than 8 months overdue.

Blown estate tax filing deadline = $233,359 late penalty

When the IRS assessed a $233,359 late penalty because the PR filed the estate's Form 706 Estate Tax Return 8 months late, the PR argued his lawyer was responsible for filing the estate tax return, and so the estate shouldn't be held responsible for his lawyer's mistake.  The Tax Court rejected this argument, but summarized the controlling law as follows:

In [United States v. Boyle, 469 U.S. 241, 245 (1985),] at 249-250, the Supreme Court stated:

Congress has placed the burden of prompt filing [of an estate tax return] on the executor, not on some agent or employee of the executor. * * * Congress intended to place upon the taxpayer an obligation to ascertain the statutory deadline and then to meet that deadline, except in a very narrow range of situations.

The Court recognized that engaging an attorney to assist in probate proceedings is “plainly an exercise of the ‘ordinary business care and prudence’ prescribed by [section 301.6651-1(c)(1), Proced. & Admin. Regs.]”. Id. at 250. Nevertheless, describing the executor's duty to file the return as an “unambiguous, precisely defined duty”, the Court cautioned that the executor's expectation that the attorney, as his agent, would attend to the matter “does not relieve the principal of his duty to comply with the statute.” Id.

Of lost wills and "virtually" adopted heirs

In re Estate of Musil, --- So.2d ----, 2007 WL 2317189 (Fla. 2d DCA Aug 15, 2007)

The stuff of most probate disputes isn't the dramatic will contest.  Rather, it's the secondary, less sexy bread-and-butter issues that usually rule the day.  For that reason cases like the linked-to opinion are useful. Practitioners and judges alike get practical guidance they can use over and over again.

What if I can't find the original will, what if I only have a copy?

I get this question with some frequency.  I'm sure most probate practitioners would say the same. In the linked-to opinion the court does a good job of explaining what needs to be done to have a photocopy of a will accepted into probate:

A will that was in the possession of the testator before his death and that cannot be located after his death is presumed to have been destroyed by the testator with the intention of revoking it. See Carlton v. Sims ( In re Estate of Carlton), 276 So.2d 832, 833 (Fla.1973); Walton v. Estate of Walton, 601 So.2d 1266, 1266 (Fla. 3d DCA 1992). The proponent of the lost or destroyed will bears the burden of overcoming the presumption that the will was intentionally destroyed. Daul, 754 So.2d at 848. “The first step in overcoming this presumption is” to establish the terms of the will and to offer it for probate. In re Estate of Parker, 382 So.2d 652, 653 (Fla.1980). Section 733.207, Florida Statutes (2005), outlines the procedure for establishing a lost or destroyed will:

Any interested person may establish the full and precise terms of a lost or destroyed will and offer the will for probate. The specific content of the will must be proved by the testimony of two disinterested witnesses, or, if a correct copy is provided, it shall be proved by one disinterested witness.

See also Fla. Prob. R. 5.510 (stating additional requirements for the establishment and probate of a lost or destroyed will).

But he raised me like his own son, don't I have any rights?

According to U.S. census data married couples made up 71% of all households in 1970 but decreased to 53% in 2000.  Nontraditional families, made up of adults raising children who are not biologically related to them, are obviously an increasingly common phenomenon.  Many of these "parent/child" relationships are never formalized in an adoption proceeding.

Against this backdrop we can expect to see more cases where people who are not related to a decedent by blood or adoption feel entitled to a stake in the estate.  "Virtual adoption" is the only available remedy in these cases.  Get to know this concept, you'll be seeing more of it (see here).  Here's how the court in the linked-to opinion summarized the elements of this claim in Florida:

Following the reasoning in [Sheffield v. Barry, 14 So.2d 417 (Fla.1943)] and in other cases, the Fifth District listed the five elements of virtual adoption in its review of a judgment that determined heirs. Poole v. Burnett (In re Heirs of Hodge), 470 So.2d 740, 741 (Fla. 5th DCA 1985). The elements of a virtual adoption include:

1. an agreement between the natural and adoptive parents;

2. performance by the natural parents of the child in giving up custody;

3. performance by the child by living in the home of the adoptive parents;

4. partial performance by the foster parents in taking the child into the home and treating the child as their child; and

5. intestacy of the foster parents.

Id. The Fifth District also recognized the Sheffield court's acknowledgment that in Florida, the purpose of virtual adoption is to provide the child with “an enforceable contractual right.” Id.

How much due process is a mentally ill patient entitled to in an involuntary commitment proceeding?

Register v. State, 946 So.2d 50 (Fla. 1st DCA Dec 15, 2006)

The Florida law covering both voluntary and involuntary treatment for mentally ill persons is Chapter 394 of Florida Statutes: known as the Florida Mental Health Act or the Baker ActAs with contested guardianship proceedings, the due process issues in these cases are thorny to say the least.    In the linked-to case the 1st DCA reversed a trial court's involuntary inpatient placement of a mentally ill person because the trial court had failed to "certify through proper inquiry" that counsel's waiver of the patient's presence at the commitment hearing "was knowing, intelligent, and voluntary."

Here's how the 1st DCA explained its ruling:

A patient has a fundamental right to be present at a commitment proceeding. Joehnk v. State, 689 So.2d 1179, 1180 (Fla. 1st DCA 1997). While a patient may waive his or her right to be personally present and be constructively present through counsel, a court must certify through proper inquiry that the waiver is knowing, intelligent, and voluntary. Id. Furthermore, a denial of the due process right to be present at an involuntary commitment hearing is fundamental error which may be raised on appeal even if not preserved below. See Ibur v. State, 765 So.2d 275, 276 (Fla. 1st DCA 2000) (holding that a denial of the due process right to be heard prior to the deprivation of one's liberty is fundamental error).

Because the court below did not certify through proper inquiry that the waiver was knowing, intelligent, and voluntary, we reverse and remand for a new commitment hearing.

Widow lacks property interest in husband's body

City of Key West v. Knowles, 948 So.2d 58 (Fla. 3d DCA Jan 10, 2007)

I think cases involving dead bodies often end up getting appealed because families find it hard to believe how limited a person's legal rights are with respect to the remains of his or her loved ones (see here).

This issue received national attention in Florida during the Anna Nicole Smith case, as chronicled on this blog (see here and here) and by Prof. James T.R. Jones of the Louis D. Brandeis School of Law, in an article entitled Anna Nicole Smith and the Right to Control Disposition of the Dead.

In the linked-to case a surviving widow, Lorraine Knowles, filed a federal section 1983 claim against the City of Key West and its former Cemetery Sexton, Gilbert Suarez, on the grounds, among other things, that she was deprived of a property interest in her husband's buried remains without due process.  The 3d DCA ruled that the trial court should have granted the City's motion for directed verdict because the surviving widow lacked a protected property interest in her dead husband's body.  Here's the key language from the linked-to opinion:

To determine whether a property interest exists, for purposes of a section 1983 claim, we must look to state law. Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972); Crocker, 778 So.2d at 984 (citing Bishop v. Wood, 426 U.S. 341, 96 S.Ct. 2074, 48 L.Ed.2d 684 (1976)). “[I]n Florida there is a legitimate claim of entitlement by the next of kin to possession of the remains of a decedent for burial or other lawful disposition.” Crocker, 778 So.2d at 988. These rights to a deceased's remains, however, exist only for purposes of burial, or for other statutory purposes, and nothing further. Id. See Lascurain v. City of Newark, 349 N.J.Super. 251, 793 A.2d 731 (2002). Thus, for purposes of a section 1983 claim, constitutionally protected property interest to decedent's remains ends at the point of burial or other lawful disposition. Any claims for events occurring thereafter must be pursued under traditional common law causes of action. See Crocker, 778 So.2d at 987-88. In this case, Knowles's complaint arises solely from events after the lawful burial of her husband. Hence, there is no constitutionally protected property interest on which Knowles can rest her section 1983 claim under the facts of this case. Therefore, the trial court should have granted the City's directed verdict motion as the close of Knowles's evidence.

Marshall v. Marshall: The Supreme Court's Get-Out-of-Probate-Free Card.

I've previously written about how the U.S. Supreme Court's ruling in Marshall v. Marshall will lead to more trusts-and-estates cases being litigated in Federal Court (see here).  In Marshall v. Marshall: The Supreme Court's Get-Out-of-Probate-Free Card, University of Washington School of Law law student Julian Hurst (2008 J.D. Candidate) examines Marshall's "practical consequences from the perspective of probate law and for those who find themselves challenging the validity of a will or trust."

One of these days you'll either be pushing for federal jurisdiction or opposing it in some form of trusts-and-estates litigation.  When that day comes, remember the linked-to law review article.  Here's the abstract:


The probate exception to federal jurisdiction is a legal doctrine self-imposed by federal courts barring jurisdiction over probating wills or administering estates, or related actions that would interfere with property in the custody of state courts. Courts have struggled with cases that fall at the margins of the exception, creating one of the most mysterious and esoteric branches of the law of federal jurisdiction.

In Marshall v. Marshall, the Supreme Court addressed the federal probate exception for the first time in over 60 years. Eight members of the Court held that the doctrine was legitimate, but more narrow than many lower courts thought. Unfortunately, the decision leaves as many questions as answers. The history, scope and purpose of the federal probate exception, as well as its place in the Supreme Court's federal jurisdiction jurisprudence, has already been treated by other authors. I will examine Marshall's practical consequences from the perspective of probate law and for those who find themselves challenging the validity of a will or trust.

Termination of a guardianship upon a change in domicile

In re Guardianship of Graham, --- So.2d ----, 2007 WL 2189111 (Fla. 4th DCA Aug 01, 2007)

In the linked-to case two brothers were feuding over whom would be appointed mom's guardian.  The brother that lost, 'Larry," decided to take matters into his own hands after the trial court ruled against him.

After the trial court appointed the guardian, Larry surreptitiously took Betty from the residence where she had been placed by the guardian and moved her to California without giving notice to the court or any of the parties. The trial court held Larry in indirect criminal contempt for removing Betty from Florida and otherwise defying the guardianship orders. Larry has refused to reveal his exact whereabouts as well as the whereabouts of his mother.

Adding insult to injury, Larry managed to find a lawyer who was audacious enough to argue that since Larry had essentially kidnapped his mom and taken her out of Florida . . . the Florida court system no longer had any authority over her.

The attorney .  .  .  argued that the court was required to dismiss the guardianship proceedings because the ward could not be located after diligent search. See Fla. Prob. R. 5.680(a). When the court asked, “But we have the ability to know where the ward is; don't we?” The attorney responded, “But she's not-she's not-they didn't until I divulged that.” That same attorney has continued to argue in this proceeding that the guardianship proceedings must be dismissed because Betty is no longer in Florida.

The trial court of course rejected Larry's ludicrous argument, and the 4th DCA affirmed.

Lesson learned:

First, in contested guardianship proceedings, always expect the unexpected.  Second, if the other side goes completely crazy, remember the trial court's contempt powersFinally, if you're involved in a legitimate proceeding where there are legitimate reasons for moving a ward to another state, make sure you remember that Florida Statutes section 744.2025(1) requires a guardian to obtain prior court approval before removing the ward from the state.  Here's how the procedural steps involved in a change of domicile were summarized in the linked-to case:

The statutes provide for termination of a guardianship upon a change in domicile of the ward where another state has appointed a guardian, but the statute requires that the change in domicile be accomplished by the legal guardian with prior approval of the court. § 744.524, Fla. Stat. (2006) (providing for termination of guardianship when the domicile of a ward has changed as provided in section 744.2025). The petition does not suggest that California has appointed a guardian for Betty and clearly the circuit court has not approved Betty's change in domicile. See also Fla. Prob. R. 5.670 (setting forth the procedure for terminating a guardianship on change of domicile of a ward and requiring the Florida guardian to file a petition for discharge); cf. In re Guardianship of Gechtman, 719 So.2d 960 (Fla. 4th DCA 1998).

Truth is stranger than fiction

The saying "truth is stranger than fiction" didn't originate in a trusts-and-estates case (see here) . . . but it should have. 

For example, say you went to a movie and the plot line revolved around a brilliant but eccentric MIT professor who allegedly staged his own "hit" by two masked men with Russian accents then blamed his son in order to gain the upper hand in litigation involving a family trust.  You'd say "no way, that could never happen."  And you'd be wrong.  As reported in Former MIT professor headed to trial in allegedly staged shooting that's exactly the real life drama currently playing itself out in a Boston courtroom:

CAMBRIDGE, Massachusetts (AP) -- What the former MIT professor and wealthy businessman told police sounded like a scene from a bad spy novel: He was shot by two masked men with Russian accents, and saved only because two of the bullets bounced off his belt buckle.

Five months later came the indictment -- against him.

Prosecutors say John J. Donovan Sr. staged his own shooting to gain an advantage in a legal battle with his own children for control of trusts that he claims are worth at least $180 million. He's accused of trying to get back at his oldest son by falsely accusing him of hiring his would-be killers.

*     *     *     *     *
Donovan is charged with filing a false police report, a misdemeanor that carries a maximum one-year sentence. His trial is scheduled to begin Friday in Middlesex Superior Court.

"John Donovan repeatedly provided false information to police about a crime that did not occur in order to 'frame' his son for a crime his son did not commit and had no part in," prosecutors claim in court documents.

*     *     *     *     *

During the 911 call Donovan made from his cell phone after the shooting, he told a state police dispatcher that his son James, now 40, "laundered $180 million" and had threatened to kill him.

Prosecutors say Donovan made up the story to exact revenge, but his lawyer Barry Klickstein calls Donovan "the innocent victim of a violent crime."

Sons Conceived In Vitro Ruled Covered by Trusts

As technology races ahead in the development of new forms of assisted reproductive technology, the courts are struggling to keep up.  From a probate litigation standpoint, the question is what legal rights - if any - does a child both born and conceived after the father's death have?  In an article entitled Posthumous Reproduction, Prof. Charles P. Kindregan, Jr., of Suffolk University Law School in Boston, described the legal landscape this way:

Until very recently, legal issues surrounding posthumous children focused on inheritance rights of a child who was conceived while the biological parents were alive with the child being born after the death of the father. The law largely deals with this problem by providing for the legal heirship of children born within the normal gestational period following the death of the father. But the development of such technologies as intrauterine insemination, in vitro fertilization, surrogacy, cryopreservation of gametes and embryos and (someday) human reproductive cloning have created the potential for an entirely different set of legal issues. These issues are not based on the birth of a child after the death of the father when the child is conceived prior to the father’s death. Instead, the new reality is based on conceiving a child or implanting a preexisting embryo after the death of a genetic parent or parents. This article explores some of the evolving issues created by the use of cryopreserved gametes and embryos after the death of one or both gamete providers.

In Florida, the inheritance rights of a child who was conceived while the biological parents were alive but born after the death of the father, are governed by Florida Statute section 732.106:

732.106 Afterborn heirs.--Heirs of the decedent conceived before his or her death, but born thereafter, inherit intestate property as if they had been born in the decedent's lifetime.

Florida has no statute governing the inheritance rights of a child conceived after the father's death.  In the absence of guiding legislation, courts are forced to fall back upon general rules of construction within the probate and trust context.  That's what a court in New York recently did, as reported on in Sons Conceived In Vitro Ruled Covered by Trusts, when it ruled that two children conceived and born after the father's death were nonetheless intended beneficiaries of the father's trust.  My guess is that a Florida court faced with similar facts would likely come to the same conclusion.  Here's an excerpt from the linked-two story:

Three years after James B. died of Hodgkin's lymphoma, his wife Nancy gave birth to the couple's first son, who was named James in honor of his late father.

Two years later -- nearly six years after her husband's death -- Nancy gave birth to their second son, Warren.

Now, as the boys approach their first and third birthdays, their in vitro conception has raised an issue of first impression that New York's Legislature did not consider, for obvious reasons, when it first drafted the Estates, Powers and Trusts Law in the early 1960s.

Specifically, in Matter of Martin B., Manhattan Surrogate Renee Roth had to decide whether the "issue" and "descendants" provided for in seven 1969 trusts includes children conceived with the cryopreserved semen of the grantor's late son -- James B., as he is known in court papers -- whose death preceded his own sons' conception.

Surrogate Roth ruled that the grantor's intent is controlling and that, although his trusts were understandably silent on the subject, they appeared to favor inclusion of young James and Warren among his "issue" and "descendants."

"[The] instruments provide that, upon the death of the Grantor's wife, the trust fund would benefit his sons and their families equally," Surrogate Roth wrote. "In view of such overall dispositive scheme, a sympathetic reading of these instruments warrants the conclusion that the Grantor intended all members of his bloodline to receive their share."

*     *     *     *     *

[Surrogate Roth] noted that the New York Legislature has addressed the same issue vis-à-vis wills: A recent amendment to the Estates, Powers and Trusts Law excludes "post-conceived" children from sharing in a parent's estate, absent a contrary provision.

That amendment, however, is "applicable only to wills and to 'after-borns' who are the children of the testators themselves," Surrogate Roth wrote. "Moreover, the concerns to winding up a decedent's estate differ from those related to identifying whether a class disposition to a grantor's issue includes a child conceived after the father's death but before the disposition became effective."

Are orders awarding trustee fees subject to appeal?

Greene v. Borsky, --- So.2d ----, 2007 WL 2119215 (Fla. 4th DCA Jul 25, 2007)

Whether a particular type of order is subject to appeal can have a huge impact on how a case is litigated.  In this case, the issue was whether a trial court's order permitting trustees to pay their legal fees with assets of the trust was subject to appeal.  The 4th DCA said YES.  Thankfully!

Here's how the 4th DCA explained it's ruling:

The orders in this case are appealable non-final orders under Florida Rule of Appellate Procedure 9.130(a)(3)(C)(ii). Rule 9.130(a)(3)(C)(ii) provides that appealable non-final orders include those that determine “the right to immediate possession of property .” This Court has previously held that a sum of money is property to which Rule 9.130(a)(3)(C)(ii) can apply. In Florida Discount Properties, Inc. v. Windermere Condominium, Inc., 763 So.2d 1084 (Fla. 4th DCA 1999), a lessor filed a motion to have disputed rent paid into the registry of the court. Id. at 1084. The trial court denied the motion, and the lessor appealed. Id. On appeal, this Court concluded that the order was an appealable non-final order under Florida Rule of Appellate Procedure 9.130(a)(3)(C)(ii), because it determined “the right to immediate possession of property, i.e., the rent payments.” Id. Likewise, in the present case, the trial court orders determined the right to immediate possession of property, here trust assets to be used by trustees to pay for attorney's fees and witness fees expended in defense of the trust. As such, we conclude that this Court possesses jurisdiction over this appeal under Florida Rule of Appellate Procedure 9.130(a)(3)(C)(ii) and affirm in all respects without further comment.

Careful readers of this blog will recognize the name of one of the attorneys on the winning side of the linked-to case: Amy B. Beller of Miller & O'Neill, P.L.  (see here for prior post).  Well done Amy.

Florida Homestead Descent Examples

Kristen D. Drake, JD, CFP, publishes Coast Law, LLC, an excellent Florida-specific blog focusing on estate planning matters.  Her goal is to is to build a "One-Stop Florida Homestead reference page," and she's off to a great start.  For example, in her blog post entitled Homestead Descent Examples she provides a link to homestead-related case studies prepared by Bruce Stone, one of Florida's most well regarded estate planning attorneys.  Here's the post in its entirety:

Sometimes the best way to understand a complicated issue is with examples. Bruce Stone, a prominent estate planning attorney in Florida (more about Mr. Stone here), presented "What Every Georgia Trusts and Estates Practitioner Needs To Know About Florida Law" and included some excellent homestead descent examples in his materials. He was kind enough to let us post them here. Test your knowledge of homestead descent with these great examples.


Last year I wrote here about a case out of the 3d DCA that had me puzzled.  The 2006 case was a will contest involving allegations of "insane delusion".  I couldn't reconcile the 3d DCA's apparent retreat from the extremely tough "lucid interval" standard generally applicable to testamentary capacity cases.

What the 3d DCA failed to explicitly state was that lack of testamentary capacity can be established in two ways: (1) general incapacity (governed by the insane-delusion standard) or (2) by establishing some specific and narrower form of insane delusion that is the direct cause of the invalid will.  This second testamentary-capacity line of attack is worth remembering.

As if on cue, professor Bradley E.S. Fogel of St. Louis University School of Law just published an article in the Spring 2007 edition of the ABA's Real Property, Probate and Trust Journal providing an excellent summary of the law governing insane-delusion will contests.  The article is entitled THE COMPLETELY INSANE LAW OF PARTIAL INSANITY: THE IMPACT OF MONOMANIA ON TESTAMENTARY CAPACITY.  Here's the editor's synopsis of his article:

In this Article, the author discusses the doctrine of monomania, which permits a court to invalidate a will based on the testator’s insane delusion if that insane delusion caused the testator to dispose of his property in a way that he otherwise would not have. The author argues that the monomania doctrine is fatally flawed and that the doctrine should be abandoned in favor of using the general test for capacity to make all testamentary capacity decisions.

Should Divorce = Automatic Forfeiture of Life Insurance Benefits?

I previously wrote here about a case where an ex-spouse was the windfall beneficiary of insurance benefits because her ex had the audacity of dying after their divorce but before getting around to revising his insurance beneficiary designation forms (it's always the little things that get you!).  This outcome probably seemed unfair to many (except the ex), including Stetson Law student Suzanne Soliman, who just published A Fair Presumption: Why Florida Needs a Divorce Revocation Statute for Beneficiary-Designated Nonprobate Assets, in 36 Stetson L. Rev. 397 (2007).  Here's an excerpt:

Like many Americans, Floridians invest significantly in beneficiary-designated nonprobate estate planning tools such as life insurance. These types of assets comprise the bulk of many Floridians' estate plans because they are easy to obtain and, in many instances, affordable compared to other estate planning tools. It is important to effectuate the policyholder's intent, particularly because so many families trust that these assets will provide some degree of security. Enacting a divorce revocation statute to protect nonprobate assets will provide protection and security for many Florida families.

Special thanks to the Wills, Trust & Estates Prof Blog for posting here on this article.

Does a spouse have to be on the deed to have homestead rights?

Taylor v. Maness, 941 So.2d 559 (Fla. 3d DCA Nov 15, 2006)

Property rights vs. homestead rights: which wins out in litigation involving homestead property?  That's a no-brainer: homestead rights trump property rights any day of the week.  The linked-to case underscores this general principal by applying it to a real live set of facts with very real economic consequences riding on how the court ruled.

Does the deed control? NO

In this case husband (but not wife) signed a sales contract for the sale of his homestead property located on Marathon Key, Florida (think VERY EXPENSIVE real estate!).  The house was deeded in husband's name alone.  Wife was not consulted, and refused to sign a deed effectuating the sales contract.  Buyer sued to enforce the sales contract.  But buyer didn't just want damages, he also wanted the court to specifically enforce the contract.  Court said NO WAY, and it didn't matter that wife's name wasn't on the deed.  Why? Because spouse's homestead rights trump all else.  The following excerpts should be enough to make the point:

The undisputed facts, which were before the trial court, are as follows. Mr. and Mrs. Maness were married on June 14, 1986. Sometime in September 1986, Mr. Maness purchased a vacant lot located at 180 Ana Court, Marathon, Monroe County, Florida, which was titled solely in the name of “James G. Maness, as a married man” (“Marathon Property”).     .     .     .     .     On or about September 25, 2002, Mr. Maness, as the seller, and the Taylors, as the purchasers, entered into a contract, whereby Mr. Maness agreed to convey the Marathon Property to the Taylors. Mrs. Maness did not execute the contract, nor was she named in the contract. Closing was to take place on or before December 2, 2002. Mrs. Maness, however, refused to execute the deed transferring the Marathon Property to the Taylors, claiming that she has a homestead interest in the Marathon Property, thereby precluding consummation of the contract.

*     *     *     *     *
In reaching our conclusion, we wish to address Mrs. Maness' homestead interest in the Marathon Property. The Taylors correctly point out that Mrs. Maness is not the title owner of the Marathon Property. However, the individual claiming the homestead exemption need not hold fee simple title to the property. Callava v. Feinberg, 864 So.2d 429, 431 (Fla. 3d DCA 2003). Article X, section 4 “does not designate how title to the property is to be held and it does not limit the estate that must be owned, i.e., fee simple, life estate, or some lesser interest.” Stilwell, 810 So.2d at 569. Thus, even if Mrs. Maness owns only a beneficial interest in the Marathon Property, she is entitled to claim a homestead exemption to the forced sale of the property. See Callava, 864 So.2d at 431 (holding that even if divorced wife only owned a beneficial interest and not title interest in the residence constituting her homestead, she was nonetheless entitled to claim a homestead exemption from the forced sale of the property).

Lesson learned:

Former U.S. Secretary of Defense Donald Rumsfeld once famously said that it was the "unknown unknowns" that worried him most (see here for the You Tube version).  In litigation involving homestead real property, simply reading the deed tells you very little about the principal issue driving the case.  Knowing this unstated fact in advance may make all the difference in the world.  If your opponent is unaware of this fact, he or she is about to learn why the "unknown unknowns" are the scariest part of practicing law.

Drafting trustee settlement agreements that stick

Commercial Capital Resources, LLC v. Giovannetti, 955 So.2d 1151 (Fla. 3d DCA Mar 28, 2007)

So you've been negotiating a settlement of contentious litigation for over 10 hours, it's now late into the night and you've finally got what looks like a deal put together, and then you get handed a "draft" settlement agreement by the mediator (who happens to be a senior judge with a zillion years of experience under his belt).  You don't want to be the guy who mucks up the deal at the last minute, and you don't want to be disrespectful to the judge, but the settlement agreement doesn't seem to get the trustee release language right.  The release language seems to focus on the trustee as an individual, vs. a fiduciary representing a trust estate and its beneficiaries.  Here's what the release language says:

[Trustee], CCR ... and all other named parties and defendants joined in the pending litigation will execute general releases in favor of [Giovannetti].... [Giovannetti] ... will execute general releases in favor of [Trustee], CCR ... and all other named parties and defendants joined in the pending litigation.... [Trustee] agrees that in his capacity as “trustee” of any trust ... without prejudice to his fiduciary obligations or duty to provide proper and necessary notice and disclosures to investors, that he will refrain from taking any action [sic] initiate or to solicit the investors to initiate a law suit against [Giovannetti], and that if any such action is brought against [Giovannetti], [Trustee] will resign as trustee from any trust involved in or bringing the action.

As the linked-to case shows, the professionals who signed off on this deal ended up back in court and eventually before an appellate court . . . all after executing a settlement agreement they probably all assumed was meant to end the litigation once and for all (what their clients were thinking is anyone's guess).

Lesson learned:

In retrospect, one could say that the settlement agreement litigated in the linked-to case was fundamentally flawed because it focused on the trustee as an individual vs. as a fiduciary virtually representing trust beneficiaries.  But that would be a cheap shot.  In reality, what probably happened here is that the lawyers were under pressure to draft a technically demanding settlement agreement late at night, after hours of intensive negotiation.  I've done this myself and lived to regret it.  The true lesson from this case (which I'm still working on) is that you want to draft the key portions of your settlement agreement in advance . . . when you're NOT subject to the pressure and stress of the moment.

4 questions to ask yourself before filing any lawsuit

Mike Dillon, General Counsel for Sun Microsystems, Inc., publishes a great blog called The Legal Thing.  In a blog post entitled On Litigation...(Azul), Mr. Dillon shared his "four principals" for evaluating when litigation is appropriate.  I thought his comments were dead on, and applicable to any form of litigation - including probate litigation.  I've reproduced his four principals below with my practice-specific comments:

No. 1 - You only litigate when you have an important interest to protect. Litigation is costly. Incredibly costly. But it is not the expense that is the real issue, it's the diversion of resources. Time employees spend reviewing e-mails and documents, educating lawyers and preparing for depositions is time away from the business. That's the real cost of litigation.

Probate comment: Ask your lawyer to assume the worst case scenario and then estimate how long you should expect the process to last (1 to 2 years is the norm) and how much it will all cost (it will always be higher than you expected).  Then ask yourself, "is it really worth it?"  If the answer is yes, then proceed to point no. 2, otherwise stop immediately and move on with your life.

No. 2 - A non-judicial resolution is almost always preferable. When you file a complaint, you are turning over resolution of an issue to a third party - be it a judge, arbitrator or jury. To a great degree you lose control of the outcome.

Probate comment: In the probate-litigation context, every penny spent on legal fees siphons off a piece of the family inheritance to a third party: the lawyers.  The quickest way to stop the bleeding is to settle the case.  Mediation should be a no-brainer in this type of litigation.

No. 3 - You litigate when you have a high degree of confidence that you will prevail. Bluffing is for weekend games of Texas Hold'em . When you file suit, you need to have fully evaluated all aspects of the case to ensure that the outcome will be favorable.

Probate comment:  Pick your battles carefully.  This is where lateral thinking pays off.  In the probate-litigation context there are often multiple approaches to achieve a desired result.  Some approaches usually favor the defendant, some usually favor the plaintiff.  Depending on what side you're on, play to your strengths.  How you address this point no. 3 will inform points 1 and 2 above.

No. 4 - You litigate to win. This means that your employees, board and management team fully understand and support the commitment (both financial and time) required to prevail. It also means having seasoned litigation counsel who understand your business and objectives.

Probate comment: Litigation is not a negotiation strategy.  Once you've decided a lawsuit is your last best option, you need to be willing to see the process through to the end.

Lateral thinking = probate litigation success

Marlowe v. Brown, 944 So.2d 1036 (Fla. 4th DCA Aug 02, 2006)

Being an effective probate litigator often requires lateral thinking -- the generation of novel solutions to problems using other than straightforward, step-by-step logic. The point of lateral thinking is that many problems require a different perspective to solve successfully.

The linked-to case is a perfect example. In this case a couple was in the midst of a very contentious divorce proceeding.  After they signed a non-final mediation agreement, but before a final judgment of divorce was entered, husband died. Shortly thereafter, wife died.  Presto! . . . we're in probate litigation land.

Why fight over a 50% divorce mediation agreement when you can get 100% in probate?

Before husband died, the parties had been contesting the meaning of their divorce mediation agreement, which contemplated a 50/50 split of the couple's assets.  Rather than continue this litigation in a linear fashion within the probate context, wife's PR came at the problem from a completely different perspective: why argue over 50/50 when wife, as a surviving spouse, gets 100% of all jointly titled assets?

In September, 2003, the wife moved the probate court to declare certain assets to be hers. Among these assets were the Greenbrier Farm, the Naked Lady Ranch, and “Hatteras Lots;” the dissolution judge's January 21 order had found that the husband and wife owned these properties as tenants by the entirety. The wife argued that these lots passed to her by operation of law when her husband died. The wife made similar arguments as to other properties based on the way the properties were titled at the time of the husband's death. For example, the wife argued that 103,114.299 troy ounces of silver passed to her under the provisions of a storage contract which declared that the account was a joint tenancy with right of survivorship.

Wife lost this argument at the trial court level . . . but won where it counts: on appeal.  The 4th DCA ruled that first, in the absence of a final judgment, there was no divorce; and second, as surviving spouse she gets 100% of the joint property.  Here's how the 4th DCA summed up its thinking:

The dissolution of marriage action terminated with the death of the husband and the . . . judge should have dismissed the case upon the wife's motion.

.     .     .     .     .

In Price v. Price, 114 Fla. 233, 153 So. 904, 905 (1934), the supreme court described the effect of an appellate reversal of a divorce decree, where one spouse dies after the issuance of the decree, but while the appeal is pending:

[O]n such reversal, the parties will be placed in the position they occupied before the decree was entered, and if one of them has died between the date of the decree of divorce and its reversal, the survivor procuring the reversal will be entitled to all rights of succession or the like, in the estate of the other, the same as if no divorce has ever been had.

Similarly, the husband's death in this case left the wife in the legal position of one whose marriage was terminated by death, and not by a final judgment.

Yes, lateral thinking wins the day again. 

Does Florida's homestead protection trump a fraudulent transfer?

Dowling v. Davis, Slip Copy, 2007 WL 1839555 (M.D.Fla. Jun 26, 2007)

Does Florida's homestead exemption from creditor claims extend to cases where all parties concede that the judgment debtor purchased a home in Florida with the intent to hinder creditors?  As explained in this federal court decision, the Florida Supreme Court says YES it does:

Crooks Welcomed:

[T]he Florida Supreme Court has expressly held that “[t]he transfer of nonexempt assets into an exempt homestead with the intent to hinder, delay, or defraud creditors is not one of the three exceptions to the homestead exemption provided for in article X, section 4.” Havoco of Am., Ltd. v. Hill, 790 So.2d 1018, 1028 (Fla.2001) ( “Havoco I” ) (emphasis added); Havoco of Am., Ltd. v. Hill, 255 F.3d 1321, 1322 (11th Cir.2001) ( “Havoco II” ) (affirming that judgment debtor's purchase of home with intent to hinder creditors did not overcome homestead exemption, based on answer to certified question in Havoco I ). This is precisely what Plaintiff is alleging Defendants sought to accomplish by purchasing the Florida residence. For this reason, Plaintiff's claim fails.

But what about an equitable lien? Don't count on it:

Plaintiff argues that the fraud occurred when Defendants, knowing a judgment was imminent, purchased a house with proceeds that could have been used to satisfy Plaintiff s judgment against Davis. Again, however, the homestead exemption does not contain an express exception for real property that is acquired in Florida for the sole purpose of defeating the claims of out-of-state creditors. Havoco II, 255 F.3d at 1322; Havoco I, 790 So.2d at 1028; Bank Leumi Trust Co. v. Lang, 898 F.Supp. 883, 887 (S.D.Fla.1995); In re Adell, 321 B.R. 562, 569-70 (Bankr.M.D.Fla.2005). Indeed, in one of the primary cases relied upon by Plaintiff, the court specifically distinguished those cases in which a debtor owned the funds-where an equitable lien is not proper-from those cases in which a debtor purchased a residence with fraudulently-obtained funds. In re Fin. Federated Title & Trust, Inc., 273 B.R. 706, 716 (Bankr.S.D.Fla.2001) aff'd 347 F.3d 880 (11th Cir.2003) (affirming imposition of equitable lien where funds were undisputedly obtained through fraudulent Ponzi scheme).FN5

FN5. Although not cited by Plaintiff, one court has imposed an equitable lien where a judgment debtor transferred funds to his daughter and son-in-law to satisfy a mortgage on their residence. Babbit Elecs., Inc. v. Dynascan Corp., 915 F.Supp. 335, 337 (S.D.Fla.1995). The court held that the transfer was made to delay, hinder, and defraud the defendant's judgment creditor in collection of its judgment and that imposition of an equitable lien would not change the position of the daughter and son-in-law. Id. at 338. However, this pre- Havoco I decision appears to be in conflict with the Eleventh Circuit's ultimate holding in Havoco II that the homestead exemption shields a debtor's purchase of a residence with non-exempt funds, even when the purchase is made with the intent to hinder a judgment creditor. Havoco II, 255 F.3d at 1322.

Lesson Learned:

As this case proves -- again -- Florida's homestead laws are almost impenetrable creditor protection shields.  And as I've written about before (see here), getting around this protective wall via an "equitable lien" theory almost never works.  Bottom line: people who admittedly move to Florida for the express purpose of evading their just debts can get away with it.

I have to believe this result is an unintended consequence of Florida's outdated homestead laws.  Until someone decides this is a crisis, I assume we'll be stuck with the status quo.  So if you're looking to defraud your creditors, sunny Florida says "welcome home!"

Does attorney as witness to signatures = waiver of attorney-client privilege?

Kranias v. Tsiogas, 941 So.2d 1173 (Fla. 2d DCA Oct 13, 2006)

Attorneys witness their clients' signatures on documents all the time. In the estate planning context, attorneys regularly witness their clients signatures on wills and trusts.  Is the attorney-client privilege waived every time you witness a signature?  The 2d DCA says NO.

The specific exception to the attorney-client privilege at issue here is found in Florida Statutes section 90.502(4)(d), which provides as follows:

(4) There is no lawyer-client privilege under this section when: . . . . . (d) A communication is relevant to an issue concerning the intention or competence of a client executing an attested document to which the lawyer is an attesting witness, or concerning the execution or attestation of the document.

In the linked-to case the petitioners were suing the trustee of a land trust for somehow defrauding them in connection with a deed.  The petitioners' own attorney had written to them about the deed, and also witnessed their signatures on the deed.  The trial court said that was enough to require disclosure of attorney's letter.  Wrong answer.  As explained by the 2d DCA, just because counsel witnesses his clients' signatures, doesn't mean the attorney-client privilege is lost:

We conclude that the circuit court erred in ordering the production of this letter based on section 90.502(4)(d), because this exception to the attorney-client privilege does not apply here. There has been no argument that the Petitioners either did not intend to sign or were not competent to sign the quitclaim deeds that conveyed property from a land trust to the Petitioners. The attorney-client privilege is not waived as to communications between an attorney and a client when such communications pertain to the preparation of a document merely because the attorney later acts as a witness to the parties' signatures on that document.

Lesson learned: anticipate privilege waiver issues

A significant cultural difference between planning/transactional attorneys and litigators is their respective sensitivity to circumstances that may result in a waiver of the attorney-client privilege.  Sensitivity to this issue is second nature to litigators (it's part of their every-day practice), non-litigators need to make a conscious effort to keep it in mind.  As I've written before (see here), sometimes it's OK to purposely step into the attorney-as-trial-witness role, you just don't want to end up there inadvertently.

2nd Circuit Re-Examines Standard for "Probate Exception" to Federal Court Jurisdiction

Many predicted that Anna Nicole Smith's 2006 Supreme Court victory involving her late husband's estate would lead to increased numbers of trust-and-estate cases being litigated in federal court (see here and here).

A recent example of the "federalizing" of trust-and-estates litigation is reported on in 2nd Circuit Re-Examines Standard for Probate Exception.  As the following excerpts make clear, it will now be much easier for litigants in the North East (i.e., litigants within the 2nd Circuit's jurisdictional boundaries) to adjudicate trusts-and-estates disputes in federal court:

 A retired attorney's long-running fight with the Bank of New York and a White Plains, N.Y., law firm over her parents' estate gave a federal appeals court the chance to explore the new standard on the probate exception to federal diversity jurisdiction.

The 2nd U.S. Circuit Court of Appeals said a 2006 U.S. Supreme Court decision changed the scope of the exception and the circuit's own case law, with the result that some of the claims brought by Adrienne Marsh Lefkowitz against the bank and McCarthy, Fingar, Donovan, Drazen & Smith can stay in federal court.

Second Circuit Judges John Walker and Peter Hall, with Southern District of New York Judge Denise Cote, sitting by designation, decided Lefkowitz v. The Bank of New York, 04-0435-cv. Hall wrote for the panel.

.     .     .     .     .

[I]n 2006, the U.S. Supreme Court decided Marshall v. Marshall, 126 S.Ct. 1735. In that case, former Playboy playmate and TV reality show star Anna Nicole Smith won a procedural victory in her attempt to collect a bequest from her late 90-year-old husband, Texas oil magnate J. Howard Marshall.

Hall, in writing the 2nd Circuit's opinion, said Marshall "reigned in the boundaries of the probate exception."

"The court explained that in Marshall the probate exception did not apply because plaintiff sought neither to (1) 'administ[er] an estate, ... probate ... a will, or [do] any other purely probate matter,' nor (2) 'to reach a res in the custody of a state court,'" Hall said. "From these statements, we discern that under the clarified probate exception a federal court should decline subject-matter jurisdiction only if a plaintiff seeks to achieve either of these in federal court."

Hall said that, therefore, "insofar as our Court's decision in Moser purported to direct courts to exercise subject-matter jurisdiction over in personam and other claims that might 'interfere' with probate proceedings only ... that holding was overly broad and has now been superseded by Marshall's limitation of the exception."

What does it take to get new evidence admitted after trial?

Robinson v. Weiland, 936 So.2d 777 (Fla. 5th DCA Sep 01, 2006)

In the linked-to case two annuities were at issue.  At the center of the dispute were two change-of-beneficiary forms allegedly signed by the decedent right before he died.  Relying on these change-of-beneficiary forms, the decedent's girlfriend claimed a 60% interest in the annuities (surviving son got the other 40%).  Decedent's sister claimed these change-of-beneficiary forms were invalid because they either weren't signed by the decedent or were the product of undue influence.

The "Smoking Gun" Witness

After trial but before judgment was entered, counsel for decedent's sister hit the jack pot when he managed to track down girlfriend's former roommate who signed an affidavit completely undermining girlfriend's trial testimony.  Roommate's affidavit ended with this bombshell:

After the forms were at the house for a number of weeks, I personally was present when she completed the annuity beneficiary change forms. She told me she was including herself as a 40% beneficiary because she did not want to appear to be too greedy.... The forms were definitely not completed in the presence of John S. Cetrano [the decedent] and were not placed in their envelopes for mailing by John S. Cetrano; Michael Weiland filled them out at 1711 Joshua Drive, NE, Palm Bay, Florida and mailed them many weeks after she first had possession of the forms.

But what if the trial court says "who cares"?

Assume you've found the smoking gun witness, and that the only reason you didn't have this witness at trail was because an opposing party (girlfriend) defrauded you and the court during the discovery phase of the case.  No matter how un-enthusiastic the trial court may be when you seek to have this new evidence admitted, once you allege "fraud", the trial court MUST conduct an evidentiary hearing to address your claims, and failure to do so is reversable error. 

In this case counsel for sister filed motions under Civ. Pro. Rules 1.530 and 1.540(b)(3) trying to get a new trial or to set aside the judgment.  The trial judge summarily denied both motions and was reversed on appeal.  Here's how the 5th DCA summarized its rationale:

The courts consistently agree that the trial court has discretion to grant a motion to reopen a case for presentation of additional evidence after the parties have rested and even after granting a motion for directed verdict for a party. .  .  .  Factors the trial court should consider in determining whether to reopen the case to allow presentation of additional evidence include whether the opposing party will be unfairly prejudiced and whether it will serve the best interests of justice.

Because the trial court summarily denied Robinson's motion, we are unable to determine why the trial court made that decision or what factors, if any, the trial court considered. Moreover, given the allegations of fraud made by Robinson to support her motion, we think an evidentiary hearing was essential for the trial court to properly determine whether to grant the request to present the testimony of Adams.

After the final judgment was entered, Robinson filed her Motion for Rehearing, New Trial, or Evidentiary Hearing, pursuant to rule 1.530, Florida Rules of Civil Procedure, once again alleging fraud as a basis for relief. Cetrano and Weiland argue that Robinson failed to demonstrate the trial court abused its discretion in denying the motion, primarily arguing cases discussing motions for relief from judgment made pursuant to rule 1.540, Florida Rules of Civil Procedure. This court and others have held that if a party files a motion pursuant to rule 1.540(b)(3), pleads fraud or misrepresentation with particularity, and shows how that fraud or misrepresentation affected the judgment, the trial court is required to conduct an evidentiary hearing to determine whether the motion should be granted.  .  .  .  Moreover, the courts have held that the hearing requirement applies when fraud is asserted as a grounds for relief under either rule 1.530 or 1.540, Florida Rules of Civil Procedure.  .  .  .  The motion filed by Robinson sufficiently alleges fraud and demonstrates how it affected the judgment, thereby satisfying the requirement for an evidentiary hearing under either rule 1.530 or 1.540. Therefore, we reject the arguments advanced by Cetrano and Weiland.

We conclude that Robinson was entitled to an evidentiary hearing based on the motion she filed prior to entry of final judgment and the motion she filed thereafter. We, therefore, reverse the order summarily denying Robinson's Motion to Reopen Trial For Newly Discovered Evidence and her Motion for Rehearing, New Trial, or Evidentiary Hearing and remand for an evidentiary hearing. Should the trial court determine that fraud occurred as Robinson alleged, we believe that a new trial would be warranted.

Key word: EVIDENCE

Your client doesn't have a right to a favorable ruling, but he or she is entitled to a fair day in court.  Which means that if the other side cheats, lies or otherwise defrauds you and the court to keep you from finding your smoking gun witness, you have a right to an evidentiary hearing to establish this fraud and a new trial if evidence of fraud is in fact established.

U.S. Supreme Court agrees to hear case on whether the investment expenses of trusts are fully deductible or subject to a 2% floor

As reported here by the North Carolina Estate Planning Blog, on June 25 the U.S. Supreme Court agreed to review a Second Circuit Court of Appeals case addressing whether the investment expenses of trusts are fully deductible or subject to a 2% floor [see here]. The Circuit Courts are in disagreement on this issue. The Second Circuit Court of Appeals case is Michael J. Knight, Trustee of the William L. Rudkin Testamentary Trust v. Comm'r of Internal Revenue, and is available here.

In Rudkin the Second Circuit held that IRC Sec. 67(e) grants an estate or trust an exception from the 2% reduction in itemized deductions only for "costs of a type" that "individuals are incapable of incurring." On the surface, the Second Circuit appeared to create a narrow window for an estate or trust to claim a full deduction for its administrative costs. In reality, however, it potentially eliminates a full deduction for any administrative cost of an estate or trust.

Not surprisingly, the Second Circuit's ruling has been the subject of some controversy.  The following is a representative example from Did the second circuit err in Rudkin Testamentary Trust?

Dozens of law reviews and journals have discussed the interpretation of Sec. 67(e) since the controversy first arose in O'Neill. (3) So far, none has urged the interpretation adopted by the Second Circuit. Indeed, the panel's interpretation even conflicts with IRS Form 1041, U.S. Income Tax Return for Estates and Trusts, and most state fiduciary income tax forms, which allow a full deduction for legal and accounting fees. Under the court's definition, legal and accounting fees should not be fully deductible (at least in the Second Circuit), because individuals are capable of incurring them. Thus, the court's interpretation is bound to foster confusion and noncompliance.

While the $4,448 deficiency in Rudkin is undoubtedly small, the Second Circuit's position has serious implications. Its endorsement and application will create a substantial tax debt for trustees who must incur costs to comply with their legally mandated duties, such as those imposed under the Uniform Prudent Investor Act. It will also generate substantial litigation over a basic deduction that Congress intended for trustees carrying out such duties, all based on a questionable interpretation.

Dismissal for lack of prosecution of adversarial probate proceedings

Weiss v. Berkett, 949 So.2d 1092 (Fla. 3d DCA Feb 07, 2007)

This one-paragraph opinion doesn't explain the facts of the case, but it appears that a probate adversarial proceeding was dismissed for lack of prosecution under Florida Rule of Civil Procedure 1.420(e).  The party whose claim was dismissed then filed a Petition for Writ of Prohibition with the 3d DCA apparently arguing that the trial court improperly applied Rule 1.420(e).  The 3d DCA agreed as follows:

We grant the petition for writ of prohibition. The Florida Rules of Civil Procedure apply to adversarial proceedings in probate court. See Mangasarian v. Mercurio, 570 So.2d 356 (Fla. 3d DCA 1990); Fla. Prob. R. 5.020(d)(2); Fla. R. Civ. P. 1.420(e). The trial court has exceeded its jurisdiction as the order under review does not comport with the requirements of Florida Rule of Civil Procedure 1.420(e) for dismissal for lack of prosecution.

Sample Pleading:

After initially posting on this case, the petitioner, Patricia Pollak Weiss, posted a comment (see below) and was kind enough to email me a copy of her winning Petition for Writ of Prohibition, which, with her authorization, I've copied to this blog post for those interested in reviewing it for future reference.

Lesson learned:

Adversarial proceedings in probate are subject to dismissal for lack of prosecution under Florida Rule of Civil Procedure 1.420(e), which provides as follows:

(e) Failure to Prosecute. In all actions in which it appears on the face of the record that no activity by filing of pleadings, order of court, or otherwise has occurred for a period of 10 months, and no order staying the action has been issued nor stipulation for stay approved by the court, any interested person, whether a party to the action or not, the court, or the clerk of the court may serve notice to all parties that no such activity has occurred. If no such record activity has occurred within the 10 months immediately preceding the service of such notice, and no record activity occurs within the 60 days immediately following the service of such notice, and if no stay was issued or approved prior to the expiration of such 60-day period, the action shall be dismissed by the court on its own motion or on the motion of any interested person, whether a party to the action or not, after reasonable notice to the parties, unless a party shows good cause in writing at least 5 days before the hearing on the motion why the action should remain pending. Mere inaction for a period of less than 1 year shall not be sufficient cause for dismissal for failure to prosecute.

A power of attorney is NOT a license to practice law

Forman v. State Dept. of Children & Families, 2007 WL 601628 (Fla. 4th DCA Feb 28, 2007)

Sometimes it's good to review the basics, like needing a license to practice law.  And no, a power of attorney wont cut it.  The fact that we need an appellate opinion to make this point should probably be troubling.  But here we are . . .

Mrs. Forman's daughter, Sara Leftow, has filed a brief on behalf of her mother. It appears that Ms. Leftow is acting under a power of attorney to proceed on her mother's behalf. Ms. Leftow's brief raises valid points of concern.

However, pleadings filed by a non-lawyer on behalf of another are a nullity. See Torrey v. Leesburg Reg'l Med. Ctr., 769 So.2d 1040, 1043 (Fla.2000). The same rule applies to briefs filed in this court. Ms. Leftow's power of attorney to act on her mother's behalf authorizes her to act as her mother's agent, not as her mother's attorney at law. See Hodges v. Surratt, 366 So.2d 768, 773 (Fla. 4th DCA 1979); Pryor v. King, 485 So.2d 28, 29 (Fla. 1st DCA 1986) (holding that trial court was correct in not allowing appellant's wife, who was armed with appellant's power of attorney, to represent him in a quiet title action).

The Florida rule declaring a non-lawyer's pleadings filed on behalf of another to be a nullity is the product of the state's policy against the unauthorized practice of law. See Torrey, 769 So.2d at 1043.

Probate court to vexatious pro se litigant: go hire a lawyer!

Favreau v. Favreau, 940 So.2d 1188 (Fla. 5th DCA Oct 06, 2006)

Pro se (self-represented) litigants are not sensitive to the sanctions normally applied to counsel for bringing frivolous actions, and indigent litigants are not sensitive to fee-shifting or fines.  Little wonder then that an out of control pro se litigant can be especially difficult for both courts and opposing parties to contend with.  (For a recent in depth analysis of this issue from Harvard Law student J. Caleb Donaldson, see "Vexatious Pro Se Civil Litigants in the Massachusetts Courts" (2006)).

The linked-to case is a good example of a Florida probate court using its "inherent power" to manage a vexatious pro se litigant.  The next time you're confronted with the pro se litigant "from hell," you'll be happy you read this opinion .  .  .

The order is not a reviewable non-final order. See Florida Rule of Appellate Procedure 9.130. The remaining avenue for review is certiorari but Edna has failed to establish the requisites for issuance of the writ in this case. A court has the inherent power to prevent abuse of court procedure which interferes with the effective administration of justice. Platel v. Maguire, Voorhis & Wells, P.A., 436 So.2d 303 (Fla. 5th DCA 1983). A requirement that pleadings be accompanied by an attorney's signature is not a restraint which amounts to a complete denial of access to courts. Id.; May v. Barthet, 886 So.2d 324 (Fla. 4th DCA 2004); see also § 68.093, Fla. Stat. (2005) (the Florida Vexatious Litigant Law). The trial court followed procedural requirements by issuing an order to show cause, affording Edna an opportunity to explain why she should not be barred from future pro se filings. Edna has failed to establish a clear departure from the essential requirements of law resulting in irreparable harm. See Cape Canaveral Hospital, Inc. v. Leal, 917 So.2d 336 (Fla. 5th DCA 2005).

My guess is that the sub-section of § 68.093 alluded to above by the 5th DCA is the following:

(4) In addition to any other relief provided in this section, the court in any judicial circuit may, on its own motion or on the motion of any party, enter a prefiling order prohibiting a vexatious litigant from commencing, pro se, any new action in the courts of that circuit without first obtaining leave of the administrative judge of that circuit. Disobedience of such an order may be punished as contempt of court by the administrative judge of that circuit. Leave of court shall be granted by the administrative judge only upon a showing that the proposed action is meritorious and is not being filed for the purpose of delay or harassment. The administrative judge may condition the filing of the proposed action upon the furnishing of security as provided in this section.

Jury: Home violated living will

Thanks to the Wills, Trusts & Estates Prof Blog for reporting here on a Florida trial involving a nursing home's failure to honor a patient's living will.  Of course, it is now impossible to mention any sort of dispute involving living wills without considering the implications of the Terry Schiavo case (the definitive historical record of this case was compiled here by Florida blogger Matt Conigliaro).  As the following excerpt from Jury: Home violated living will reveals, Ms. Schiavo's tragedy continues to reverberate through Flroida's courts.

In Florida's first prolongation-of-life trial, jurors found that the Joseph L. Morse Geriatric Center in West Palm Beach failed to honor the living will and advance directive of Madeline Neumann, a 92-year-old Alzheimer's patient who stipulated that she did not want to be kept alive by artificial means.

The jury found that Morse Geriatric should pay $150,000 in damages. But the panel declined to find Morse's former medical director, Dr. Jaimy Bensimon, negligent for his role in Neumann's prolonged death.

*     *     *     *     *
Awareness of advance directives and self-determination has improved since the time of Neumann's death, said Jim Nosich, Bensimon's attorney.

"I think Terri Schiavo beat this case to the punch in terms of education," he said, referring to the Pinellas County woman whose case sparked a national debate on end-of-life issues.

Education and awareness -- not money -- was at the heart of Neumann's case, according to attorneys Jack Scarola and Marnie Poncy, who represented Scheible, Neumann's granddaughter and health-care surrogate.

"We undertook this case because of the importance of those legal issues," Scarola said. "The verdict confirmed the accuracy of this message."

The Schiavo case became a game of political football, according to Scarola, overshadowing the rights of health-care self-determination.

"Madeline Neumann is everybody's grandparent, everybody's parent," Scarola said. "This is what we can expect to happen to every single one of us. Nursing homes are now on notice that there are economic consequences to their neglect of these responsibilities."

Estate tax deductions for claims against the estate: IRS proposes new regulations

Failing to properly coordinate how a claim against an estate is administered in the probate proceeding with how the claim is reported to the IRS for estate-tax deduction purposes can be a multimillion dollar mistake (see here).

In order to get this process right certainty as to what the applicable tax rules are is key.  Which is why the latest action by the IRS on this front should be helpful.  As reported here by Joel A. Schoenmeyer in the Death and Taxes Blog, the IRS is proposing amendments to the regulations relating to the amount deductible from a decedent's gross estate for claims against the estate (see here). 

In its "background" explanation to the proposed rule amendment, the IRS cited the need for greater uniformity amongst the courts as the primary reason for the proposed rule change.  Here's an excerpt:

The amount an estate may deduct for claims against the estate has been a highly litigious issue. Unlike section 2031, section 2053(a) does not contain a specific directive to value a deductible claim at its date of death value. Section 2053, in fact, specifically contemplates expenses such as funeral and administration expenses, which are only determinable after the decedent's date of death. Although numerous courts have addressed section 2053(a)(3), there is little or no consistency among the conclusions of those courts with regard to the extent (if any) to which post-death events are to be considered in valuing such claims.

*  *  *  *  *

After carefully considering the numerous judicial decisions and the analysis and conclusion in each, the legislative history of section 2053 and its predecessors, and the various possible alternatives, and in order to further the goal of the effective and fair administration of the tax laws, the proposed regulations adopt rules based on the premise that an estate may deduct under section 2053(a)(3) only amounts actually paid in settlement of claims against the estate. If the resolution of a contested or contingent claim cannot be reached prior to the expiration of the period of limitations for claims for refund, the estate may file a protective claim for refund to preserve its right to claim a deduction under section 2053(a).

How much evidentiary value does a death certificate have?

Marshall v. HQM of Winter Park, LLC, --- So.2d ----, 2007 WL 1647561 (Fla. 5th DCA Jun 08, 2007)

In Florida a death certificate is part of every probate proceeding.  The fact that these documents are given conclusive effect in uncontested probate proceedings probably explains why parties attempt to use them to the same effect in contested proceedings, and end up getting reversed on appeal if the trial judge goes along with them (see here).

In the linked-to case a death certificate was used to obtain a summary judgment ruling disposing of a wrongful death claim.  The trial court was reversed on appeal based on the following black letter Florida law:

In granting summary judgment, the trial judge apparently gave conclusive effect to the death certificate and disregarded the opinion of Appellants' expert. This was error. 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 does not constitute prima facie proof of the cause of death, nor does it create conclusive proof of any fact related to the death. As it relates to the cause of death, it simply states the ultimate opinion of the attesting physician. When, as here, a conflicting medical opinion on causation is offered, summary judgment is not appropriate.

Lesson learned?

Death certificates may be necessary to your case, but they are rarely sufficient to get the job done in contested proceedings.  If the circumstances surrounding a decedent's death are being contested, make sure your client understands that simply pulling out a death certificate containing helpful facts will NOT win the day in court (i.e., client should understand and expect to incur the expense and delay inherent to any case where circumstantial evidence is being contested).

Cardinal rule of all litigation: no surprises! (I've ranted on this point before).

Part II: Can a co-op be homestead property?

In a comment posted here in connection with Phillips v. Hirshon (a recent 3d DCA opinion holding that a cooperative apartment may not be considered homestead property for the purpose of subjecting it to Florida Statutes regulating the descent of homestead property), Bradenton attorney Jeffrey S. Goethe discussed a case where he successfully argued that Florida's homestead creditor protections apply to cooperative apartments.  The key to possibly reconciling these two divergent results is to recognize the divergent lines of case law that has evolved with respect to each of the three distinct facets of homestead law addressed in Florida's constitution:

In a follow up to his comments, Jeff was kind enough to share a copy of the 11-page legal memorandum he filed in his case and agreed I could post it on the blog for the benefit of others (see here for copy).

Thanks again Jeff.

Resulting trusts: viable tools for litigating real property claims?

Key v. Trattmann, --- So.2d ----, 2007 WL 1517827 (Fla. 1st DCA May 25, 2007)

A common theme running through much trusts and estates litigation is the betrayal of confidences.  Be it among family members or erstwhile friends, notions of fairness -- not commercial imperatives -- often drive the litigation.  The linked-to case speaks to this point by providing an effective tool for successfully contesting title to real property on equitable grounds under a "resulting trust" theory.

Resulting Trusts

In the linked-to case "Mr. Key" purchased and maintained real property in Tallahassee with his own funds. In order to help "Mr. Trattmann" obtain U.S. citizenship, Mr. Key allowed the property to be titled in Mr. Trattmann's name, subject to Mr. Trattmann's promise to convey the property to him on demand.  Mr. Trattmann later denied the existence of this promise, and Mr. Key sued to obtain title.  The trial court granted summary judgment in Mr. Trattmann's favor based partly on two affirmative defenses: the claim was barred by (1) the statue of frauds and (2) the applicable statue of limitations.  In the linked-to opinion the 1st DCA reversed the trial court, and in the process provided an excellent litigation road map for counsel/parties finding themselves on either side of a resulting trust claim.

  • Florida law
As a starting point, the 1st DCA summarized the circumstances under which Florida courts may recognize the existence of a resulting trust:

A resulting trust arises where an express trust fails, in whole or in part; where the purposes of an express trust are fully accomplished, without exhausting the trust estate; or, of particular pertinence here, “‘where a person furnishes money to purchase property in the name of another, with both parties intending at the time that the legal title be held by the named grantee for the benefit of the unnamed purchaser of the property.’“ Steigman v. Danese, 502 So.2d 463, 467 (Fla. 1st DCA 1987) (quoting Steinhardt v. Steinhardt, 445 So.2d 352, 357-58 (Fla. 3d DCA 1984)), disapproved of on other grounds by Spohr v. Berryman, 589 So.2d 225, 228-29 (Fla.1991), and order vacated by In re Estate of Danese, 601 So.2d 570, 571 (Fla. 1st DCA 1992). See also F.J. Holmes Equip., Inc. v. Babcock Bldg. Supply, Inc., 553 So.2d 748, 749 (Fla. 5th DCA 1989) (“A resulting trust may arise in favor of one who furnishes money used to purchase property the legal title to which is taken in the name of another.”). A resulting trust can, indeed, be “founded on the presumed intention of the parties that the one furnishing the money should have the beneficial interest, while the other held the title for convenience or for a collateral purpose.” Frank v. Eeles, 13 So.2d 216, 218 (Fla.1943) (internal quotation marks and citation omitted). See also Restatement (Third) of Trusts § 7 cmt. c (2003).

  • Statute of Frauds: NOT applicable
The trial court found that even if a resulting trust had arisen, the plaintiff's claims were barred by Florida's statute of frauds because the promise to convey the real property alleged by the plaintiff was not in writing.  The 1st DCA rejected the trial court's ruling as follows:

The statute of frauds does not apply to resulting trusts . . . [b]ecause a resulting trust arises not ex contractu but by operation of law, the statute of frauds does not pertain. See, e.g., Williams v. Grogan, 100 So.2d 407, 410 (Fla.1958) (“A trust which is created by operation of law is not within the statute of frauds and may be proved by parol evidence.”); Stonley v. Moore, 851 So.2d 905, 906 (Fla. 3d DCA 2003) (reversing summary judgment entered on a claim seeking to establish a resulting or constructive trust where the trial court relied on the statute of frauds, because “‘resulting trusts involving real estate can be based on parol evidence’”) (quoting Zanakis v. Zanakis, 629 So.2d 181, 183 (Fla. 4th DCA 1993)).

  • Statute of Limitations: the clock starts ticking when the dispute is made known, NOT when the contested property is first purchased
In trust disputes, determining when the clock starts ticking for statute of limitations grounds can be tricky.  In fact, the Florida Bankers Association is currently proposing revisions to the current statute of limitations applicable to trust disputes (see here).

Although unclear from the opinion, the trial court apparently assumed that the cause of action arose at or about the time the property was first purchased.  The 1st DCA rejected that conclusion, making clear that under Florida law trust disputes do not accrue until the trustee actually repudiates the trust.

Applying a statute of limitations to a resulting trust,[FN5] the Fifth District held that the “beneficiary of a resulting trust is not bound to act until the trustee repudiates the trust or begins to hold the property adversely with knowledge on the part of the beneficiary.” Bradbury v. Fuller, 385 So.2d 7, 8 (Fla. 5th DCA 1980). See also Grable v. Nunez, 64 So.2d 154, 160 (Fla.1953) (“The statutes of limitations do not operate against a resulting trust until the trustee has disclaimed the trust and begins to hold adversely to the beneficial interest.”). Thus, assuming [as the trial court did that F.S. 95.11(3)(k) and (6)] applies, it would not have begun running until Mr. Trattmann refused to convey the property to Mr. Key.

. The rights of beneficiaries of resulting trusts to enforce their rights against the trustee or third persons are subject to the same rules regarding the doctrine of laches and statutes of limitations as apply in the case of express trusts. See § 98, and also compare §§ 96 and 97. The so-called doctrine of merger, which applies to express trusts (see § 69), also applies to resulting trusts.

Restatement (Third) of Trusts § 7 cmt. h (2003). See also supra note 1.

The New Homestead Trap: Surviving Spouses Are Trapped by Life Estates They No Longer Want or Can Afford

One of the basic building blocks of Florida probate law is the "life estate" in homestead property all surviving spouses are entitled to.  The statutory basis for this rule is found in F.S. 732.401, which provides as follows:

(1) If not devised as permitted by law and the Florida Constitution, the homestead shall descend in the same manner as other intestate property; but if the decedent is survived by a spouse and lineal descendants, the surviving spouse shall take a life estate in the homestead, with a vested remainder to the lineal descendants in being at the time of the decedent's death per stirpes.

(2) Subsection (1) shall not apply to property that the decedent and the surviving spouse owned as tenants by the entirety.

Pretty basic stuff for any Florida probate practitioner.  What may not be so simple is explaining the real life practicalities of a life estate to a surviving widow.  Which is why you may want to keep a copy of The New Homestead Trap: Surviving Spouses Are Trapped by Life Estates They No Longer Want or Can Afford handy.  In this just published article Ft. Lauderdale attorney Jeffrey A. Baskies does a good job of explaining the costs assumed by surviving spouses/life tenants, a point often overlooked by families and their advisers.

Costs Borne by Life Tenants

F.S. §738.801 provides in part that “the provisions of F.S. §738.701-738.705 … shall govern the apportionment of expenses between tenants and remaindermen when no trust has been created….” In the absence of some agreement, those provisions apply to all life estate/remainder situations created by the Florida homestead laws (created by the constitutional restrictions on devise in art. X, §4 of the state’s constitution and F.S. §732.401).

Taken together, these statutes require the life tenant to pay:

  • All of the ordinary expenses incurred in connection with the administration, management, or preservation of property, including ordinary repairs (including condo or homeowners’ association maintenance charges) and regularly recurring taxes (ad valorem property taxes).
  • The interest portion of mortgage payments, if any, on the property.
  • Recurring premiums on insurance covering the loss of a principal asset or the loss of income from or use of the asset.
  • The costs of, or special taxes or assessments for, an improvement representing an addition of value to property shall be paid by the tenant when the improvement is not reasonably expected to outlast the estate of the tenant. In all other cases, a part only shall be paid by the tenant, ascertainable based on the present value of the tenant’s estate (actuarially).

Thus, surviving spouses — who are ostensibly “protected” by the Florida Constitution and statutes (given the “right” to live “rent-free in a homestead”) — are required to bear 100 percent of the burden of the state’s two largest fiscal crises: the escalation in property taxes and homeowners’ insurance. In addition, costs of ordinary upkeep, interest payments on mortgages and, in many cases, virtually all of the special assessments are also the burden of the surviving spouse. Further exacerbating the situation, many widows live in communities which have charged (and are still charging) assessments to repair common areas damaged by the hurricanes the state faced these past few years — with the promise of active hurricane seasons for the foreseeable future.

While the surviving spouses have borne all of these huge increases in their costs of living, the remainder beneficiaries have seen property values double in most of the state (and increase three to five times in some areas) over the past five to 10 years. One hundred percent of that appreciation inures to the benefit of the remainder beneficiaries, while they are not forced to pay for any of these increased expenses.

Contrast the “rent free” use of the property by the widow with the “free ride” the remainder beneficiaries have had on property values, and ask who is being helped and who is being harmed by our homestead “protections”? The costs of property taxes and homeowners’ insurance have skyrocketed at the same time property values have appreciated at a meteoric pace. This situation has exposed in stark relief the discrepancy in treatment and benefits of surviving spouse life tenants and remainder beneficiaries.

Evidentiary road map for undue influence and lack of testamentary capacity cases

Diaz v. Ashworth, --- So.2d ----, 2007 WL 1484550 (Fla. 3d DCA May 23, 2007)

A prospective client comes to see you about challenging a will on undue influence and/or lack of testamentary capacity grounds.  The client wants to know "how much will it cost, how long will it take, what are my chances of winning?"  You ask yourself what may be the most important question of all "should I take this case?" 

Unless you understand the evidentiary issues you'll need to address in connection with each claim, you can't possibly expect to answer any of the questions posed above with any degree of certainty.  And misjudging those questions usually equals an unhappy client who doesn't want to pay his lawyer (yikes!)

Which is why the linked-to opinion is so important.  In this case the highly regarded Miami-Dade senior trial judge, Herbert Stettin, did such a good job of laying out the evidentiary issues underlying a will contest based upon undue influence and lack of testamentary capacity grounds, that the 3d DCA simply copied his order and adopted its reasoning as their own.

Evidence and Undue Influence Claims:

I found the discussion addressing evidentiary issues arising in an undue influence case especially helpful.  When reading the excerpt provided below, keep in mind the following three points.

  • Key statute: §733.107(2)
  • Burden of proof: preponderance of the evidence
  • Building your case: note the importance given to medical testimony
For further background, an excellent starting place is Florida's New Statutory Presumption of Undue Influence, 77 Fla. B.J. 20, 21 (2003).

Judge Stettin:

Petitioner's second claim is that Mr. and Mrs. Ashworth unduly influenced Mr. Mesa to make the July 10, 2003 will. Father Diaz argues that the evidence shows the Ashworths never had a prior close relationship with Mr. Mesa, that their deep involvement in the making of the will, together with their attempts to insulate Mr. Mesa from contact with others after the will was made, all done at a time when Mr. Mesa was in the final stages of the AIDS illness, prove that the Ashworths obtained the will in question by unduly influencing Mr. Mesa's decision.

[Carpenter analysis]

The starting point to determine whether a will has been procured by the exercise of undue influence is the analysis required by In re: Estate of Carpenter, 253 So.2d 697 (Fla.1971). Under Carpenter, once it is established by the proponent that the will was properly executed, the contestant then must show, prima facie, the existence of a confidential relationship between the testator and the active procurement of the will by the proponent. Carpenter discusses those factual circumstances which may give rise to such a determination which, once made, results in a presumption that the will is the product of undue influence. Using the Carpenter test, I find that a presumption of undue influence was established by the evidence. Mr. Ashworth is the sole beneficiary under the July 10, 2003 will; he was present at its execution; Mrs. Ashworth was present on July 9, 2003, when Mrs. Mesa stated that he wished to make a will; Mr. Ashworth recommended that his attorney, Mr. Pilafian, draw the will; while disputed as to whether he learned of it on July 9 or July 10, 2003, Mr. Ashworth was aware of the contents of the will before it was signed; and Mrs. Ashworth was one of the subscribing witnesses. Add to this fact that Mr. Ashworth brought Mr. Mesa to Mr. Pilafian's office to sign the will and that he and his wife were active in caring for him after the will was signed, and it is clear the Ashworths occupied a confidential relationship with Mr. Mesa.

[Shifting burden of proof under Carpenter]

Carpenter provides that once evidence of such a presumption of undue influence has been made, it does not shift the burden of proof to the proponent of the will to prove the will was not the product of undue influence. Rather, it merely shifts to the proponent “the burden of coming forward with a reasonable explanation for [the beneficiary's] active role in the decedent's affairs, and specifically, in the preparation of the will ...”. 253 So.2d at 704. Carpenter holds that it then becomes the responsibility of the trial court to determine whether the proponent has, prima facie, satisfied this burden of reasonable explanation. Finally, once all these presumptions and burdens are met, the decision rests on the traditional evidentiary test of who has proven their case by a preponderance of the evidence.

[Impact of F.S. 733.107(2) on Carpenter analysis]

Subsequent to Carpenter, however, the legislature enacted an amendment to § 733.107, Fla. Stat ., to prohibit the shifting of the burden of proof in presumption of undue influences cases. See, e.g., Hack v. Janes, 878 So.2d 440, 443 (Fla. 5th DCA 2004). As it now stands, in those cases where the proponent of a will satisfies, prima facie, a presumption of undue influence in the making of the will, the proponent of the will has the burden of proving the will was not the product of undue influence. That burden must be met by a preponderance of the evidence as determined by the trier of fact.

[Application of law to facts]

Using these standards, I find that the Petitioner has proven by a preponderance of the evidence that the will was not the product of undue influence by Mr. and Mrs. Ashworth. Mr. Mesa was capable of making his own decision about who would receive his property when he signed the Ashworth will. The will he signed on July 10, 2003, and the two previous wills he made in the two years prior to 2003, each named non-relatives as beneficiaries. Each will was very basic. On July 10, 2003, Mr. Mesa knew what a will was and he was clear about his wishes as to who should inherit his property. On the same day as the Ashworth will, Mr. Mesa also made another significant decision to reject further medical treatment and to enter hospice care at his home rather than spend his last days in an institution. Dr. Steinhart's records and testimony are clear that Mr. Mesa was competent to make these decisions. I find the preponderance of the evidence in this case is that Mr. Mesa was competent and not unduly influenced in making the will dated July 10, 2003.

Evidence and Lack of Testamentary Capacity Claims:

I wrote about the last 3d DCA testamentary capacity case here.  Without mentioning that opinion (perhaps purposely?), Judge Stettin also did a great job of summarizing the state of the law in Florida with respect to what it takes to successfully prosecute a will challenge based on lack of testamentary capacity (again notice the importance given to medical testimony).  Here again the 3d DCA simply adopted his reasoning as its own.

Judge Stettin:

[Applicable legal standard]

In Raimi v. Furlong, 702 So.2d 1273, 1286 (Fla. 3d DCA 1998), our Third District concisely set out the applicable standards for a determination of testamentary incompetence, stating:

It has long been emphasized that the right to dispose of one's property by will is highly valuable and it is the policy of the law to hold a last will and testament good wherever possible. See In re Weihe's Estate, 268 So.2d 446, 451 (Fla. 4th DCA 1972), quashed on existing facts, 275 So.2d 244 (Fla.1973); In re Dunson's Estate, 141 So.2d at 604. To execute a valid will, the testator need only have testamentary capacity (i.e. be of “sound mind”) which has been described as having the ability to mentally understand in a general way (1) the nature and extent of the property to be disposed of, (2) the testator's relation to those who would naturally claim a substantial benefit from his will, and (3) a general understanding of the practical effect of the will as executed. See In re Wilmott's Estate, 66 So.2d 465, 467 (Fla.1953); In re Weihe's Estate, 268 So.2d at 448; In re Dunson's Estate, 141 So.2d at 604. A testator may still have testamentary capacity to execute a valid will even though he may frequently be intoxicated, use narcotics, have an enfeebled mind, failing memory, [or] vacillating judgment.” In re Weihe's Estate, 268 So.2d at 448. Moreover, an insane individual or one who exhibits “queer conduct” may execute a valid will as long as it is done during a lucid interval. See Id.; see also Coppock v. Carlson, 547 So.2d 946, 947 (Fla. 3d DCA 1989) (whether testator had the required testamentary capacity is determined solely by his mental state at the time he executed the instrument), rev. denied, 558 So.2d 17 (Fla.1990).

[Application of law to facts]

Applying these standards, I find that Mr. Mesa was competent to make the July 10, 2003, Ashworth will. He understood the nature and extent of his property, he knew those who would naturally claim a substantial benefit from his will, and it is clear that he was aware of the practical effect of the will he signed. He knew that he was going to die. He made an informed decision to accept hospice care instead of further treatment just prior to making the Ashworth will. Dr. Steinhart believed Mr. Mesa was competent to make such an obviously important decision.

Does a beneficiary's death divest his estate of its interest in the assets of a trust that remained to be distributed?

Bryan v. Dethlefs, --- So.2d ----, 2007 WL 1425499 (Fla. 3d DCA May 16, 2007)

In this case the beneficiary of his predeceased grandfather's trust died before the trust assets were fully distributed to him.  The subsequent litigation revolved around this question: in order to vest under the trust, does the following trust clause require the beneficiary to be living at the time of the settlor's death, or upon full distribution of his inheritance under the trust?

Distribution to Grandson: Upon my death, the then balance of principal and accumulated income remaining in the trust fund shall be distributed to my Grandson, ROBERT R. BIZZELL, if he is living at the time of distribution. (emphasis added).

Miami-Dade County Probate Judge Arthur L. Rothenberg ruled the vesting event was the settlor's date of death, and the 3d DCA affirmed.

Lesson learned: when in doubt, it's vested - NOT contingent

Rules of construction can be useful tools because they tip the scales in favor of a certain interpretation when the subject text is less than crystal clear.  That's what happened in this case.  The following excerpt from the linked-to opinion provides useful guidance with respect to the rules of construction applicable if there is any doubt that an inheritance vests immediately or is contingent upon some future event:

[T]he law favors the early vesting of estates. Lumbert v. Estate of Carter, 867 So.2d 1175, 1179 (Fla. 5th DCA 2004)(citing Sorrels v. McNally, 89 Fla. 457, 105 So. 106 (1925)). As this Court stated in Estate of Rice v. Greenberg, 406 So.2d 469 (Fla. 3d DCA 1981), any doubt as to whether an interest is vested or contingent should be resolved in favor of vesting:

This Court is committed to the doctrine that remainders vest on the death of the testator or at the earliest date possible unless there is a clear intent expressed to postpone the time of vesting. It is also settled that in case of doubt as to whether a remainder is vested or contingent, the doubt should be resolved in favor of its vesting if possible, but these general rules all give way to the cardinal one that a will must be construed so as to give effect to the intent of the testator.

406 So.2d at 473 (quoting Krissoff v. First Nat. Bank of Tampa, 32 So.2d 315 (Fla.1947)). Accordingly, no estate should be held to be contingent “unless very decided terms are used” and “unless there is a clear intent to postpone the vesting.” Sorrels, 89 Fla. at 467, 105 So. at 110. Indeed, “[t]he presumption that a legacy was intended to be vested applies with far greater force, where a testator is making provision for a child or grandchild, than where the gift is to a stranger or to a collateral relative.” Sorrels, 89 Fla. at 467, 105 So. at 110.

Finally, if a trust vests at the settlor's death, then “the death of the beneficiary before it becomes payable does not cause the legacy or devise to lapse.” Sorrels, 89 Fla. at 465, 105 So. at 110. Similarly, where a settlor intends a trust to vest upon the testator's death, benefits accrue to the beneficiaries from the time of the death, not the subsequent time that the trust was funded. In re Bowen's Will, 240 So.2d 318, 320 (Fla. 3d DCA 1970).

Dead Witness Humor

The following is from the Wills, Trusts & Estates Prof Blog:

By Texas Senior U.S. District Judge Jerry Buchmeyer, et cetera, 70 Tex. B.J. 193 (2007):

    D. Clinton Brasher of Beaumont, Texas, received these marvelous admissions “from defense counsel regarding an employee of theirs (up until the time of his death)” who was listed as a fact witness:

1. Admit that ______ is dead.

RESPONSE: Admit insofar as this question is regarding information regarding the death of ______’s body, as his spirit surely lives on.

2. Admit that ___________ will be unavailable to testify at trial.

RESPONSE: Admit subject to ___’s coming back to life and subsequently testifying in this matter, or, for that matter, testifying through a duly appointed oracle. … Inasmuch as this request for admission is meant to cover such things other than whether or not ____ will be available to testify live at trial, no pun intended, Plaintiff objects to the request as vague.

Can a co-op be homestead property?

Phillips v. Hirshon, --- So.2d ----, 2007 WL 1263475 (Fla. 3d DCA May 02, 2007)

Article X, section 4(c) of the Florida Constitution, which declares that “homestead shall not be subject to devise if the owner is survived by a spouse or minor child,” is one of the few "forced heirship" rules applicable under Florida law (the only other example of significance would be Florida's spousal elective share rules).  These rules provide an opportunity to challenge a will that is exponentially easier than traditional grounds for challenging a will in Florida (see here).

Children challenge dad's devise to girlfriend on homestead-law grounds

In this case dad devised a life estate in his Key Biscayne penthouse to his girlfriend.  One of his two surviving sons was a minor, so they challenged this devise by arguing that the property was homestead property.  Here's how the 3d DCA summarized their argument:

After their father's death, Joseph and David filed separate petitions to determine homestead. The thrust of their argument to the trial court was that the co-op was homestead property in the hands of their father at the time of his death and therefore not subject to devise by him under Article X, section 4(c) of the Florida Constitution, which declares that “homestead shall not be subject to devise if the owner is survived by a spouse or minor child.” The brothers contend that because David was a minor, the bequest under the will fails and the property passes outside of the estate, and therefore, the brothers now share the father's interest in the co-op on an equal basis as a matter of law.

Court says NO to homestead status for co-op

The trial court didn't buy this argument, and neither did the 3d DCA based on a conflicting Florida Supreme Court opinion.  However, the 3d DCA made clear that it felt the sons should have prevailed, and took the extra step of certifiying the issue to the Florida Supreme Court for reconsideration.  Here's ow the 3d DCA summarized its holding:

The Levine brothers urge that because their father occupied the co-operative apartment under a long-term proprietary lease received in conjunction with his purchase of his interest in the co-op, the property is protected homestead property under Florida law. Applying the principle of stare decisis, we affirm the decision of the trial court on authority of In re Estate of Wartels v. Wartels, 357 So.2d 708 (Fla.1978), which expressly holds “that a cooperative apartment may not be considered homestead property for the purpose of subjecting it to Florida Statutes regulating the descent of homestead property.” Id. at 711 (construing Article X, section 4(a)(1), Fla. Const.). At the same time, we certify to the Florida Supreme Court as a question of great public importance under Article V, section 3(b)(4) of the Florida Constitution, whether its decision in Wartels has continuing vitality in light of subsequent legislative action. We also find certifiable, direct conflict between our decision today and the decision of the Fourth District Court of Appeal in S. Walls, Inc. v. Stilwell Corp., 810 So.2d 566 (Fla. 5th DCA 2002), which construed the same section of Article X, section 4 of the Florida Constitution upon which the Wartels court relied to deny the benefit of homestead to an heir in the devise and descent context of Article X, section 4(c) to nevertheless afford the benefit of homestead protection from a forced sale under Article X, sections 4(a) and 4(b) of the same constitutional provision.

How certain is a designation of preneed guardianship?

Miller v. Goodell, --- So.2d ----, 2007 WL 1201892 (Fla. 4th DCA Apr 25, 2007)

One of the standard documents included in most estate plans is a "designation of preneed guardian."  The purpose of this document is to tell the world whom you would like appointed as your guardian if ever needed.  I always make a point of reminding clients that the ultimate authority to determine whom your guardian will be rests with the courts - NOT the client.

This case provides a good example of how the statutory scheme governing these documents actually works in real life.  The key statutes are:

  • 744.3045 - Creates statutory presumption in favor of appointing client's designated preneed guardian.
  • 744.309 - Provides list of who is automatically disqualified as a matter of law from being appointed guardian (e.g., a felony conviction will automatically disqualify you).
  • 744.312 - Gives court authority to appoint someone other than the designated preneed guardian if it's in the ward's best interest.

Court says NO to designated preneed guardian:

The linked-to case is instructive because it provides an example of when a court will NOT abide by the client's wishes, as expressed in his or her designation of preneed guardian:

[A]ppellants contend the trial court erred in refusing to appoint Fanning as Audrey's plenary guardian because Audrey had executed a preneed guardian declaration naming Fanning as Audrey's alternate preneed guardian. This argument fails for the following reasons: (1) Audrey and her attorneys agreed to the appointment of a neutral professional guardian; and (2) the trial judge determined that the rebuttable presumption that Fanning is entitled to serve as guardian had been overcome, and that it is not in Audrey's best interests for Fanning to be appointed plenary guardian.

*     *     *     *     *
In this case appellants have failed to establish the trial court abused its discretion. Section 744.3045(4), Florida Statutes (2005), provides in pertinent part: “Production of the declaration in a proceeding for incapacity shall constitute a rebuttable presumption that the preneed guardian is entitled to serve as guardian.” The trial judge considered the evidence presented but found the rebuttable presumption of the appointment of the designated preneed guardian had been overcome. In conjunction with finding the rebuttable presumption had been overcome, the trial court also considered the application of section 744.312(4), Florida Statutes (2005), which provides:

If the person designated is qualified to serve pursuant to s. 744.309, the court shall appoint any standby guardian or preneed guardian, unless the court determines that appointing such person is contrary to the best interests of the ward.

The trial court specifically found that it was contrary to Audrey's best interests to appoint Fanning as plenary guardian of the person and property.

Estate funds: possession is nine-tenths of the law

Morrison v. West, --- So.2d ----, 2007 WL 1135659 (Fla. 4th DCA Apr 18, 2007)

The linked-to case is a good example of why estate funds MUST remain subject to court control until all reasonably foreseeable debts are paid -- including attorney's fees.  Once estate funds are distributed no one should be misled by false expectations about the power of lawyers or even the courts to get those funds back.  The old saying we learned as children that "possession is nine-tenths of the law" is all too true when it comes to estate funds.

In the linked-to case client, Ms. Carla Morrison, hired North Carolina attorney William West to represent her in litigation against her husband's multi-million dollar estate.  He did so and worked out a settlement agreement that included a $1 million pay out to Morrison.  Morrison then fired West and hired attorney Gary Woodfield to represent her.  At a hearing to approve the settlement agreement Mr. Woodfield represented to the court that his client had agreed to retain the $1 million payment in his firm's trust account until a fee dispute with West was worked out.

COURT: [Morrison] agrees that it goes to your trust account until the fee arrangements are resolved?

WOODFIELD: She does. I have discussed that with her. She is in agreement with that, Mr. West is in agreement with that, and Mr. Pressly is in agreement with that.

And hopefully we will be able to amicably resolve the matter and that will be the end of it.

The trial court approved the settlement and executed the final judgment on January 20, 2005. Neither the final judgment nor the settlement agreement referred to the disbursement of the $1 million to West.

For reasons unexplained in the linked-to opinion, the funds left Mr. Woodfield's trust account the very next month - and have yet to be returned despite a standing court order directing client to give the money back.

In February 2005, West learned that Woodfield released the $1 million in the Edwards & Angell trust account to Morrison. On June 30, 2005, West filed a motion to modify the final judgment and requested that Morrison be ordered to redeposit the $1 million into the court registry pending further proceedings. On February 21, 2006, the trial court held a hearing on West's motion to modify the final judgment. West, Woodfield, and Morrison testified at the hearing.  The trial court ruled:

And having observed the witness testimony today I find that Carla Morrison did in fact authorize Mr. Woodfield to withhold that $1 million and place it in a trust account, bank account, interest bearing until the fee issue has been resolved. I find that that portion of her testimony regarding it be for a short time only is not credible. And I find the testimony of Mr. West regarding these fee disputes to be credible.

So I am directing that this money be placed back in the Edwards and Angell trust account, interest bearing, not to be released under any circumstances without a further Court order until the fee issues are resolved.

The trial court directed that the money be returned to the Edwards & Angell account within 30 days. Morrison never complied.

Lesson learned?

Always keep your eye on the money.  When in doubt, make sure you have the appropriate orders in place to ensure estate funds don't get distributed until you're sure all interested parties - including the attorneys - have been provided for.  Sure, you can always sue for the return of wrongfully distributed estate funds (733.812), but why put yourself in that position to begin with?

Order appointing successor trustee is NOT a final order subject to appeal

Fach v. Brown Bros. Harriman Trust Co. of Florida, 949 So.2d 260 (Fla. 4th DCA Feb 07, 2007)

The issue explicitly addressed by the linked-to opinion is relatively simple: is an order appointing a successor trustee a final appealable order?  The 4th DCA held it is not:

In this consolidated appeal, Barbara A. Fach and her daughter Lauren K. Cain appeal two non-final orders denying, without hearing, their emergency motions for relief from orders, filed pursuant to Rule 1.540(b), Florida Rules of Civil Procedure. The orders from which they sought relief were entered in an adversarial proceeding in which the probate court appointed U.S. Trust as the successor trustee to Brown Brothers Harriman Trust Company on an emergency basis in two separate cases. The appellees argue that this court lacks jurisdiction because the orders from which the appellants sought relief in the probate court were not final orders, and thereby not subject to Rule 1.540. We agree and dismiss the appeal.

What was really driving this appeal? .  .  .  VENUE!

Although never stated in the linked-to opinion, I think the real issue driving this appeal was venue.  Appointing a new corporate trustee may result in the trust's "principal place of administration" changing to the location of the new corporate trustee's "usual place of business" (736.0108), which in turn may result in a change of venue for trust litigation purposes (736.0204) (see here for real life example).

With this background in mind, the following excerpt from the linked-to opinion now makes sense:

At oral argument, the appellants essentially agreed that this appeal was taken to insure that the trial court had left certain issues open for consideration. In fact, in this case the probate court specifically asked whether it could appoint U.S. Trust as successor trustee and leave the situs of the trust in Palm Beach County, without prejudice to addressing the latter issue at a subsequent hearing. The court then dictated its order to counsel, again reiterating that the appointment was without prejudice to addressing the situs of the trust at a later time.

When do probate proceedings bar a claim for intentional interference with an expectancy of inheritance?

Schilling v. Herrera, --- So.2d ----, 2007 WL 981627 (Fla. 3d DCA Apr 04, 2007)

Anna Nicole Smith's U.S. Supreme Court case revolved around whether federal courts have jurisdiction to adjudicate state-law tortious interference claims.  Since she won (see here) the expectation has been that more tortious interference claims would be litigated in federal court (see here).  With this background in mind, this 3d DCA opinion is especially timely because it explains when probate proceedings will effectively bar such claims in Florida.

In DeWitt v. Duce, 408 So.2d 216 (Fla.1981), the Florida Supreme Court articulated the governing rule in Florida as follows: a claim for intentional interference with an expectancy of inheritance is barred by F.S. 733.103(2) if the plaintiff had an adequate remedy in probate with a fair opportunity to pursue it.  By implication, when the plaintiff did NOT have a fair opportunity to pursue his or her claim in probate, the claim is NOT precluded by the rule in DeWitt.

In the linked-to opinion the 3d DCA held that the plaintiff's tortious interference claim was not precluded by DeWitt because the plaintiff was essentially prevented from pursuing his claims in probate.  In other words, the claim was not barred because there were two frauds committed in the case.  The first against the decedent, the second against the plaintiff.  Here's how the 3d DCA articulated its reasoning:

We find that DeWitt is factually distinguishable, and therefore inapplicable. A review of the amended complaint reflects that Mr. Schilling has alleged two separate frauds. The first alleged fraud stems from Ms. Herrera's undue influence over the deceased in procuring the will, whereas the second alleged fraud stems from Ms. Herrera's actions in preventing Mr. Schilling from contesting the will in probate court. We acknowledge that pursuant to DeWitt, if only the first type of fraud was involved, Mr. Schilling's collateral attack of the will would be barred. However, language contained in DeWitt clearly indicates that a subsequent action for intentional interference with an expectancy of inheritance may be permitted where “the circumstances surrounding the tortious conduct effectively preclude adequate relief in the probate court.” Id. at 219.

 Good lawyering pays off

When the client walks through the door, tells you the probate proceeding is complete, but asks what can you do for him, not many attorneys would have a good answer.  In this case, Fort Lauderdale probate litigator Brandan J. Pratt figured out a winning strategy and successfully pursued it through to appeal.  Very solid lawyering indeed.

Probate court gets reversed for failing to appoint the statutorily preferred personal representative

Garcia v. Morrow, --- So.2d ----, 2007 WL 983053 (Fla. 3d DCA Apr 04, 2007)

I've written recently about probate courts being reversed for failing to appoint the personal representative named in a decedent's will (see here and here).  This opinion picks up on the themes outlined in those cases . . . but in the intestate context.

In this case Judge Maria Korvick was reversed for refusing to appoint the statutorily preferred person as personal representative in the absence of evidence that he lacked "the necessary qualities and characteristics” to assume the position as personal representative.

Lesson learned:

The key word here is "evidence."  In other words, it is reversible error for a trial court to refuse to appoint as personal representative the person with preference under F.S. 733.301 in the absence of specific findings of fact - developed in the context of a formal evidentiary hearing - that the statutorily preferred person lacks the necessary qualities and characteristics to assume the position as personal representative.  Quoting the 5th DCA in DeVaughn v. DeVaughn, 840 So.2d 1128, 1132 (Fla. 5th DCA 2003), here's how the 3d DCA articulated the rule:

[W]e know that the probate court has the inherent authority to consider a person's character, ability, and experience to serve as personal representative. See Padgett v. Estate of Gilbert, 676 So.2d 440, 443 (Fla. 1st DCA 1996). However, if the statutorily preferred person is not appointed, the record must show that the person is not fit to be appointed. If the record supports the conclusion that the statutorily preferred person “lacks the necessary qualities and characteristics,” the court has discretion to refuse to make the appointment. Id.

Estate misses opportunity to save $2.8 million in estate taxes

Estate of Hester v. U.S., --- F.Supp.2d ----, 2007 WL 703170 (W.D. Va. Mar 02, 2007)

The estate tax automatically makes the IRS the biggest creditor of most large estates.  Understanding this dynamic can translate into millions in savings for a client . . . or a colossal missed opportunity.

In the linked-to case the estate attempted to claim a $2.8 million estate tax refund based on the theory that the decedent had misappropriated millions in trust funds and thus the remainder beneficiaries of the subject trust would have claims against the estate that would result in corresponding estate tax deductions.  The estate's theory collapsed in on itself because it didn't claim the $2.8 million estate tax refund until after the statue of limitations period had run on possible claims against the decedent's estate for misappropriating trust funds.  Here's how the court articulated this point:

Allowing a deduction here, where a taxpayer is attempting to secure a refund for a theoretical liability that will never be paid and that is now barred by the statute of limitations, would essentially “exalt form over substance.” Estate of Hagmann, 60 T.C. at 468. Therefore, because the estate has neither an actual or expected claimant, or a cognizable claim, the misappropriated assets are not deductible under § 2053(a)(3).

Lesson Learned: Probate administration and estate tax reporting need to go hand-in-hand

In the linked-to case the estate failed to coordinate the probate proceeding with its anticipated estate tax positions.  The outcome would have likely been very different if - prior to expiration of the applicable statute of limitations - the estate had simply conceded a liability to the trust beneficiaries in the context of the probate proceedings - utilizing whatever mechanism is available under Virginia  law for doing so (in Florida, F.S. 733.703(2) authorizes a Personal Representative to file a proof of claim for all claims he or she has paid or intends to pay).

Failing to anticipate the estate-tax ramifications of actions taken - or not taken - in the probate proceeding likely cost this estate $2.8 million in avoidable estate taxes.

Court says NO to appeal of spousal-elective-share order

Trenchard v. Gray, --- So.2d ----, 2007 WL 837294 (Fla. 2d DCA Mar 21, 2007)

In Dempsey v. Dempsey (a 2005 opinion I wrote about here) the 2d DCA ruled on when elective share orders are subject to appeal.  Under Florida Probate Rule 5.360, determining the elective share is a two-step process:

  • First, the trial court must rule on the issue of entitlement (Rule 5.360(c)).
  • Second, if the trial court finds entitlement, then it must determine the amount of the elective share, the assets to be distributed to satisfy the elective share, and, if contribution is necessary, the amount of contribution for which each recipient is liable (Rule 5.360(d)). 
Step one is a non-final, non-appealable order.  Step two is an appealable order.

Based on the same rationale, the 2d DCA dismissed an appeal of a step-one elective share order in the linked-to opinion.  The following excerpt from Judge Silberman's concurring opinion does a good job of explaining - again - the 2d DCA's approach to elective-share-order appeals:

Appellant Vicki Trenchard raises an issue regarding whether certain real property to which she claims ownership is subject to Appellee Marcia Gray's claim to an elective share. Ms. Trenchard and William Gray, the decedent, owned the property as joint tenants with the right of survivorship. The trial court's order finds that the decedent's interest in the real property is subject to the elective estate. The order is consistent with the statutory requirement that the value of the decedent's interest in the property must be taken into account to determine the elective estate. See § 732.2035, Fla. Stat. (2005).

The trial court has not determined any questions as to ownership of the property or whether the property itself may be used to satisfy the elective share claim. The court also has not resolved questions as to the amount of the elective share, the identification of assets that will be used to satisfy the elective share, the amount of the unsatisfied balance of the elective share, or the apportionment of the unsatisfied balance among the direct recipients of the remaining elective estate. See §§ 732.2075, 732.2085. Thus, I concur in the decision to dismiss this appeal because the trial court's order is nonfinal and nonappealable. See Dempsey, 899 So.2d 1272.

Dependent relative revocation doctrine + prior wills = no standing to sue

In re Estate of Coukos, 947 So.2d 1290, 32 Fla. L. Weekly D433 (Fla. 2d DCA Feb 09, 2007)

Sometimes the best defense is a good offense.  In the linked-to case, counsel for the personal representative deftly defended against a lawsuit by disinherited heirs by attacking their standing to bring the suit, vs. allowing his client to get dragged into a full-blown will contest. 

Based on the following rationale, the 2d DCA held that the grandchildren and great-grandchildren of the testator lacked standing to petition to revoke his will, in which they were not beneficiaries, given that previous and presumptively valid wills were discovered that, similar to the current will, did not include the petitioners as beneficiaries of the estate. This is a one paragraph opinion, and although unstated, the key concept here is Florida's "dependent relative revocation."

Appellants, the grandchildren and great-grandchildren of Harry L. Coukos, challenge the trial court's dismissal with prejudice of their petition for revocation of probate, in which they challenged Mr. Coukos' 2004 will. Because Appellants lacked standing to challenge the will, we affirm. See Wehrheim v. Golden Pond Assisted Living Facility, 905 So.2d 1002, 1006 (Fla. 5th DCA 2005) (“[A] petitioner may not be an interested person in revocation and removal proceedings if previous and presumptively valid wills have been discovered that, similar to the current will, do not include the petitioner as a beneficiary of the estate.”). However, we do so without prejudice to any right Appellants may have to challenge the trust agreement.

Bankruptcy court says NO to equitable lien on homestead property

The one crack in the almost impenetrable fortress protecting Florida homestead property from creditors is the amorphous "equitable lien" doctrine.  There isn't a lot of case law out there on equitable liens against Florida homestead, so In re Gosman, 2007 WL 707365 (Bankr.S.D.Fla. Mar 05, 2007) should be of interest to anyone whose practice involves homestead issues.

In this case the bankruptcy court said NO to a creditor seeking to impose an equitable lien on $22.5 million in net sales proceeds generated by the sale of former health care executive Abe Gosman's Palm Beach mansion.  The court articulated the following two-part test for determining "the very narrow circumstances warranting the imposition of an equitable lien" on homestead property under Florida law:

  • that the money was obtained fraudulently or through egregious conduct, and
  • that the money obtained was utilized to invest in, purchase or improve the homestead. The Court finds that neither of the two prongs has been satisfied.
Here's how the bankruptcy court summarized Florida's equitable lien case law:

The Florida homestead exemption is construed liberally and the three exceptions to the Florida homestead exemption are construed narrowly and strictly. Havoco of America. Ltd. v. Hill, 790 So.2d 1018 (Fla.2001). A limited legal basis has been established for imposing an equitable lien on homestead. The first case from the Florida Supreme Court to impose an equitable lien determined that the imposition of a lien was proper due to the embezzlement of funds by an employee who, in turn, used the funds to make improvements to the home. Jones v. Carpenter, 106 So. 127 (Fla.1925). The Court in Jones elaborated that if the money had been obtained through a valid contract and then utilized to make home improvements, the imposition of an equitable lien would not be appropriate. Id. In Palm Beach Savings & Loan Association, F .S.A v. Fishbein, 619 So.2d 267 (Fla.1993), the Florida Supreme Court allowed an equitable lien against homestead property wherein monies were obtained fraudulently by use of a forged mortgage instrument and then utilized to satisfy a valid mortgage. In Chauncey v. Dzikowski, 454 F.3d 1292 (11 Cir.2006), the Eleventh Circuit Court of Appeals referenced the standard for imposing an equitable lien by stating that it may be necessary to reach beyond the literal language of the Florida homestead exemption to invoke an equitable lien against homestead property when funds were obtained through fraud or egregious conduct and utilized to invest in, purchase, or improve the homestead. Id. at 1294.

Good news from the bankruptcy front: homestead in a revocable trust remains protected

I previously wrote here about Engelke v. Estate of Engelke, a 4th DCA opinion holding that homestead held in a revocable trust remained exempt from forced sale or lien by judgment creditors pursuant to Article X, Section 4(a) of the Florida Constitution.  The reason why opinions like Engelke are especially interesting for estate planners is because they chip away at the precedential value of In re Bosonetto, 271 B.R. 403 (Bankr.M.D.Fla.2001), a Middle District Bankruptcy Court opinion ruling that homestead property in a revocable trust lost its creditor protection.  Bosonetto has been the subject of heavy criticism every since.

We now have two new Middle District Bankruptcy Court opinions expressly refusing to follow BosonettoIn re Alexander, 346 B.R. 546, 19 Fla. L. Weekly Fed. B 356 (Bankr.M.D.Fla. Jul 25, 2006), and In re Edwards, --- B.R. ----, 2006 WL 3788803 (Bankr.M.D.Fla. Oct 04, 2006).

This is good news for planners, although the issue is not yet dead.  Bosonetto hasn't been overruled.  Until it is, planners should remain cautious.  The following excerpts from Edwards summarize the well-reasoned analyses underlying both opinions:

The issue for determination is whether real property in which a debtor resides qualifies for the Florida homestead exemption when title to the property is held by a revocable trust. The issue is governed by Florida state statutory and case law. Florida opted out of the federal bankruptcy exemption scheme and a debtor filing for bankruptcy protection in Florida must use Florida's state law exemptions. The Florida exemptions include a homestead exemption found at Florida Constitution, Article X, Section 4(a)(1):

(a) There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien thereon, except for the payment of taxes and assessments thereon, obligations contracted for house, field or other labor performed on the realty, the following property owned by a natural person:

(1) a homestead, if located outside a municipality, to the extent of one hundred sixty acres of contiguous land and improvements thereon, which shall not be reduced without the owner's consent by reason of subsequent inclusion in a municipality; upon which the exemption shall be limited to the residence of the owner or the owner's family.

Fla. Const. Art. X, § 4 (emphasis added).

*     *     *     *     *

The Trustee relies on the decision In re Bosonetto, 271 B.R. 403 (Bankr.M.D.Fla.2001) in which the Bankruptcy Court held a debtor may not claim real property owned by a trust as exempt homestead property. The great weight of the relevant case law holds to the contrary. Fee simple title of the property is not required, and an equitable or legal interest should afford protection pursuant to the provision.

The Florida Appellate Court ruled in Engelke v. Estate of Engelke, 921 So.2d 693, 696 (Fla. 4th DCA 2004) a revocable trust was constitutionally protected homestead property and could not be used to pay claims and expenses of the grantor's estate. The grantor of the trust retained an ownership interest in the property since the trust was revocable. The trust, due to its revocable nature, was owned by a “natural person” within the meaning of the Florida homestead exemption. The revocable trust only held title to the property, while the grantor retained ownership.

A recent case decided in the Middle District of Florida, In re Alexander, 346 B.R. 546 (Bankr.M.D.Fla.2006) is in agreement holding fee simple title to the property is not necessary to qualify for the homestead exemption.  “... [I]n order to claim property in which the individual resides as exempt it is sufficient that: (1) the individual have a legal or equitable interest which gives the individual the legal right to use and possess the property as a residence; (2) the individual have the intention to make the property his or her homestead; and (3) the individual actually maintain the property as his or her principal residence.” The Bankruptcy Court ruled homestead property titled in a revocable trust can be exempt from a debtor's bankruptcy estate in a Chapter 7 case.

Another estate plan hits the dust: testator's personal property right's lose out to heir's homestead rights

Cutler v. Cutler, --- So.2d ----, 2007 WL 601866 (Fla. 3d DCA Feb 28, 2007)

Homestead is known as Florida’s legal chameleon because it has different meanings depending upon its context.  Here's how the 3d DCA described the three faces of Florida's homestead law in the linked-to opinion:

As the Florida Supreme Court noted in Snyder v. Davis, 699 So.2d 999, 1001-02 (Fla.1997), there are three kinds of homestead with one purpose: preserving the family home for its owner and heirs. The first kind, unrelated to this case, provides homestead with an exemption from taxes. See Art. VII, § 6, Fla. Const. The second protects homestead from forced sale by creditors. Art. X, §§ 4(a)-(b), Fla. Const. The third delineates the restrictions a homestead owner faces when attempting to alienate or devise homestead property. Art. X, § 4(c), Fla. Const.

This case is another example of homestead law derailing a Florida testator's estate plan.  All parties conceded that the homestead property at issue was "freely devisable" under Florida law, and yet the testator's intent was still frustrated by Florida's homestead law.

The estate plan at issue was simple: mom, whose only surviving family was her adult son and daughter, specifically devised 2 pieces of real estate, her home to her daughter and an adjacent vacant lot to her son.  In the event the administrative expenses of her estate exceeded her residuary estate, mom wanted the remaining expenses to be shared equally by son and daughter.  Here's how the 3d DCA described mom's plan:

Edith's [estate] plan [was] that if other available assets are insufficient to satisfy her creditors' claims and the final expenses of her estate upon her death, the residence she devised to Cynthia and the adjacent vacant parcel she devised to her son Edward will abate equally to satisfy those expenses.

Daughter objected to apportioning any probate expenses to her devise of freely-devisable homestead property and the trial court agreed pursuant to the “inuring clause” of Article X, section 4(b) of the Florida Constitution, effectively frustrating mom's clearly expressed testamentary intent.  The following excerpts from the linked-to opinion provide a good summary of the 3d DCA's rationale for upholding the trial court's ruling:

The specific homestead protection at issue in this case is protection against forced transfer for use by an estate after the death of a decedent. Art. X, § 4(b), Fla. Const. To clearly distinguish this particular protection in the Florida Probate Code from other forms of homestead, the Legislature has denominated it as “protected homestead.” See § 731.201(29), Fla. Stat. (2003)(defining “protected homestead as “[that] property described in s. 4(a)(1), Art. X of the State Constitution on which at the death of the owner the exemption inures to the owner's surviving spouse or heirs under s. 4(b), Art X of the State Constitution”).

*     *     *     *     *
Here, we are confronted with two specific devises of property, which, in the general residuary clause of her will, Edith directed should be contingently available to her personal representative, if necessary, to pay the expenses of her estate. See Park Lake Presbyterian Church v. Estate of Henry, 106 So.2d 215, 217 (Fla.1958)(defining a specific devise as “a gift of a particular thing or of a specified part of a testator's estate so described as being capable of distinguishment from all others of the same kind,” and defining a residuary legacy as “a general legacy wherein fall all the assets of the estate after all other legacies have been satisfied and all charges, debts, and costs have been paid”). On their face, these two specific devises appear equal in dignity. But upon closer examination, it is clear that they are not. In the case of the specific devise of the vacant land to Edward, there is no question but that Edith had the legal right to subject this devise to the debts of the estate if she so desired. § 733.805(1) Fla. Stat. (2004)(“Funds or property designated by the will shall be used to pay debts [of the estate] ... to the extent the funds or property is sufficient.”); In re Estate of Potter, 469 So.2d 957, 959 (Fla. 4th DCA 1985). However, as we have learned, the devise to Cynthia was followed by a constitutional exemption from forced sale of her devise to satisfy the expenses of Edith's estate. This constitutionally created benefit is personal to Cynthia, and hers to assert. For reasons of her own, she has determined to do so. We do not consider ourselves liberated to deny her this constitutional benefit.

Lesson learned:

The lesson to be drawn from this case is that the creditor protection aspects of even freely-devisable homestead property will trump all other interests -- including a testator's individual property rights in his or her own home.  This point is made by the Judge Schwartz in his dissent:

The ground of my dissent is aptly stated in the appellant's brief:

When there is no surviving spouse or minor child, as in this case, the decedent's homestead may be freely transferred, gifted, or devised without limitation. Art. X, Section 4(c), Fla. Const.; City National Bank of Fla. v. Tescher, 578 So.2d 701, 703 (Fla.1991). ... If Mrs. Cutler could have left her properties to someone outside of her family, which she could have done, why could she not leave it to her heirs with the provision that the properties be available to satisfy her debts? The answer to this question is simple-she was lawfully entitled to do so.

See also DeMayo v. Chames, 934 So.2d 548, 551 (Fla. 3d DCA 2006) (Shepherd, J., concurring) (persuasively stating view that property owner should have authority to deal with homestead property as she sees fit), review granted, 937 So.2d 122 (Fla. 2006).FN6

FN6. I hope, without confidence, that the majority is not saying that the limitation on the devise would have been okay if it were contained in the same sentence or paragraph as a condition of the devise, but it is not and the testatrix's clearly expressed wishes must be frustrated because it is in a separate provision of the will. If my hope is unjustified, as I write I can hear workers installing the words-in Gothic letters, of course-“All common sense abandon, ye who enter here” over the doors to our courtroom.

I am sympathetic to Judge Schwartz's position, as I previously stated here.

Florida appeals court upholds lower court ruling giving Anna Nicole Smith's body to her daughter

Arthur v. Milstein, --- So.2d ----, 2007 WL 602630 (Fla. 4th DCA 2007)

Poor Judge Seidlin.  Even when he gets it right . . . he's wrong.  Relying on the "tipsy coachman" doctrine, which allows allows an appellate court to affirm a trial court that “reaches the right result, but for the wrong reasons” so long as “there is any basis which would support the judgment in the record,” the 4th DCA upheld Judge Seidlin's ruling granting power to decide where Smith will be buried to Richard C. Milstein, as guardian ad litem for Smith's 5-month-old daughter, Dannielynn Hope Marshall Stern.

According to the 4th DCA, the trial court incorrectly based its ruling on Florida statutes intended to guide funeral home operators and medical examiners:

The trial court relied upon section 406.50(4) to determine that Dannielynn had priority over Arthur. .  .  .  .

We find that neither section 497.005(37), nor section 406.50, control the outcome of this case, which in essence involves private parties engaged in a pre-burial dispute as to the decedent's remains. Otherwise stated, the trial court was not being asked to consider whether a funeral home or medical examiner was liable for its decision with respect to the disposition of a decedent's remains.

Instead, as I predicted here, the 4th DCA held that its prior ruling in the Cohen case was the correct basis for deciding this dispute: Anna Nicole Smith's body should be disposed of in accordance with her intent, as established by clear and convincing evidence.

Here's how the 4th DCA articulated its rationale:

In this case, common law is dispositive. Kirksey v. Jernigan, 45 So.2d 188, 189 (Fla.1950); Cohen v. Guardianship of Cohen, 896 So.2d 950 (Fla. 4th DCA 2005); Leadingham v. Wallace, 691 So.2d 1162 (Fla. 5th DCA 1997). Generally, in the absence of a testamentary disposition, the spouse of the deceased or the next of kin has the right to the possession of the body for burial or other lawful disposition. Kirksey. In Cohen, we held that a written testamentary disposition is not conclusive of the decedent's intent if it can be shown by clear and convincing evidence that he intended another disposition for his body. Cohen looked to decisions of other states which determined that whether to enforce the will provisions regarding disposition of the testator's body depends upon the circumstances of the case.

*     *     *     *     *
Cohen noted that there were “no cases in Florida or across the country in which a testamentary disposition has been upheld even though credible evidence has been introduced to show that the testator changed his or her mind as to the disposition of his/her body.” 896 So.2d at 954. There, we found no abuse of discretion associated with the trial court's finding of the decedent's intent. See also Leadingham. We note that even under section 497.005(37), the first priority is to the wishes of the decedent “when written inter vivos authorizations and directions are provided” and that the remaining list of legally authorized persons are those who are most likely to know and follow those wishes. To the extent sections 497.005(37) and 406.05(4) provide guidance, the priorities therein could set forth a presumption, rebuttable by clear and convincing evidence of the decedent's intent, as was the will in Cohen, and as found here.

This is probably the end of Florida litigation involving Anna Nicole Smith.  Apparently the Bahamian court system will be the next stop for this litigation train.  See Wrangling over Anna Nicole’s body ends:

A judge in the Bahamas is hearing the child custody dispute between Arthur and Stern, who is listed as Dannielynn’s father on the birth certificate. On Tuesday, Arthur saw the little girl for the first time and left the home in tears.

In Fort Lauderdale on Wednesday, Judge Lawrence Korda ordered DNA samples from Smith’s body be turned over to attorneys for photographer Larry Birkhead, an ex-boyfriend of Smith’s. Frederic von Anhalt, the husband of actress Zsa Zsa Gabor, also says he could be the father. But Korda said he had no jurisdiction to do anything further.

“The Bahamas is the proper venue, and the Bahamian court has already exercised jurisdiction over the minor child,” Korda said.

Attorney Retaining Liens

As reported in Politician's Heirs Snare Thelen Reid in Complex Estate Battle, a New York firm successfully opposed a subpoena to turn over its files in connection with contested probate proceedings in Texas because the estate hadn't paid its bills.  The basis of the New York firm's retaining lien was described as follows in the linked-to piece:

In a Feb. 9 decision, Manhattan Supreme Court Justice Carol Robinson Edmead said Thelen Reid was entitled to a retaining lien allowing it to keep documents relating to Martinez's estate pending payment of outstanding legal bills. She quashed Gonzalez's deposition subpoenas on the same grounds.

The judge noted that, while all the firm's bills had been paid while Martinez was alive, Gonzalez had retained the firm after his death. Justice Edmead ruled that Gonzalez had retained Thelen Reid on behalf of Martinez's estate, not in her individual capacity.

"Since the Law Firm's rendition of services at the request of Ms. Gonzalez was made on behalf of the Estate of Dr. Martinez, such services entitle the Law Firm to a common-law retaining lien on any of the Estate's books, papers, money and securities which are in the attorney's possession," the judge wrote in In the Matter of the Application of Letizia Martinez de Gonzalez, 114877/06.

Florida Law: Ethics Opinion 88-11

Florida law also recognizes an attorney's right to a retaining lien over client files when bills go unpaid.  Here's how Florida Bar Ethics Opinion 88-11 summarized Florida law on this point:

Many attorneys are unaware that in Florida a case file is considered to be the property of the attorney rather than the client. Dowda and Fields, P.A. v. Cobb , 452 So.2d 1140, 1142 (Fla. 5th DCA 1984); Florida Ethics Opinion 71-37 [since withdrawn]. Under normal circumstances, an attorney should make available to the client, at the client's expense, copies of information in the file where such information would serve a useful purpose to the client. Opinion 71-37 [since withdrawn].

*     *     *     *     *

Florida common law recognizes two types of attorney's liens: the charging lien and the retaining lien. The charging lien may be asserted when a client owes the attorney for fees or costs in connection with a specific matter in which a suit has been filed. To impose a charging lien, the attorney must show: (1) a contract between attorney and client; (2) an understanding for payment of attorney's fees out of the recovery; (3) either an avoidance of payment or a dispute regarding the amount of fees; and (4) timely notice. Daniel Mones, P.A. v. Smith, 486 So.2d 559, 561 (Fla. 1986). The attorney should give timely notice of the asserted charging lien by either filing a notice of lien or otherwise pursuing the lien in the underlying suit. The latter approach is preferred.

Unlike a charging lien, a retaining lien may be asserted with respect to amounts owed by a client for all legal work done on the client's behalf regardless of whether the materials upon which the retaining lien is asserted are related to the matter in which the outstanding charges were incurred. A retaining lien may be asserted on file materials as well as client funds or property in the attorney's possession, and may be asserted whether or not a suit has been filed. Mones, 486 So.2d at 561.

Once removed, foreign estate administrator lost standing to pursue claims

Juega v. Davidson, --- So.2d ----, 2007 WL 465523 (Fla. 3d DCA Feb 14, 2007)

Who has standing to sue and when is a recurring them in trusts and estates litigation.  In probate proceedings, the issue is framed in terms of who is an "interested person,"  In non-probate trust litigation, the issue is governed by Florida Rule of Civil Procedure 1.210(a).

In this case an estate administrator appointed as part of estate proceedings in Spain filed a 1994 lawsuit in Miami, Floria.  The case apparently dragged on for years.  In 2003, the Spanish estate was closed on the estate administrator was discharged.  Having acquired a taste for U.S. litigation, in 2004 the foreign administrator proceeded with his case in Miami after having been discharged in Spain.

The trial court dismissed the discharged-foreign administrator from the lawsuit on lack-of-standing grounds.  The 3d DCA agreed, providing the following helpful guidance:

Florida Rule of Civil Procedure 1.210(a) states, in pertinent part:

Every action may be prosecuted in the name of the real party in interest, but a personal representative, administrator, guardian, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a party expressly authorized by statute may sue in that person's own name without joining the party for whose benefit the action is brought.

By its express wording, Rule 1.210(a) enumerates six categories of persons who may bring an action for the benefit of another without joining the real party in interest. However, the real party in interest may prosecute in his own name as well even if one of those six categories of persons is available. See Estate of Morales v. Iasis Healthcare Corp., 901 So.2d 965, 966 (Fla. 2d DCA 2005) (“[i]n cases involving claims made by ... an estate, there are two parties: the estate and the personal representative”). Here, [foreign administrator] ceased to be the estate administrator and the Estate ceased to be the real party in interest in 2003.

Because [foreign administrator] ceased to act in his representative capacity in 2003, he did not have standing in 2004 to raise claims on behalf of the estate.

You can't sue someone else's personal representative for breach of fiduciary duty or get fees for thwarting someone else's testamentary intent

Harding v. Rosoff, --- So.2d ----, 2007 WL 461381(Fla. 4th DCA Feb 14, 2007)

This is the second appellate opinion arising out of this piece of probate litigation.  I wrote about the first appeal here.  In this sad case a 95 year old woman inadvertently failed to comply with the technical  requirements necessary to effectively exercise a power of appointment she had under a trust created by her brother over 30 years ago.

The default beneficiary under brother's trust sued the probate estate over the attempted exercise of the power of appointment and won.  Rather than being content with this win, default trust beneficiary then sued the personal representative of sister's estate for attorneys' fees.  The trial court said NO WAY, and the 4th DCA agreed as follows:

  • Court: You can't sue someone else's personal representative for breach of fiduciary duty:

The personal representatives argue that there can be no surcharge, which is a charge against a fiduciary to compensate a beneficiary for the breach of fiduciary duty, Merkel v. Guardianship of Jacoby, 862 So.2d 906 (Fla. 2d DCA 2003), because there was no fiduciary duty to Harding. They point out that they are fiduciaries only of the Teresa Rosoff estate and that Harding is not a beneficiary of that estate. Harding is a beneficiary of the Molinari Trust, but the personal representatives are not fiduciaries of the trust. We are not persuaded by Harding that there is a fiduciary duty to her, but we need not decide that issue because the pursuance of the litigation by the personal representatives was consistent with the testator's intent. Although they lost and we affirmed, we noted that “Teresa's apparent intent has been thwarted.” Rosoff, 901 So.2d at 1010. The trial court was correct in finding no impropriety by the personal representatives.

  • Court: You don't get fees for thwarting the testatrix's intent:

Harding also contends that she should have been awarded attorney's fees and costs for prevailing in the litigation under section 733.106, Florida Statutes (2005), because the litigation benefited the estate. In re Estate of Udell, 501 So.2d 1286 (Fla. 4th DCA 1986). Harding has cited no cases, however, which would support her theory that there was a benefit to the estate under these specific facts. She relies on In re Estate of McCune, 223 So.2d 787 (Fla. 4th DCA 1969), in which we stated that services which carry out the intent of the testator as expressed in the will are compensable from the estate. As we previously noted, however, this litigation thwarted the testator's intent. Harding also cites Robinson v. Robinson, 805 So.2d 94 (Fla. 4th DCA 2002), in which this court affirmed an award of attorney's fees to a beneficiary who successfully reformed a trust. In Robinson, however, the fees were awarded from the trust, not the estate. Under these facts, in which the litigation determined only who would be the beneficiary of the Molinari Trust, the trial court did not err in finding that there was no benefit to the estate.

Florida's recognition of tort of intentional infliction of emotional distress caused by extreme and outrageous conduct in handling of cremation

Matsumoto v. American Burial and Cremation Services, Inc., --- So.2d ----, 2006 WL 3733310, 32 Fla. L. Weekly D26 (Fla. 2 DCA Dec 20, 2006)

In light of the ongoing litigation involving conflicting claims for custody of Anna Nicole Smith's body (see here), the linked-to case seems especially timely (thanks to Alachua, FL attorney Jane E. Hendricks for pointing it out to me).

The linked-to case answers two questions that can be expected to come up from time to time in a probate practice.  After the publicity the Anna Nicole Smith case is bringing to litigation involving control of a decedent's body, these questions may come up with more frequency.

  • Question 1: Can you sue someone for causing you emotional pain and suffering over the disposition of a family member's dead body?  Answer: YES.  Here's how the 2d DCA described this particular tort:

Ms. Matsumoto sued the appellees in June 2003, claiming that they tortiously interfered with the body of her deceased father, Lenzo Chavis. Her pleading and her trial theme more accurately reflect a tort claim for outrageous conduct causing severe emotional distress. See, e.g., Smith v. Telophase Nat'l Cremation Soc'y, Inc., 471 So.2d 163 (Fla. 2d DCA 1985) (acknowledging Florida's recognition of tort of intentional infliction of emotional distress caused by extreme and outrageous conduct in handling of cremation); Williams v. City of Minneola, 575 So.2d 683, 690-91 (Fla. 5th DCA 1991) (holding that cause of action lies in tort for infliction of emotional distress by outrageous conduct involving dead body); Baker v. Fla. Nat'l Bank, 559 So.2d 284, 287 (Fla. 4th DCA 1990) (recognizing that claim for intentional infliction of emotional distress and “tort of outrageous conduct” are the same claim).

  • Question 2:  Does a funeral home have an affirmative duty to find the next of kin with highest priority under Florida law when seeking authority to cremate a decedent's body?  Answer: NO. According to the 2d DCA Florida Statutes section 470.002(18) [now repealed] specifies the priority of persons who may direct the disposition of the decedent's body.  Under this statute, a decedent's child has priority over a brother or sister.  In the linked-to case the decedent's estranged daughter claimed the funeral home should have tried to locate her prior to following the directions of the decedent's brother.   The 2d DCA rejected her claim as follows:

Ms. Matsumoto .  .  .  urges us to graft upon the statute a requirement that the funeral home undertake a diligent search for the closest next of kin if their whereabouts are unknown by those lower in priority under the statute. She suggests that the funeral home must make a good faith effort, similar to that required for constructive service of process, to locate the unavailable next of kin. See § 49.041(1), Fla. Stat. (2002). The statute does not impose a due diligence requirement on funeral homes. Nor does it require funeral homes to provide others with higher priority notice of a family member's death. We decline to impose such obligations on the funeral home.

Court to Trustee: go hire a lawyer!

EHQF Trust v. S & A Capital Partners, Inc. , --- So.2d ----, 2007 WL 45838 (Fla. 4th DCA Jan 09, 2007)

I wrote here about a 2006 opinion out of the 5th DCA addressing Florida Rule of Probate Procedure 5.030(a), which, subject to limited exceptions, requires Florida guardians and personal representatives to be represented by counsel.  There's no such rule for Florida trustees.  However, the 4th DCA came to the same conclusion with respect to trustees based on the following rationale:

The notice of appeal filed by appellant, a trust, was not signed by an attorney licensed to practice law in Florida. Section 454.23, Florida Statutes (2006), prohibiting the unlicensed practice of law, provides no exception for representation of a trust. Although Florida has not previously addressed the issue, other states have concluded that a trustee cannot appear pro se on behalf of the trust, because the trustee represents the interests of others and would therefore be engaged in the unauthorized practice of law. Curry v. Kilgore, 2004 UT App. 112 (Utah Ct.App.2004); Ziegler v. Nickel, 64 Cal.App.4th 545, 75 Cal.Rptr.2d 312 (Cal.2d 1998); Life Science Church v. Shawano County, 221 Wis.2d 331, 585 N.W.2d 625 (Wis.Ct.App.1998); Mahoning County Bar Ass'n v. Alexander, 79 Ohio St.3d 1220, 681 N.E.2d 934 (Ohio 1997); Beaudoin v. Kibbie, 905 P.2d 939 (Wyo.1995); Back Acres Pure Trust v. Fahnlander, 233 Neb. 28, 443 N.W.2d 604 (Neb.1989); In re Ellis, 53 Haw. 23, 487 P.2d 286 (Haw.1971).

It is therefore ordered that this appeal will be dismissed unless appellant files an amended notice of appeal signed by an attorney licensed to practice law within twenty days of this order. This appeal is stayed pending compliance with this order.

The Art of the "General Release"

Hernandez v. Gil, -- So.2d. ---, 2007 WL 466029 (Fla. 3d DCA Feb 14, 2007)

Drafting a settlement agreement is always part science, part art.  The drafting needs to be technically solid.  The economic aspects of the deal need to be clearly worked out, although this issue is usually pretty simple, no matter how many zeros are after the dollar sign (party A pays part B $___ to settle).  The less tangible aspect of the deal - but probably the most important contribution made by counsel - is anticipating everything that can go wrong and working defenses against these contingencies into the deal. 

The Art of the "General Release"

The linked-to opinion is an example of superb lawyering anticipating and building defenses against an unscrupulous litigant into a global settlement agreement.  In this case son challenged probate of his father's will by suing his mother and a friend of the family, who were dad's PRs and trustees of dad's trust.  Son settles case against dad's estate in exchange for certain estate assets and the exchange of general releases.  Son then breaches deal by suing again when mom passes away. 

Fortunately the lawyers negotiating the original settlement deal had anticipated this turn of events in the form of general releases that shielded the good guys from this type of attack.  Here's how the 3d DCA described the three categories of general release at issue in this case:

  • First general release: shield mom's estate from future attack by disgruntled son:

Pursuant to the clear and unambiguous language of the first general release executed by Hernandez, Hernandez agreed to release his mother, Doña Alicia, from any and all causes of action and to renounce any right in Doña Alicia's estate, except to the extent, if any, that Doña Alicia named him a beneficiary under her will. Further, if not named as a beneficiary under his mother's will, Hernandez agreed not to contest the validity of the will and waived his right to enter an appearance in any probate proceeding pertaining to his mother's estate and, to the extent that he would make such challenge or enter any such appearance, he would be deemed to have predeceased his mother.

  • Second general release: shield the trustee from future attack by disgruntled son:

In a second analogously termed release, Hernandez agreed to renounce any right, title, or interest, vested or contingent, he had, has, or may have in the future in the Trust and in any other trust in which either of his parents was a settlor or beneficiary.

  • Third general release: shield family friend from individual future attack by disgruntled son:

In a third release, Hernandez agreed to release Gil, individually, and in her capacity as executrix and personal representative of Don Manolo's estate, and in her capacity as the trustee of the Trust, from any and all claims whatsoever, in law or in equity, which he ever had, has, or may have in the future.

Lesson learned?

Good drafting worked . . . to an extent.  Although no one could physically prohibit disgruntled son from breaching the terms of the settlement deal, the general releases he signed provided effective tools for shielding against his future attacks.  Here's how the 3d DCA described how disgruntled son breached original deal and how the general releases described above worked to thwart him:

The record indicates that Doña Alicia died in July 2003 and did not name Hernandez as a beneficiary under her last will and testament. Not surprisingly, Hernandez entered an appearance in the probate proceedings of his mother's estate and filed a petition challenging the administration of her will, in clear contravention of the express terms of the GSA. Hernandez also filed a lawsuit against Gil, individually, for tortious interference with his rights to his mother's inheritance. Pursuant to the clear and unambiguous language of the GSA and the corresponding releases, Hernandez bargained away his right to challenge his mother's will and in the event that he did so, he would be deemed to have predeceased his mother. Having challenged his mother's will, Hernandez is deemed to have predeceased her and therefore, has no right to any inheritance from his mother.

Is there a better way to manage an irrational litigant in probate?

Simpson v. In re Estate of Norton, 2007 WL 397463 (Fla. 3d DCA Feb 07, 2007)

The most frustrating probate litigant has to be the irrational adversary.  Not because this type of adversary is more apt to win, but because this type of adversary is more apt to make everyone waste a lot of time and money using the court system to force compliance with existing black letter law every step of the way.  The last sentence of the linked-to opinion gives you a hint of what type of litigant Ms. Simpson is:

[T]his is not the proper forum in which to litigate Simpson's numerous complaints about her three former attorneys and we decline to address those issues.

What's most striking about the linked-to opinion is that although the three orders at issue all cover mundane administrative decisions that all appear to be common sense rulings by a thoughtful probate judge -- an irrational litigant was able to cause unnecessary delay and expense by exploiting the expansive appellate rules applicable to probate proceedings.  Two of the orders on appeal were entered in April of 2006, the third in July of 2006.  The appellate decision upholding those rulings wasn't published until February of 2007: that's 7 months of needless delay!?  If you read the opinion it sounds like the estate's attorney did everything right.  Is there a better way to manage this type of irrational litigant?  I have to admit that in this case I can't think of one.  Sure, you can always move for sanctions, but that doesn't put a stop to the delaying tactics and the irrational litigant will probably brush off the threat of sanctions anyway.

In terms of guidance for future litigants, the following line from the linked-to opinion probably says it best:

[D]issatisfaction with the administration of a probate estate unaccompanied by any legal basis as to how the trial court abused its discretion is not grounds for an appeal.

4th DCA on intestate succession and DNA testing: paternity adjudication trumps biology

Glover v. Miller, 2007 WL 247899 (Fla. 4th DCA Jan 31, 2007)

In 2005 sixteen-year-old Jerrod Miller was shot to death by a Delray Beach police officer.  Ten years earlier, in 1995, Kenneth Miller was declared Jerrod's father by an adjudication of paternity and judgment requiring child support.  In 2006 posthumous DNA testing revealed a 99% likelihood that another man, Terry Glover, is really the biological father of Jerrod.  Because Jerrod died without a will, under Florida's laws of intestacy (F.S. 732.103), Jerrod's estate passes to his parents in equal shares or to his sole surviving parent if either predeceased him.  Jerrod's mother died in 2003, so whomever ends up designated as his father gets everything.  According to this Sun-Sentinel report, millions could be at stake:

Miller's attorney, T.J. Cunningham, said Willie Gary would file a wrongful-death lawsuit as soon as Miller is formally appointed personal representative of the estate. Gary, a high-profile Stuart attorney, previously notified Delray Beach that the estate would settle the case for $7.5 million.

Both men filed dueling petitions for administration of Jerrod Miller's estate.  The probate court ruled in favor of Miller based on the 1995 paternity adjudication -- and the 4th DCA upheld that ruling based in part on the following rationale:

Section 732.101(2) provides that the decedent's date of death is the event vesting the heirs' rights to intestate property. At the date of Jerrod's death, Glover was not considered Jerrod's father for purposes of intestate succession, because he never married Jerrod's mother, was never adjudicated to be his father, and never acknowledged in writing that he was Jerrod's father. In contrast, Miller was Jerrod's father for purposes of intestate succession because he was adjudicated to be Jerrod's father. Thus, Miller's rights vested on Jerrod's death because he is Jerrod's father by a paternity judgment. Jerrod was a lineal descendant of Miller within the meaning of section 732.108(2)(b), so he is an heir for purposes of section 733.301(1)(b) 3.

.  .  .  .  .  .

As noted by the trial court, Glover did not move to set aside the adjudication of Miller's paternity. His petition for administration of the estate merely alleged that he is the biological father of Jerrod. Yet Miller is Jerrod's father in the eyes of the law, regardless of the results of DNA testing. FN1 The legal father has substantial rights (in this case vested rights) which cannot be lightly dismissed, even by the discovery that the legal father is not the biological father. In fact, our supreme court has held that the mere fact that biological testing shows that a man other than a legal father is the biological father of the child without more does not require the granting of a paternity petition. Dep't of Health & Rehabilitative Servs. v. Privette, 617 So.2d 305 (Fla.1993).

FN1. Glover's contention that he is entitled to summary judgment of fatherhood based upon DNA testing alone is also statutorily inaccurate. Where DNA testing shows a 95 percent or more confidence level that the man is the biological father, it creates only a rebuttable presumption of fatherhood. § 742.12(4), Fla. Stat. (2006).

.  .  .  .  .  .

We agree with the trial court that in order for Glover to assert a right as an heir, the existing judgment of paternity would have to be vacated. A child cannot have two legally recognized fathers. See Achumba v. Neustein, 793 So.2d 1013, 1015 (Fla. 5th DCA 2001).

Divorce + Life Insurance Payments to Ex' = Probate Litigation

Spoerr v. Manhattan Natl. Life Ins. Co., 2007 WL 128815 (S.D.Fla. Jan 12, 2007)

I've written previously about the probate-litigation issues lurking at the end of many divorces (see here).  Case in point: receipt of life insurance proceeds by ex-spouse.  That's what the linked-to case is about: ex-husband was the named beneficiary of a life insurance policy on his ex-wife.  Ex-wife executed a durable power of attorney ("POA") designating her son as her attorney-in-fact.  Son used the POA to change the beneficiary designation form on his mom's life insurance policy.  When mom died, the insurance company paid son $250,445.80.  Dad found out and sued everyone in sight to get his hands on the insurance money.

Probate disputes involving conflicting claims to life insurance proceeds are common.  There are three aspects of this case that I find most interesting.

1.    Increased federal jurisdiction over probate disputes.

Although not technically a dispute involving the decedent's probate administration, the litigation at issue in the linked-to case is part and parcel of the big picture involving who gets what after mom died.  The fact that this particular piece of the litigation ended up in court (diversity jurisdiction) may mean nothing, or could be another example of the increased "federalization" of trust-and-estates litigation predicted by those following the U.S. Supreme Court's decision in Marshall v. Marshall, and written about recently in Marshall v. Marshall -- Rashomon Revisited, Prob. & Prop., Jan./Feb. 2007.

2.   The scope of authority conveyed in a Durable Power of Attorney

Abuse and exploitation of the elderly by means of durable powers of attorney is an often-written about problem (see here).  In the linked-to case, the court ruled that son's use of his mom's POA to change the beneficiary designation on her life insurance policy was was void ab initio, based on the following rationale:

The construction of the durable power of attorney (“POA”) executed by Patricia in July of 2003 is a matter of law. See James v. James, 843 So.2d 304, 308 (Fla. 5th DCA 2003) (“Construction of a power of attorney, like contract law, is a matter of law.”). In construing a POA, “[t]he court must look to the language of the instrument, as with any other contract, in order to ascertain its object and purpose.” Johnson v. Fraccacreta, 348 So.2d 570, 572 (Fla. 4th DCA 1977). In addition, “ ‘powers of attorney are strictly construed.’ “ Alterra Healthcare Corp. v. Bryant, 937 So.2d 263, 269 (Fla. 4th DCA 2006) (quoting De Bueno v. Castro, 543 So.2d 393, 394 (Fla. 4th DCA 1989)). The POA at issue in this case contains a limitation on the authority granted to the attorney-in-fact.  Specifically, the POA states:

Limitation. Notwithstanding the powers contained in this Durable Power of Attorney, my attorney in fact may not perform duties under a contract that require the exercise of my personal services; make any affidavit as to my personal knowledge; vote in any public election on my behalf; execute or revoke any Will or Codicil on my behalf; create, amend, modify, or revoke any document or other disposition effective at my death or transfer of assets to an existing trust created by me unless expressly authorized by this Power of Attorney or said document; or exercise powers and authority granted to me as trustee or court appointed fiduciary unless otherwise expressly authorized by said instrument of the court.

(D.E. No. 33 Exh. B ¶ (q)) (emphasis added). See also Fla. Stat. § 709.08 (stating the same limitation on an attorney-in-fact).  Thus, this language specifically prohibits the attorney-in-fact from changing the beneficiary of a life insurance policy as was done in this case unless the POA specifically authorizes the attorney-in-fact to perform this action. Upon examination of the POA, there is no provision which expressly authorized Richard T. as Patricia's attorney-in-fact to change the beneficiary on her insurance policy. Manhattan's contention that paragraph (i) of the POA which provides that the attorney-in-fact could “execute and deliver applications for insurance ··· and to cancel and select the amounts therefor” authorized Richard T. to change the beneficiary on an existing policy is without merit. Applying for insurance is not the same as changing the beneficiary on an existing policy and paragraph (i) is in no way an “express” authorization for Richard T.'s actions as required by paragraph (q) of the POA. Therefore, the policy change request executed with Richard T.'s signature as Patricia's attorney-in-fact is void ab initio. See, e .g., Campbell v. Metropolitan Life Ins. Co., 812 F.Supp. 1173 (E.D .Okla.1992) (finding where a change of beneficiary form for a Federal Employees Group Life Insurance policy was not witnessed as required by the applicable law the attempted change was “invalid and of no effect.”).

3.   No immunity for insurance company under F.S. 627.423

The last thing insurance companies want is to get sucked into probate litigation.  The purposes of F.S. 627.423 is to make sure they don't.  This statute basically says that insurance companies can't be sued for paying out insurance proceeds in accordance with a policy's beneficiary designation form.  The trial court said the statute didn't apply, and thus the insurance company could be sued by dad to recover the insurance proceeds wrongfully paid to son, based on the following rationale:

First, the court ruled that because the beneficiary designation was void ab initio the statute did NOT apply.

[A]s payment was made to Richard T. and not Richard E. and as the change of beneficiary was void ab initio, the payment was not made “in accordance with the terms of the policy” to the “person then designated.”

Second, the court ruled that the insurer essentially had constructive knowledge of the fact that it was paying the insurance proceeds to the wrong person, thus for this reason as well the statute did NOT apply.

Furthermore, an insurer is only immune from liability where payment to the beneficiary was done in good faith without knowledge.

Here, it is undisputed that the policy only gave the power to change the beneficiary to the owner of the policy, who in this case was Patricia. (D.E. No. 1, Exh. A at 4,8). It is also undisputed that Manhattan received the POA and relied upon it in approving the change of beneficiary request signed by Richard T. (D.E. No. 32, Exh. 2 at 2). As the POA did not allow Richard T. as attorney-in-fact to execute the change of beneficiary form, a fact that is clear from the face of the POA, Manhattan was on notice that this change of beneficiary form was invalid and that Richard E. remained the beneficiary of the policy. See, e.g., Stavros v. Western & Southern Life Insurance Company, Inc., 486 S.W.2d 712 (Ky.1972) (where the Court found an insurance company was not immune from liability under a similar statute because insurer should have known that the change of beneficiary was unauthorized as the form changing the beneficiary was not executed by the insured, an eleven-year-old-boy or his parent or guardian as required by the policy). Thus, section 627.423 does not preclude Manhattan from liability.

Fraud trumps "technical deficiencies" when validating land trusts

Keller v. Estate of Keller, 2007 WL 162770 (Fla. 4th DCA Jan 24, 2007)

The underlying facts of this tragic divorce/murder/land-trust case are recounted in lured detail in Court TV's write up of the case: THE KELLERS AND THEIR MILLIONS: A Bloody Meeting.  Before the divorce was finalized, Mrs. Keller was murdered.  Mr. Keller is now in jail charged with her murder.  Mr. Keller's reported $72+ million fortune is mostly in real estate.  His real estate investments were held in various land trusts.  (I've written recently about land trusts here and here.)

During his marriage to mail-order bride Mrs. Keller, Mr. Keller lead her to believe he was transferring a 50% beneficial interest in certain land trusts to her, when in fact he later testified that he had purposely failed to comply with the "technicalities" needed to transfer interests in a land trust.  When he tried to raise his own deliberate failure to comply with the requisite formalities for transferring title, the trial court ruled against him and the 4th DCA upheld that ruling based on the following rationale:

Another issue involves a number of other trusts which are factually similar. In 1999, at a time when Mrs. Keller was a minority beneficiary of the trusts, Mr. Keller, at her request, made written changes on each trust document to reflect that she had a fifty percent beneficial ownership interest. He testified in the dissolution proceeding that he had deliberately not followed through on certain formalities required by the trust instruments regarding the altering of the beneficial ownership interests. Again, his testimony, which was in conflict with his written changes on the trust instruments, was found not credible. There was ample evidence to support the trial court's conclusion that Mr. Keller was estopped from raising the technical deficiencies, which included the fact that Mrs. Keller was equally jointly liable on the indebtedness on most, if not all of these properties. Cotton v. Williams, 1 Fla. 37, 54 (Fla.1846) (“No man can avoid his own deed by which an estate has passed, on account of his own fraud in executing it.”).

Lesson learned:

As a trust-and-estates attorney I would rationalize the court's actions not only on notions of equity -- which is the heart and soul of divorce litigation -- but also on the distinction between equitable and legal title I wrote about hereMr. Keller's actions may have purposely avoided the requirements for transferring legal title, but his actions were certainly sufficient to transfer equitable title.

Another probate court gets reversed for failing to appoint the testator's designated personal representative

Hernandez v. Hernandez, 2007 WL 120051 (Fla. 5th DCA Jan 19, 2007)

It was only about a month ago that I wrote here about the reversal of a probate court's refusal to appoint the person designated in a will to serve as personal representative.  In the linked-to case we again have a probate court being reversed for failing to appoint the personal representative named by the testator in his will.  Why probate courts feel they have the discretion to brush aside perhaps one of the most important aspects of any person's will -- designating your PR -- is a mystery to me.  The following excerpt from Wikipedia's definition of executor gives a good sense of how big a job being PR can be, and thus how important this choice is:

Typically the executor is the person responsible for offering the will for probate, although it is not absolutely required that he or she do so. The executor's duties also include the disbursement of property to the beneficiaries as designated in the will, obtaining information about any other potential heirs, collecting and arranging for payment of debts of the estate and approving or disapproving creditor's claims. An executor also makes sure estate taxes are calculated, necessary forms are filed and tax payments made, and in all ways assists the attorney for the estate. Also the executor makes all donations as left in bequests to charitable and other organizations as directed in the will. In most circumstances the executor is the representative of the estate for all purposes, and has the ability to sue or be sued on behalf of the estate. The executor also holds legal title to the estate property, but may not use that property for the executor's own benefit unless expressly permitted by the terms of the will.

Given that the selection of a PR is so important, it's little wonder that Florida law provides such deference to the choice expressed in a person's will.  Here's how the linked-to opinion articulated Florida law on this point:

In Schleider, the Fourth District wrote:

The general rule of law is that trial courts do not have discretion to refuse to appoint the personal representative named by the testator in the will unless that person is disqualified by law. Clearly, the testator's selection of a personal representative should be afforded great deference. Only in exceptional circumstances does a court have the discretion to refuse to appoint a person as personal representative who was named in the decedent's will.

Schleider, 770 So.2d at 1253 (citations omitted); see also § 733.301(1)(a) 1., Fla. Stat. (2005).

In the linked-to case the probate court refused to appoint the designated PR because of animosity between the designated PR and his brother.  The 5th DCA explained as follows why family-acrimony alone isn't reason enough to ignore a person's will:

[T]he trial court did not detail the facts that would support the denial of Ruben's petition for administration, but referred only to the brothers' conflict as its basis for declining to appoint either as personal representative. This was insufficient because a dispute between the estate's beneficiaries, without more, does not constitute sufficient grounds to refuse to appoint an otherwise qualified person named as personal representative in the decedent's will. See Schleider, 770 So.2d at 1254. Where a dispute will cause unnecessary litigation and impede the estate's administration, and either the person lacks the character, ability, and experience to serve or exceptional circumstances exist, the totality of circumstances may permit the court to refuse to appoint the personal representative named in the will. Id. Here, the record does not support such a conclusion.

Court to PR: just because you have grounds to sue, doesn't mean you should

Disque v. Unger, 2007 WL 101375 (Fla. 4th DCA  Jan 17, 2007)

The linked-to case does a good job of underscoring a key concept often lost on personal representatives: they are fiduciaries.  In other words, no matter how strongly they may personally feel about a contested issue, prior to using estate funds (i.e., assets that belong to someone else) to embark on new litigation they need to be able to answer the following question with an unqualified YES: is this litigation in the best interest of the estate?

The PR in the linked-to case failed the "best interest" test when he filed a declaratory judgment action seeking construction of a marital settlement agreement.  Only problem was that no matter how the court construed the contested marital settlement agreement . . .  no assets would flow into the probate estate being administered by the PR filing the declaratory judgment suit.  Both the trial court and the 4th DCA ruled the PR had failed the best-interest test and dismissed his action.  The following excerpts from the linked-to case summarize the controlling law at play in this case:

Section 733.602(1), Florida Statutes (2003), which describes the general duties of a personal representative, provides:

A personal representative is a fiduciary who shall observe the standards of care applicable to trustees as described by s. 737.302. A personal representative is under a duty to settle and distribute the estate of the decedent in accordance with the terms of the decedent's will and this code as expeditiously and efficiently as is consistent with the best interests of the estate. A personal representative shall use the authority conferred by this code, the authority in the will, if any, and the authority of any order of the court, for the best interest of interested persons, including creditors. (emphasis added)

The parties do not contest the trial court's conclusion that, no matter which way the dispute was resolved, it would be of no financial benefit to the estate. The appellants contend, however, that the probate court should have resolved the issue because the property settlement agreement authorized Rose's estate to enforce it. The fact that the estate was authorized by the property settlement agreement to enforce it, however, does not satisfy the requirement of section 733.602(1), that the personal representative act in the best interest of interested persons.

In this case the persons interested in the estate, beneficiaries or creditors, have no interest in the dispute involving Alvin's will. We accordingly agree with the trial court that, under these specific facts, where the estate could not benefit financially, and the dispute could be resolved in a lawsuit between all of the interested parties without the estate being a party, the estate should not be involved.

*     *     *     *     *

When the personal representative found himself in a quandary as to whether to file this lawsuit, he should have sought court approval before filing the lawsuit, as is authorized by section 733.603, Florida Statutes (2003). When the trial court concluded, on its own, that pursuing this litigation was not in the best interest of the estate, it was simply doing what was contemplated by section 733.603. Because it is undisputed that the estate cannot benefit financially, and that further litigation will deplete the assets which would otherwise go to interested persons, there is no reason to prolong this proceeding.

Lesson Learned:

The concepts at play in this case can be used very effectively as defensive tools. 
It will often be easier, cheaper and quicker to obtain a court order barring a PR (or any other type of fiduciary) from pursuing litigation on the grounds that the action is not in the best interests of the estate vs. obtaining a dismissal of the actual lawsuit.  For example, in the linked-to case, the initial declaratory judgment action would have probably been dismissed if at the outset the parties opposed to the action had simply filed a motion to dismiss based on the law cited above with a short affidavit stating that the outcome of the action, no matter who won, would not benefit the estate.

"Pay on Death" vs. "In Trust For" bank accounts

Jonathan Alper's Asset Protection Blog had an interesting post entitled Bank Accounts to Avoid Probate: POD vs. ITF accounts.  In estate administrations you come across pay-on-death "POD" bank accounts and in-trust-for or "ITF" bank accounts (also known as Totten trusts) all the time.  Jonathan makes some interesting points regarding the differences between these two non-probate accounts on asset-protection grounds.  Although I'm not sure I agree with his conclusions, here's an excerpt:

Here's my understanding, although I know of no cases comparing the two types of accounts. . ITF , “in trust for” implies the existence of a trust relationship so that the beneficiary of the trust (Mary) would have equitable ownership in the account funds from the day John funds the account. . Of John opened a POD account, Mary would have no rights or interest in the account during John’s life, and Mary would first acquire an interest upon John’s death. From an asset protection standpoint, John is a trustee over Mary’s money during his life in the case of an ITF account, and John has no equitable ownership in the money which would be vulnerable to his creditors. Creation of the ITF account is an immediate gift in trust to Mary. If John’s POD account John has a life estate in the account and the beneficiary has a remainder interest. During his lifetime John has full access to money in his POD account; Mary’s interest is limited to what is left in the POD account upon John’s death.. Because John can access for his own use money in a POD account during his lifetime I expect that John’s creditors could attack money his POD account as they can get whatever rights John has in the POD account. For that reason, I believe an ITF account provides better asset protection as well as probate avoidance.

Testamentary capacity: is the "lucid interval" standard still good law?

Miami Rescue Mission, Inc. v. Roberts, 943 So.2d 274, 31 Fla. L. Weekly D2979 (Fla. 3d DCA Nov 29, 2006)

In 1998 the 3d DCA held in Raimi v. Furlong, 702 So.2d 1273 (Fla. 3d DCA 1998), that just because you're "insane" doesn't mean you necessarily lack testamentary capacity if you happen to sign your will during a "lucid interval."  Based on this very tough standard for proving incapacity, the 3rd DCA overturned the trial court’s finding of incompetency as a matter of law because at trial the testifying neurologist was unable to determine if the testator was lucid or not at the precise moment she executed the contested will. Here's the key text from Raimi:

It has long been emphasized that the right to dispose of one’s property by will is highly valuable and its is the policy of the law [in Florida] to hold a last will and testament good wherever possible. To execute a valid will, the testator need only have testamentary capacity (i.e., be of “sound mind”) which has been described as having the ability to mentally understand in a general way (1) the nature and extent of the property to be disposed of, (2) the testator’s relation to those who would naturally claim a substantial benefit from his will, and (3) a general understanding of the practical effect of the will as executed. A testator may still have testamentary capacity to execute a valid will even though he may frequently be intoxicated, use narcotics, have an enfeebled mind, failing memory, [or] vacillating judgment. Moreover, an insane individual or one who exhibits “queer conduct” may execute a valid will as long as it is done during a lucid interval. Indeed, it is only critical that the testator possess testamentary capacity at the time of the execution of the will.

Fast forward to 2006.  In an apparent retreat from its own "lucid interval" standard, in the linked-to opinion the 3d DCA now seems to be saying lack of testamentary capacity can be established by "clear and convincing" evidence regarding the testator's general health and mental wellbeing in the days leading up to the will signing.  Although the 3d DCA does cite to Raimi for a procedural point, it never discusses why the "lucid interval" standard it applied in that case apparently does not apply in this case.  Instead, the 3d DCA reaches back to Florida Supreme Court precedents from 1919 and 1933 to support its current ruling.

“Where there is an insane delusion in regard to one who is the object of the testator's bounty, which causes him to make a will he would not have made but for that delusion, the will cannot be sustained.” Newman v. Smith, 77 Fla. 633, 667 and 688, 82 So. 236, 236 (1919). Further, “an insane delusion has been defined as a spontaneous conception and acceptance as a fact of that which has no real existence except in imagination. The conception must be persistently adhered to against all evidence and reason.” Hooper v. Stokes, 107 Fla. 607, 145 So. 855, 856 (1933).

Lesson learned?

The 3d DCA notes that the trial judge, Celeste Hardee Muir, entered a 22-page order "carefully" explaining the evidence she relied on in reaching her conclusion to revoke the testator's latest will on incapacity grounds.  That's probably the key line in this opinion.  It's tough (maybe impossible?) to reconcile the 3d DCA's ruling in Raimi with its current ruling in the linked-to case. I would guess the differing outcomes may be the result of an extremely compelling set of facts in the latest case.  So is this case an example of "bad facts making bad law" or a concious retreat from the lucid-interval standard?  Who knows, the 3d DCA certainly didn't discuss the point.  Not exactly concrete guidance for future litigants and their attorneys .  .  .

Personal representative to lawyer: So what can possibly go wrong after you've settled the case?

Johnson v. Clark, 2006 WL 3780511 (M.D.Fla. Dec 20, 2006)

No surprises.  That, in a nutshell, is probably the single most important ingredient in any successful attorney-client relationship . . . especially so in the litigation context.  Which is why this case is an excellent resource for Florida probate counsel.

Hammering out a settlement agreement is usually considered probate-litigation Nirvana.  But just because the trustee or personal representative signs off on the deal doesn't mean you're home free.  If one of the beneficiaries is determined to undermine the deal then all the "what ifs" need to be anticipated and factored into the deal (remember - no surprises!). 

So what can you do to ensure the deal sticks?  First of all, you'll want to get  a court order approving the deal after a hearing where all beneficiaries were given an opportunity to object.  Counsel in this case did this.  So far so good.  But what can you do if a beneficiary starts up a whole new piece of litigation covering the same ground covered by the settlement agreement?  As we all know, you can't stop someone from suing you, all you can do is mitigate the risk and cost of such actions.

Virtual Representation

Although the virtual-representation concept summarized below provides an effective tool for disposing of litigation by disgruntled beneficiaries in the settlement-agreement context, the cost of having to litigate this issue should have been anticipated as part of  the settlement deal and shifted over to the estate in the form of an indemnification clause (remember - no surprises!).

The doctrine of virtual representation provides that “[a] person who is not a party to an action but who is represented by a party is bound by and entitled to the benefits of a judgment as though he were a party.” Restatement (Second) of Judgments § 41(1). Further, it is well-settled that in cases involving claims by a trustee and individual beneficiaries, a trustee, in his representative capacity, acts on behalf of the trust representing the interests of the trust and its beneficiaries; a beneficiary is therefore bound by a judgment properly obtained by a trustee acting in his representative capacity. See § 737.402(t), Florida Statutes (2006); Restatement (Second) of Judgments § 41(1)(a) (“A person is represented by a party who is the trustee of an estate or interest of which the person is a beneficiary····”). In Florida, the doctrine of virtual representation has been codified [in F.S. 731.303].

Intervenor Status

But what if you happen to be the attorney representing the disgruntled beneficiary?  What kind of options can you open up for this client?  The virtual-representation concept bars your client from undoing a settlement deal entered into by his or her trustee, but what if your client had independent standing in the case?  Well, then it's a whole new ballgame.  As discussed in the following excerpts from the linked-to opinion, if your client is granted "intervenor status" in the case, presto: independent standing!

Although [Weiss v. Courshon, 618 So.2d 255 (Fla. 3d DCA 1993)] has a similar fact pattern to that presented here, the one glaring and significant difference between the beneficiaries in Weiss and Clark in the present case-the fact that Clark never formally became an intervenor in the probate proceedings-dictates the different result here. While it is true that Clark objected to the Mediation Agreement and even appealed the court's order approving the settlement, Clark was not an intervenor to the trustee's claims and neither the Mediation Agreement nor the Order approving it expressly reserved his individual claims. . . . . .

FN6. Although the [Weiss v. Courshon, 618 So.2d 255 (Fla. 3d DCA 1993)] court did not specifically cite to it, Florida law provides that “[a]nyone claiming an interest in pending litigation may at any time be permitted to assert a right by intervention.” Fla. R.Civ.P.1.230. “[T]he general rule [is] that it is too late to apply for intervention after final decree has been entered, though there are cases where in the interest of justice leave to intervene has been granted after final decree.” Wags Transp. Sys., Inc. v. City of Miami Beach, 88 So.2d 751, 752 (Fla.1956) (internal citations omitted) (holding that potential loss of intervenors' homes satisfied the interest of justice exception). Further, the Virtual Representation Statute represents a policy decision by the Florida legislature, which weighs heavily against the possibility that facts of this case would warrant a late grant of intervenor status, even if Clark had actually requested such status. See id.

The "Standard" General Release

Say it's 11 PM on a Friday night and you've been negotiating a settlement deal for the last 18 hours, you've worked through the all the economics of the deal and someone says "how about we just agree to the 'standard' general release?"  Freeze, because that last statement is nonsense.  Do yourself and everyone else involved a favor and insist on the parties agreeing to the explicit text of the release.  If anyone blows a gasket at this latest middle-of-the-night example of your intransigence, you may want to share this last bit of guidance from the linked-to opinion:

The Florida Supreme Court has recognized that “there are no ‘standard’ general releases; all are unique. The fact that a proposed release is described as being ‘general’ is virtually meaningless. [I]t would be essential to know what is being released, who is being released, and any conditions or terms of the release.” Swartzel v. Publix Super Markets, Inc., 882 So.2d 449, 453 (Fla. 4th DCA 2004). In other words, the covenant to execute “mutual general releases” as set forth in the Mediation Agreement essentially had no meaning until the actual general releases were executed . . .

Does a conflict of interest disqualify a personal representative from being appointed in the first place?

Werner v. Estate of McCloskey, 2006 WL 3613178 (Fla. 1st DCA Dec 13, 2006)

This case underscores the importance Florida law gives to a person's choice of personal representative in his or her will.  It also proves that just because you may think there are grounds to remove a serving personal representative, it doesn't mean you have grounds for blocking the initial appointment.  Why does this matter?  Because who gets appointed personal representative ("PR") of an estate has huge implications in the litigation context.  The named PR can pay his legal fees with probate assets, while the person challenging the PR has to pay his own way.  In the real world, this fact alone can determine the outcome of a contested proceeding, regardless of the underlying legal positions of the parties.

The following excerpt from the linked-to opinion speaks to the strength of the legal presumption in favor of the named personal representative:

Section 733.301(1)(a), Florida Statutes (2005), provides that, in testate estates, preference in granting letters of administration must be accorded to “[t]he personal representative ··· nominated by the will····” Moreover, “[i]t is a well recognized principle of law that a testator has the right to name the person who shall administer his estate provided such person is not disqualified by law.” Pontrello v. Estate of Kepler, 528 So.2d 441, 442 (Fla. 2d DCA 1988) (citations omitted). “The general rule is that trial courts are without discretion to refuse to appoint the personal representative specified by the testator in the will unless the person is expressly disqualified under the statute or discretion is granted within the statute.” In re Estate of Miller, 568 So.2d 487, 489 (Fla. 1st DCA 1990) (citations omitted).

Here, the trial court appointed Ms. Niznik rather than appellant because it concluded that appellant “ha[d] a conflict of interest with the estate” (the precise nature of which was not identified). Nothing in section 733.301(1)(a) purports to vest discretion in the trial courts to disregard the preference there specified, as long as the personal representative nominated by the decedent is statutorily qualified to serve. Sections 733.302 and 733.303(1), together, set out the qualifications required of one who wishes to serve as a personal representative. Section 733.302 requires that the person be “sui juris” and “a resident of Florida at the time of the death of the person whose estate is to be administered.”

The following excerpt reminds the parties of the fact that just because a conflict of interest may not disqualify a named PR, it's certainly a good reason to get rid of him or her once appointed:

We note that, to the extent that, on remand, there exists a legitimate concern about whether appellant has a conflict of interest, section 733.504(9), which lists causes for removal of a personal representative once appointed, includes as a ground “[h]olding or acquiring conflicting or adverse interests against the estate that will or may interfere with the administration of the estate as a whole.”

Do you know how to retrieve funds wrongfully taken from a joint bank account?

Joseph v. Chanin, 940 So.2d 483, 31 Fla. L. Weekly D2470 (Fla. 4th DCA Oct 04, 2006)

The linked-to opinion is an excellent case study on exactly how to address a question that comes up ALL THE TIME in probate disputes: what to do when someone takes money from a joint bank account that he or she shouldn't have and wont give it back when caught red handed.  This appellate opinion serves up the kind of bread-and-butter guidance that makes it easier for judges and attorneys to do their jobs.  No flowery prose or needless digressions.  Just concrete application of the law to a particular set of facts.


Assume "A" and "B" live together for years, co-mingling their finances and paying shared expenses out of a single jointly titled checking account.  Assume further that A was siphoning off funds from this account to a separate savings account for "C," his daughter.  Finally, assume A dies, B finds out about the side account funded for C, and C refuses to give the money back.

Solution: B sues C for "Conversion"

That's what the plaintiff did in the linked-to case, winning both at trial and on appeal before the 4th DCA.  Here's the road map drawn by the 4th DCA for future litigants faced with a similar set of facts:

  • Step 1 (B vs. A):  Establish  initial liability of joint account holder.

One joint tenant may bring a conversion action against another joint tenant who wrongfully appropriates more than his share of the money from a joint tenancy account. See Hamilton v. Trapp, 392 So.2d 1001 (Fla. 4th DCA 1981); Allen, 429 So.2d at 371; Nationsbank, 814 So.2d at 1230. Placement of the money into the AmTrust account made it “capable of identification,” Belford Trucking, 243 So.2d at 648, so that Chanin could have sued Meyer Joseph or his estate for conversion from the pooled checking account.

  • Step 2 (B vs. C): Establish liability of third-party who received wrongfully withdrawn funds and refuses to give them back.

As the beneficiary of the funds in the AmTrust account, Barbara Joseph could be held liable for conversion if she exercised dominion over the funds, knowing of Chanin's claim. See Goodwin v. Alexatos, 584 So.2d 1007, 1011 (Fla. 5th DCA 1991) (citing Wilson Cypress Co. v. Logan, 120 Fla. 124, 162 So. 489 (1935), for the proposition that “[t]he recipient of converted property is liable to the rightful owner in an action for conversion”). Thus, Barbara Joseph became liable for conversion once she refused Chanin's request to return the money in the AmTrust account. See Uhl v. Holbruner, 146 Fla. 133, 136, 200 So. 359 (1941) (donee liable for conversion where donor of converted bonds had “no title” to convey and donee refused demand to return them); Restatement (Second) Torts §§ 223, 229, 237 (1965).FN3 By such act, Barbara Joseph exercised dominion over the funds inconsistent with Chanin's right to possess them.

  • Step 3 (B vs. Judge): Last but not least, make sure your trial judge understand the underlying theory of your case.

A finding that a conversion occurred is consistent with the view that “the essence of an action for conversion is not the acquisition of property by the wrongdoer, but rather the refusal to surrender the possession of the subject personalty after demand for possession by one entitled thereto.” Murrell v. Trio Towing Serv., Inc., 294 So.2d 331, 332 (Fla. 3d DCA 1974) (citing 89 C.J.S. Trover and Conversion § 3 (1955); 18 Am.Jur.2d Conversion § 43 (1965)). The demand by the rightful owner gives “the person in possession actual notice of the rights of the person who is legally entitled to possession.” Ernie Passeos, Inc. v. O'Halloran, 855 So.2d 106, 109 (Fla. 2d DCA 2003).

Brooke Astor Guardianship Litigation Part 2: Fees

I previously wrote here about the very public litigation involving guardianship proceedings for legendary New York socialite Brooke AstorWell, it's almost inevitable that part 2 of any guardianship case will be a fight over fees (see generally), and this case is no exception.  The following is an excerpt from In Aftermath of the Astor Case, How the Final Fees Piled Up, a New York Times piece reporting on the case:

The legal drama over the health care and finances of Brooke Astor, New York’s legendary socialite and philanthropist, played out for nearly three months amid allegations and recriminations of financial duplicity, greed and outright forgery.

The case against her son, Anthony D. Marshall, came to a halt on Oct. 13 when the parties in the feud reached a settlement, averting what could have been an expensive and sensational trial scheduled to begin less than a week later.

But everything comes with a price. In the seven weeks since the agreement, those involved in the case have filed bills with Justice John E. H. Stackhouse of State Supreme Court in Manhattan for fees totaling about $3 million for the services of 56 lawyers, 65 legal assistants, 6 accountants, 5 bankers, 6 doctors, 2 public relations firms and a law school professor. Under state law, such payments would come out of Mrs. Astor’s assets, valued at over $120 million.

But yesterday, Justice Stackhouse issued an order that approved a smaller amount, $2.22 million, calling the original figure “staggering” and saying that some charges were for work that was not in the best interest of Mrs. Astor, who is 104. The justice denied payments for the public relations firms, the time lawyers spent talking with reporters and the hours logged preparing the fee applications themselves.

Yikes!!  According to my math the court refused payment of close to $800,000 in fees.  Unless these professionals have fee agreements in place requiring the litigants/their clients to pay their fees, they just did a whole lot of free work for a $120 million+ guardianship estate.

Lesson learned:

In a guardianship case, either you need to be ready to work on a pro bono basis or you need to have an engagement agreement in place requiring whomever hires you to personally pay your fees if the court wont authorize payment of your fees from the guardianship estate.  The risk of the court refusing payment of fees will be borne by someone, just make sure that if it's going to be you the decision is a conscious one.

Source: Death and Taxes - The Blog

Florida's land-trust law remains unsettled in bankruptcy proceedings

In re Raborn, --- F.3d ----, 2006 WL 3409104 (11th Cir.(Fla.) Nov 28, 2006)


The status of every single land-trust deed executed in Florida prior to 2004 remains unsettled and subject to attack in a bankruptcy proceeding.  Ultimate resolution of this issue depends on how the Florida Supreme Court answers the questions certified to it by the U.S. 11th Circuit Court of Appeals.

In the linked-to opinion the 11th Circuit is asked to weigh in once again on a bankruptcy case that has been roiling Florida's land-trust legal landscape since 2001.  The stakes are high . . . literally every land trust deed recorded prior to 2004 in the State of Florida is potentially subject to attack in a bankruptcy proceeding.

This case revolves around a common estate planning scenario: in 1991 mom and dad deeded real property to a trust created for their three children.  One of their children, their son Douglas K. Raborn, was the trustee of the trust.  The subject deed apparently contained the type of language that most Florida attorneys would say was sufficient to effectuate the desired title conveyance.  Here's how the 11th Circuit described key terms of the deed:

The . . . “Conveyance Deed to Trustee Under Trust Agreement” (“Deed”), was recorded in the Palm Beach County real estate records on 5 February 1991. .  .  .  .  The Deed names Mr. and Mrs. Raborn as “Settlors under the Raborn Farm Trust Agreement dated January 25, 1991” and conveys the farm to “Douglas K. Raborn, as Trustee under the Raborn Farm Trust Agreement dated January 25, 1991.” According to the Deed, the Trustee is “to have and to hold the said real estate with the appurtenances upon the trust and for the uses and purposes herein and in said Trust Agreement set forth.” The Deed repeatedly refers to the Trust Agreement and acknowledges the Trustee's broad powers to deal with the property. The Settlors signed the Deed and swore before a notary public “that they executed said instrument for the purposes therein expressed.”

Now here's the scary part: when son, the trustee, declared bankruptcy 10 years later in 2001, the bankruptcy trustee argued that the real property deeded to him as trustee of the land trust was deeded to him  in fee simple thus making it a part of the bankruptcy estate and subject to the claims of son's personal creditors.  On appeal to the district court the bankruptcy trustee won this argument in 2004!!??

Fast forward to 2006. 
The case is before the 11th Circuit once again.  Concluding that it needed clarity on Florida's land-trust law before it could rule on the federal bankruptcy-law issues, the 11th Circuit certified the following two questions to the Florida Supreme Court:

Whether, under Florida Statutes section 689.07(1) as it existed before its 2004 amendment, this Deed-which is a recorded real estate conveyance deed to a named trustee of a private express trust identified in the deed by name and date, and contains other language referring to the unrecorded trust agreement, the settlors, and the beneficiaries-conveys only legal title to the property in trust to the grantee as trustee.

This question is solely an issue of Florida state law that should be decided by the Florida Supreme Court.

If the state court answers this first question in the negative and determines that the Deed-viewed in the light of the unamended statute-did not convey the property in trust, we also certify the following question:

Whether, as a matter of Florida law, the 2004 statutory amendment to Florida Statutes section 689.07(1) applies retroactively to the Deed in this particular case and causes the Deed-in the light of the amendmentFN5-to convey only legal title to the grantee in trust.FN6

In certifying these questions, our intent is not to restrict the issues considered by the state court, including whether the Deed and Trust Agreement were effective to create a valid “Illinois Land Trust” covered under Florida Statutes section 689.071 rather than section 689.07(1).FN7

FN5. Although the 2004 bill expressly states that the amendment only clarifies existing law and applies retroactively, the district court pointed to conflicting statements in the Senate Staff Analysis and Economic Impact Report. At one point, the report stipulates that the amendment was meant to “supersede[ ] the contrary federal district court ruling in the bankruptcy matter of In re Raborn.” At another point, the report states, “This bill would not affect the recent contrary ruling of a federal district court in bankruptcy. However the bill would apply to future judicial actions.”

FN6. We would need to answer for ourselves the question of whether federal law would allow retroactive application of the statute to this case, even if state law would allow it.

FN7. We are aware that the Florida Legislature extensively amended Florida Statutes section 689.071, effective 1 October 2006. This amendment to Florida's land trust provision purports “to clarify existing law and applies to all land trusts whether created before, on, or after October 1, 2006.” Once again, we do not know whether, under Florida law, this amendment applies retroactively to this case. Even if state law would allow retroactive application of the amended land trust statute to this case, however, we would need to address the issue of whether such retroactive application is permissible as a matter of federal law.

Stay tuned for more!

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A tale of two "deeds": equitable v. legal title

Rice v. Greene, 2006 WL 3327665 (Fla. 5th DCA Nov 17, 2006)

It's not often that a probate-related case forces the parties to distinguish between Equitable Title in real property (i.e., the present right to possession with the right to acquire legal title once a preceding condition has been met) and Marketable Title in real property.  Well that's exactly what happened in this case.

Here widow inherited real property from her husband in 1994 pursuant to her late husband's will . . . but she never got around to probating the will.  Ten years later widow sells the same property to two different buyers.  "Buyer A" bought the property in June 2004 and received a warranty deed from widow.  A few months later in October of 2004 widow sold same property to "Buyer B" and also gave him a warranty deed.  Buyer B recorded his deed before Buyer A. 

So who owns what?

  • Upon husband's death, widow instantly vested as an equitable owner of the property . . . even though she never probated his will.  F.S. 732.514.
  • Although she had equitable ownership, widow's failure to probate her husband's will meant she never acquired marketable titleF.S. 733.103(1).
  • Buyer A was out of luck under Florida's recording statute (F.S. 695.01(1)), because Buyer B recorded his deed first.  This doesn't mean Buyer B had clear title, only that Buyer A is now out of the picture and Buyer B has first dibs on working with one apparently easily confused widow on cleaning up the title mess she created.

Here are a few excerpts from the linked-to case summarizing the points above:

[Buyer A] is correct that under section 733.103, Mr. Schwartz's unprobated will was ineffective to “prove title” to the property, under section 732.514. But, it was Mr. Schwartz's death that vested Mrs. Schwartz's rights in the property. Reading these statutes in concert, it is clear that because Mrs. Schwartz never offered Mr. Schwartz's will for probate, she lacked marketable title to the property. However, she clearly acquired equitable title to the property upon her husband's death, assuming, as have the parties, that Mr. Schwartz's will, which was presented to the court below, is authentic. Admittedly, because Mrs. Schwartz's title was not marketable, under certain circumstances, it might have been subject to divestment for the payment of claims, expenses of administration or taxes. Regardless, those are matters that affect the quality of the title, which is not at issue here. Instead, the only issue is which party has a priority claim to the property as between [Buyer A] and [Buyer B].

“[A]n unrecorded deed is not good or effectual in law or equity against creditors or subsequent purchasers for valuable consideration who are without notice of the transaction.” Fryer v. Morgan, 714 So.2d 542, 545 (Fla. 3d DCA 1998). Therefore, because [Buyer B] had no notice of the earlier warranty deed between [Buyer A] and Mrs. Schwartz and paid valuable consideration for the property, [Buyer B's] recording of his warranty deed before [Buyer A] gives [Buyer B] priority to the property. Since there is no genuine issue of material fact and [Buyer B] is entitled to judgment under section 695.01(1), the trial court did not err in granting [Buyer B's] motion for summary judgment.

We do note that the language of the final judgment is overly broad, in that it purports to quiet title to the property in [Buyer B]. While the final judgment adjudicated the dispute between [the buyers] .  .  .  much more work is necessary before [Buyer B] will have marketable title to the property.

How to validly devise a life estate in a tenenats-in-common real property interest

Morgan v. Cornell, --- So.2d ----, 2006 WL 2987107, 31 Fla. L. Weekly D2632 (Fla. 2d DCA Oct 20, 2006)

Estate planning and probate litigation are two sides of the same coin.  The planner needs to understand the underlying substantive property rights being conveyed and how to draft documents that accurately describe what those property rights are and to whom they are being conveyed.  In the event of a dispute, the litigator needs to understand the same: what are the underlying substantive property rights being disputed and does the operative document effectuate a legally enforceable conveyance.

That's why this case is equally instructive to the planner and the litigator.  The litigation revolved around whether the decedent had validly devised a life estate in two properties he owned as tenants-in-common with his girlfriend.  The properties at issue were a home in Naples, Florida and a second home in New Hampshire (i.e., the amount in controversy likely exceeded seven figures).  The decedent's children argued -- and won at the probate-court level - that the devise was invalid and thus girlfriend got nothing.  Girlfriend argued the opposite . . .  and won where it really counted, before the 2d DCA, which reversed the probate court's order.

Here's how the 2d DCA articulated the issue on appeal:

The specific devises at issue state:

If I own the home [in New Hampshire/Florida] at my death, I leave said home and real estate together with the contents therein to Julia H. Morgan for the term of her life, subject to the obligation to pay all real estate taxes, upkeep, insurance and ordinary costs of ownership, with a remainder interest in fee simple as Tenants in Common to her children ···, per stirpes.


The personal representative of Mr. Cornell's estate, his daughter Elizabeth L. Cornell, filed a petition seeking construction of these conditional devises, alleging that the condition-“If I own the home”-is unclear in extent, nature, and meaning. On one hand, the word “own” could be read to mean “to the extent I own the home,” so that the specific devises would be effective for whatever interest the testator possessed at his death. On the other hand, the word “own” could be interpreted more strictly, so that the condition would be fulfilled only if the testator were the sole owner of each home at the time of his death. If the second interpretation were operative, the condition would fail and the testator's interest in the homes would become part of the residuary estate and pass to his three children.

The 2d DCA rejected the children's interpretation -- and the probate court's order -- by holding that the word "ownership" was a broad enough term to encompass a tenants-in-common interest.  This is the part of the 2d DCA's opinion that is most instructive to future planners/drafters and litigators because it articulates in clear, unambiguous language what a "tenants-in-common" interest is and how it can be devised:

The parties in this case agree that Mr. Cornell and Ms. Morgan owned the real properties as tenants in common. When two persons own property as tenants in common,

A and B each owns in his own name, and of his own right, one-half of Blackacre···· It means that each owns separately one-half of the total ownership···· Each is entitled to share with the other the possession of the whole parcel of land. Each may transfer his undivided one-half interest as he wishes so long as the transfer does not impair the possessory rights of the other tenant in common. Each may transfer his undivided one-half interest by will···· The central characteristic of a tenancy in common is simply that each tenant is deemed to own by himself, with most of the attributes of independent ownership, a physically undivided part of the entire parcel.

Thomas F. Bergin & Paul G. Haskell, Preface to Estates in Land & Future Interests 58-59 (1966). The estate of a tenant in common is both inheritable and devisable. Tyler v. Johnson, 61 Fla. 730, 55 So. 870 (1911).

As a tenant in common, Mr. Cornell owned a physically undivided part of each entire parcel in New Hampshire and in Naples. Without question, Mr. Cornell did “own” the property at the time of his death; the ownership condition was fulfilled; and each devise validly passed a life estate in his undivided half interest to Ms. Morgan-just as he intended.

So what is it, cash or tangible property?

Baldwin v. Estate Of Winters, 2006 WL 3299834 (Fla. 4th DCA Nov 15, 2006)

So what is it, cash or tangible property?  The linked-to case demonstrates this seemingly basic/esoteric question can have a real-life impact on who gets what from an estate.  The contested writing was described as follows by the 4th DCA:

On May 22, 1999, two copies of a typewritten letter were prepared on the testator's personal stationery. They directed the same personal representative “to give to Allan Baldwin a new car of his choice from [her] estate.” Each copy was signed by the testator, witnessed, and notarized.

If this document devised tangible property, then F.S. 732.515 governs, if it devises a monetary amount, then the general rules governing codicils under F.S. 732.502 governs.  The probate court ruled it was a devise of a monetary amount, NOT tangible property, thereby rejecting Mr. Baldwin's argument for application of the less demanding rules applicable to devises of tangible property under F.S. 732.515.

Here's how the 4th DCA summarized its ruling:

[W]e agree with the probate court's initial ruling that the separate writing was not a proper devise of tangible property, pursuant to section 732.515. Because the devise was of a monetary amount, it could not be effectuated through a separate writing under the 1997 version of section 732.515.

Missing the forest for the trees: judicial construction of trust provisions designed to minimize estate tax without ever mentioning the tax-savings goals driving the disputed trust provisions

Fleck-Rubin v. Fleck, 933 So.2d 38, 31 Fla. L. Weekly D1369 (Fla. 2d DCA May 12, 2006)

The trial court in this case ruled that an estate tax marital deduction trust (obviously designed to qualify as a "general power of appointment marital deduction trust") failed to give the surviving spouse an unlimited withdrawal power over these trust assets . . . . in spite of the fact that in the absence of such withdrawal power the entire tax-savings design of the trust would fall apart?!

Estate-tax planning is a HUGE (and usually the primary) consideration driving how most trusts are drafted.  Failing to understand the estate tax issues underlying the entire design of a trust document is like trying to order off a Chinese menu with no English translations . . . you know it's a menu, but have only the vaguest idea of what's actually being said on a given page.  The same applies to the construction of most trust documents: if you don't understand the tax planning concepts driving the trust's design and drafting, then how can you possibly be expected to correctly construe the trust's text?  Short answer: you can't.

Although the 2d DCA achieves the right result, in a classic example of missing the forest for the trees it grounds its reversal of the trial court's mistaken order on the meaning of the word "shall" without ever once discussing the single most important indication of the settlor's intent:  estate tax planning.  For the record, here's how the 2d DCA explained its ruling:

In this appeal, we are asked to determine whether the terms of the trust agreement permitted Sondra to remove all the funds and assets of Trust A without her cotrustee's consent. The trial court considered two provisions in determining that Sondra did not have the authority to unilaterally remove the funds and assets of Trust A-paragraph 3(a)-(e) and paragraph 9(f). Paragraph 3(b) provides that “[t]he Trustees shall make distributions to my wife from the principal of Trust A, even to the complete exhaustion thereof····” (Emphasis added.) Paragraph 9(f) provides:

9. The following additional provisions and limitations, when applicable, shall govern the administration and disposition of the trust property:


(f) Notwithstanding any provision to the contrary elsewhere contained in this instrument, neither my wife nor any lineal descendant of mine shall, while serving as a Trustee hereunder, participate in the exercise by the Trustees of any discretionary power or authority conferred upon the Trustees by any provision of this instrument with respect to the distribution, or the withholding from distribution, of the principal of any trust estate held hereunder for the benefit of such one or with respect to the distribution, the withholding from distribution, or other application of the net income therefrom; and all such powers and authorities shall be exercised solely by the other Trustee.

(Emphasis added.)

The trial court determined that paragraph 9(f) required Sondra to obtain the authorization of the cotrustee, Aaron, for the transfer of the funds and assets from Trust A to herself since she was then the beneficiary and a cotrustee of that Trust. Paragraph 9(f), however, applied only to a trustee's exercise of any discretionary authority. The unambiguous language of paragraph 3(b) allowed Sondra to demand distributions from Trust A “even to the complete exhaustion thereof.” Such distributions were not subject to the approval or discretion of Aaron, as cotrustee, since paragraph 3(b) provided that the trustees “shall make distributions” requested by Sondra. Because the trustees had no discretion under paragraph 3(b), paragraph 9(f) was inapplicable.

Lesson learned:

Trust litigation is demanding: not only do you have to know how to litigate a case, you also have to understand the complex estate-tax issues underlying almost all trust design and drafting.

Ex parte injunction baring trustee from seeking compensation reversed on appeal

Cone v. Anderson, 2006 WL 2986471, 31 Fla. L. Weekly D2621 (Fla. 1st DCA Oct 20, 2006)

The 1st DCA's opinion provides no facts whatsoever to explain what was going on when the trial court entered an order enjoining the trustee-defendant from seeking compensation without prior court approval (which begs the question: why even publish an opinion that provides close to zero guidance to future litigants??).  However, reading between the lines I think what happened here was that the appellee obtained the injunctive order on an ex parte basis . . . which is a no-no in the absence of the compelling circumstances required by Civ. Pro. Rule 1.610 for ex parte injunctive relief:

Florida Rule of Civil Procedure 1.610 governs injunctions. If the language of an order is injunctive in nature, the order must comply with the requirements for the issuance of an injunction, even if the trial court merely intended to preserve the status quo in the order. See Spradley v. Old Harmony Baptist Church, 721 So.2d 735, 737 (Fla. 1st DCA 1998). In the present case, the trial court “enjoined” Cone from seeking any and all compensation until “further order of this Court or any other Court of competent jurisdiction.” Clearly, the language of the order is injunctive in nature. Appellee concedes that the trial court did not comply with rule 1.610. Accordingly, we REVERSE the order and QUASH the injunction.

Lesson learned:

Just because you've figured out the underlying substantive trust or probate law doesn't mean you can't get tripped up on the civil procedure.

Florida Supreme Court opens the courtroom door to more litigants in guardianship proceedings

Hayes v. Guardianship of Thompson, 2006 WL 3228916 (Fla. Nov 09, 2006)

This case is important for two reasons.

Conflict Resolved:

First, the Florida Supreme Court resolved a conflict among the DCAs regarding who has standing to litigate fees (both attorney's and guardian's) in guardianship proceedings.  Here's how the Court summarized its holding, which has the effect of expanding the class of potential litigants (i.e., more people have standing to litigate, thus expect more litigation to follow in guardianship proceedings):

Although we cannot provide specific criteria, we reject the bright-line rule adopted by the Third District in [McGinnis v. Kanevsky, 564 So.2d 1141 (Fla. 3d DCA 1990)] that precludes an heir from participating in a proceeding for guardian's or attorney's fees. Implicit in the Third District's reasoning is that heirs of a ward should never be afforded standing to participate in proceedings for guardian's or attorney's fees because there are sufficient built-in procedural safeguards to protect the interests of the ward:

[J]ust as it is obviously for the competent person to spend or misspend his assets as he pleases, so it is up to the guardianship estate, regulated by the guardian and the court, to do the same without the interference or concern with the totally non-altruistic wishes of the ward's relatives or legatees.

564 So.2d at 1144 n. 9 (emphasis supplied).

We disagree. As the Fourth and Fifth Districts recognized in [Bachinger v. Sunbank/South Florida, N.A., 675 So.2d 186 (Fla. 4th DCA 1996)] and [Sun Bank & Trust Co. v. Jones, 645 So.2d 1008, 1017 (Fla. 5th DCA 1994)], “[c]ourts must scrupulously oversee the handling of the affairs of incompetent persons under their jurisdiction and err on the side of over-supervising rather than indifference.” Bachinger, 675 So.2d at 188 (quoting Jones, 645 So.2d at 1017). Moreover, although courts must approve petitions for guardian's and attorney's fees, “it is highly unrealistic to assume that such an ex parte procedure would involve any high level of scrutiny.” Bachinger, 675 So.2d at 187. Thus, depending on the circumstances of the case and the specific issues involved, heirs of a ward may be considered “interested persons” for the purpose of participating in a guardianship proceeding, including a proceeding for guardian's or attorney's fees. See, e.g., Bachinger, 675 So.2d at 188 (beneficiaries under the ward's will, who cared for her before she became incompetent, were interested persons for the purpose of filing objections to guardian's petition for final discharge).

Probate v. Guardianship: Different Priorities = Different Outcomes

This opinion is also important because it highlights how different public-policy priorities in probate and guardianship proceedings can result in courts erring on the side of less litigation when possible (probate) and erring on the side of more litigation if needed (guardianship).

This is how the Florida Supreme Court described the public-policy priority underlying all guardianship proceedings:

In guardianship proceedings, the overwhelming public policy is the protection of the ward. See § 744.1012, Fla. Stat. (2006) (declaring that the purpose of the Florida Guardianship Law is “to promote the public welfare by establishing a system that permits incapacitated persons to participate as fully as possible in all decisions affecting them; that assists such persons in meeting the essential requirements for their physical health and safety, in protecting their rights, in managing their financial resources, and in developing or regaining their abilities to the maximum extent possible; and that accomplishes these objectives through providing, in each case, the form of assistance that least interferes with the legal capacity of a person to act in her or his own behalf”).

Viewed from this perspective, it's almost inevitable that the Florida Supreme Court would construe Florida law in a way that errs on the side of making sure all "interested persons" are given the opportunity to participate in contested guardianship proceedings -- as long as the goal is to better the ward's welfare.  The litigant that understands and incorporates this perspective into his or her case has a clear advantage.

By contrast, in probate proceedings the public-policy priority is efficiency: when in doubt, err on the side of less litigation not more.  Here's how the Florida Supreme Court encapsulated this public policy directive in 2000:

There is a “strong public policy” in this state “in favor of settling and closing estates in a speedy manner.” May v. Illinois Nat'l Ins. Co., 771 So.2d 1143, 1151 (Fla.2000).

As I've noted over and over again on this blog, this public-policy priority plays itself out most clearly in probate litigation involving creditor claimsAgain, the litigant that understands and incorporates this perspective into his or her case has a clear advantage.


Former PR refuses to answer deposition questions -- successfully claims 5th Amendment right against self incrimination.

Pisciotti v. Stephens, 2006 WL 3077750 (Fla.App. 4 Dist. Nov 01, 2006)

I plead the Fifth!!! Ahh, those immortal words of American jurisprudence.  Well, if you thought your friends in the criminal defense bar were the only ones who got to have fun with this bit of legal jargon . . . think again.  In this case brother figures out sister may have stolen a few checks while mom was alive.  Brother filed an adversary proceeding to remove sister as PR of mom's estate and then sued sister for theft.  Brother then gets an order from probate court requiring sister to answer deposition questions and file a final accounting . . . overruling sister's refusals based on her Fifth Amendment constitutional right against self-incrimination.  Wrong answer says the 4th DCA, which reversed the probate court's order on both counts.  Here are a couple of key excerpts from the 4th DCA's opinion:

Sister's first argument on appeal is that the trial court's order requiring her to answer deposition questions violates her Fifth Amendment privilege against self-incrimination, particularly in light of her brother's comments regarding criminal prosecution of her. We agree.


Here, given the potentially incriminating nature of the evidence, coupled with brother's professed intent to seek criminal prosecution, sister had reasonable grounds to fear that her deposition testimony could be used as a link in a chain of evidence against her in a later criminal proceeding.  .  .  .  Thus, in this case the trial court failed to recognize that there was a reasonable possibility of prosecution, and ultimately applied the wrong law.

Second, sister argues that the trial court's order requiring her to file final accountings also violates her Fifth Amendment privilege. Generally, the privilege does not apply to documents that are required under the law to be prepared by a PR to carry out a fiduciary duty. [In re Rasmussen, 335 So.2d 634, 636 (Fla. 1st DCA 1975)].

Yet given the fundamental nature of the Fifth Amendment's constitutional guarantees, we perceive grave difficulties in applying the privilege to the deposition questions but not to the related final accountings. To refuse to apply the privilege to the order for a final accounting document in this case would have the rather perverse effect of protecting sister from giving testimonial answers conceivably providing a link in the chain of evidence but then refusing the same protection by requiring her to file accountings yielding the same information. Because of the facts and circumstances of this case, we distinguish Rasmussen.

Can you accidentally create an "Elective Share Trust" under Florida law? Probably NOT

Janien v. Janien, 2006 WL 2956304 (Fla. 4th DCA Oct 18, 2006)

Under Florida law a surviving widow or widower is entitled to at least 30% of the decedent spouse's estate.  If done properly, an "elective share trust" allows a person to satisfy his or her surviving spouse's elective share rights, while still retaining the right to say what happens to the elective-share assets when the surviving spouse dies.   This planning device  can be especially useful  where a person wants to provide for a second  wife or husband, but make sure the family assets go back to his or her children when the surviving spouse dies.

The issue in this case was whether the following clause created an elective share trust within the meaning of F.S. 732.2025(2).  The drafting attorney who prepared this instrument testified that at the time he did the drafting he'd never heard of an elective share trust.  So the question was did the decedent "accidentally" get it right?

ARTICLE SECOND: If my husband, Cedric Janien, survives me:

A. I devise and bequeath my beneficial interest in the North Chatham Realty Trust, together with all furniture, fixtures, antiques and other items of personal property in said residence, to my Trustee, with the right in my husband to exclusively live in and occupy such residence for the period of his life, and provided that he is financially able to do so, he shall be responsible for all maintenance charges and taxes assessed against the residence during his lifetime. If he does not have the financial ability to pay such expenses and taxes, them my Trustee is authorized and is directed to mortgage the premises for the purpose of paying such maintenance charges and taxes.

The trial court ruled this trust did NOT qualify as an elective share trust.  The 4th DCA agreed, providing the following valuable guidance:

First, Article Second (A) fails to satisfy the requirement of section 732.2025(2)(a), because .  .  .  Cedric is entitled neither to the “use” of the property within the meaning of the statute, nor to “income” derived from the property.


Article Second (A) created something less than a life estate in the Massachusetts property.


We also hold that Article Second (A) does not satisfy the requirements of section 732.2025(2)(b). That section requires that the purported elective share trust be “subject to the provisions of former s. 738.12 or the surviving spouse has the right under the terms of the trust or state law to require the trustee either to make the property productive or to convert it within a reasonable time.”

Lesson learned: 

The technical requirements for a valid elective share trust are such that you're probably not going to have a qualifying clause unless the drafting attorney knew what he or she was doing.  By way of contrast, the following is a form of elective share trust that actually works:

Despite any other provision of this Trust Agreement, if my wife or her designated representative elects the Elective Share in my estate, any trust created under this Trust and not qualifying for the federal marital deduction in which my wife is a beneficiary will be divided into two parts, with the least amount of that trust as is needed to satisfy the balance of the Elective Share unpaid by other sources under Section 732.2075 of the Florida Statutes being held as a separate trust (the “Elective Share Trust”) and administered so as to qualify under Section 732.2025 of the Florida Statutes (including the right for my wife to require the Trustee to make the trust property productive or to convert it within a reasonable time). Unless the original trust already provides for a qualifying invasion power or a qualifying power of appointment for my wife, the Personal Representative in its discretion may elect to create an invasion power for the Elective Share Trust for purposes of valuation under Section 732.2095 of the Florida Statutes. If an invasion power is created, the Personal Representative shall designate that such a power is to apply by filing a notice with my wife and in the probate court within 6 months after the election by my wife of the Elective Share.

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Yes - putting your condo in your revocable trust really means something.

Aronson v. Aronson, 930 So.2d 766, 31 Fla. L. Weekly D1317 (Fla. 3d DCA May 10, 2006)

Revocable trusts are widely used in Florida for estate planning purposes.  The standard procedure is to title large assets in the name of the revocable trust to avoid having to probate those assets when the settlor dies and also to make it easier for a successor trustee to administer those assets for the benefit of an incapacitated settlor.  On the other hand, because clients can change or "revoke" their revocable trusts at any time and revocable trusts offer zero asset protection from creditors, some may feel that titling assets in the name of the trust is a technical matter with no real-life significance.  Wrong answer . . .  as demonstrated by this case.

Mr. Aronson titled his condo located on Key Biscayne (read: $500,000+ FMV real estate) in July of 1996 to his revocable trust.  I'm assuming this trust mostly favored his children.  A few months later, in December of 1996 Mr. Aronson deeded this same condo to his second wife.  Perhaps inevitably, Mr. Aronson's children and second wife ended up in litigation over who owns the condo: the trust or second wife?  At trial, the court ruled in favor of second wife.  On appeal, the 3d DCA reversed, ruling that an individual can't deed a property in his individual capacity if he's previously deeded it over to his revocable trust, even if he had the authority at any time to revoke his own trust.  The following are a few excerpts from the 3d DCA's opinion:

Here, the Settlor executed a warranty deed conveying the property to himself, as trustee. Thus, the Settlor, in his capacity as trustee, became the legal title holder of the trust property. See Buerki, 570 So.2d at 1063. Once the Settlor held the property as trustee, for the benefit of the beneficiaries of the trust, he no longer possessed the power to convey the property in his individual capacity.

*     *     *     *     *

However, assuming that the Trust reserved to the Settlor and the Trustee certain powers to dispose of trust assets, there is no question that Mr. Aronson failed to withdraw the property in strict compliance with the Trust instrument as it required the Settlor to deliver a written document to the Trustee in order to withdraw the Trust assets. See Bongaards, 793 N.E.2d at 339. Instead, Mr. Aronson conveyed real property in his individual capacity, which he did not legally own in that capacity. Accordingly, the subsequent transfer was invalid as a matter of law.

We need not and, indeed, cannot attempt to glean Mr. Aronson's intent in transferring the property to the trust, or subsequently to Ms. Aronson in his individual capacity. Here, there was no ambiguity in either the original transfer of the property to the Trust by warranty deed or the subsequent transfer of the property to Ms. Aronson by quit claim deed. See Dolphins Plus, Inc. v. Hobdy, 650 So.2d 213, 214 (Fla. 3d DCA 1995)(noting that unambiguous language of a written instrument is not subject to judicial construction or interpretation). Having created a valid trust and being familiar with the powers he retained therein, as well as the law in this area, Appellants contend that Mr. Aronson's intent was to appease his second wife and effectuate a sham transaction he knew to be legally invalid. Conversely, it is argued that Ms. Aronson was the natural object of Mr. Aronson's bounty and that the subsequent transfer must be held to be valid to give meaning to Mr. Aronson's actions. These and other explanations may exist in attempting to ascertain the true motive behind Mr. Aronson's actions. However, the choice of any particular scenario to explain and give meaning to Mr. Aronson's intent involves guesswork that is not likely to produce enduring legal principles under which to consider future cases.

How NOT to make a foreign trustee pay Florida probate expenses

In re Estate of Stisser, 932 So.2d 400, 31 Fla. L. Weekly D1008 (Fla. 2d DCA Apr 07, 2006)

Technical issues such as whether a Florida court has in rem jurisdiction over a matter or whether in personam jurisdiction is required can have huge impacts on how a case is litigated.  In this case, the outcome of that question determined whether a Florida personal representative was forced to sue the successor trustee of the decedent's revocable trust for payment of expenses and taxes in Florida or Minnesota.  The PR won the argument before the probate court, even though the trust was administered in Minnesota by an individual trustee residing in Minnesota containing trust assets that apparently were located in Minnesota.  Based on these facts, I don't see how the probate court concluded that it had in rem jurisdiction over the trust -- none of the assets were located in Florida.  On appeal, the 2d DCA reversed

The 2d DCA got to the right result, but its expressed reasoning is flawed because it fails to zero in on the single key issue before it: was the lawsuit limited solely to questions involving the parties' rights over property in Florida or was the lawsuit seeking to impose a judgment directly against a person or party?  Instead the 2d DCA framed its opinion in terms of an "indispensable party" analysis.  For the record, here's how the 2d DCA expressed its reasoning:

[T]he probate court could not enter such a ruling in the absence of the Cotrustees. “‘The law is settled that, in suits against the trustee affecting trust property, the trustees as well as the cestuis que trustent should be made parties defendant.’ ” First Nat'l Bank of Hollywood v. Broward Nat'l Bank of Fort Lauderdale, 265 So.2d 377, 378 (Fla. 4th DCA 1972) (quoting Griley v. Marion Mortgage Co., 132 Fla. 299, 182 So. 297, 300 (1937)).  The general rule is that a “trustee is an indispensable party in all proceedings affecting the estate.” Id. Yet, in the instant case, both the probate court and the parties appeared to agree that the court did not have personal jurisdiction over the Cotrustees. The probate court stated that it did not require personal jurisdiction over the Cotrustees and proceeded without it in the mistaken belief that it had in rem jurisdiction, which it believed was sufficient. Stisser conceded at the hearing that the probate court did not have personal jurisdiction over the Cotrustees.

Given the fact that the law requires the probate court to have personal jurisdiction over the Cotrustees of a trust in order to enter a ruling affecting the corpus of the trust and given the fact that the court lacked such jurisdiction over the Cotrustees, the probate court was without authority to rule on the complaint filed by Stisser. We conclude therefore that the probate court erred in denying the Cotrustees' motion to quash service of process and in taking jurisdiction over the instant case. Accordingly, we reverse.

What happens when the originally signed copy of the will is missing?

Pierre v. Estate of Pierre, 928 So.2d 1252, 31 Fla. L. Weekly D1434 (Fla. 3d DCA May 24, 2006)

Suppose mom writes a will that cuts out estranged son, suppose further estranged son reappears on the scene shortly before mom’s death after 10 years of no contact with mom and somehow the will that cut him out goes “missing.” Well, estranged son might be smiling because if mom died without a will (i.e., intestate), then as one of her lineal descendants he gets a piece of the estate. Under Florida law, if the originally signed copy of a will is missing, it is presumed that the testator’s intent was to destroy the will and thus a photocopy of the will is not valid. However, this presumption can be overcome, which is what happened in this case.

Here’s how the 3d DCA explained the law in Florida governing lost wills:

When a person who executes a will dies and the will cannot be located, a rebuttable presumption arises that he or she destroyed the will with an intent to revoke it. See In re Estate of Hatten, 880 So.2d 1271, 1274 (Fla. 3d DCA 2004)(stating that when a decedent who has made a will dies, and the will cannot be found among the decedent's personal papers or in other logical locations, a rebuttable presumption arises that the decedent herself destroyed the will with the intent to revoke it). The presumption may, however, be rebutted with competent substantial evidence that the interested party had access to the testatrix's home, an opportunity to destroy the will, and a pecuniary interest in doing so. See Walton v. Estate of Walton, 601 So.2d 1266, 1267 (Fla. 3d DCA 1992)(explaining that the presumption that a decedent destroyed her will with the intention of revoking it may be overcome by competent and substantial evidence, and that “the existence of persons with an adverse interest in destroying a will who have an opportunity to do so, may serve to rebut the presumption that the will has been revoked”).

As we conclude that there is competent substantial record evidence to support the trial court's finding that the presumption of revocation was overcome, we affirm.

Florida's unforgiving 2-year non-claim statute strikes again!

Bush v. Webb, 2006 WL 2872522 (Fla. 1st DCA October 11, 2006)

An overarching theme of Florida’s probate code (and recurring point of discussion on this blog) is the tension between basic due-process rights on the one hand and Florida’s strong public policy favoring the speedy administration of estates on the other. In order to move things along as quickly as possible (with the least amount of litigation expense possible), Florida law provides extremely short windows of opportunities for litigants to file claims.  Florida’s 2-year non-claim statute (733.710(1)) epitomizes this stated public policy because of its simplicity and utter disregard for due process or equitable considerations. When it comes to creditors, after 2 years it's game over . . . period, no exceptions.

The issue litigated in this case was whether language in a will explicitly directing the personal representative to pay the decedent’s funeral expenses trumps Florida’s 2-year non-claim statute. The 1st DCA described the will-language in contention as follows:

The decedent died on February 16, 2002. In her will, she bequeathed all her property to appellant and directed that her “just debts, funeral and administration expenses be paid as soon after [her] death as may be practical . . .”

The personal representative in this case was the decedent’s sister. Apparently the decedent’s children paid mom's funeral expenses then waited over two years to file a claim against mom’s estate seeking reimbursement. The PR said NO, the trial court said YES, and the 1st DCA sided with the PR, changing the answer to NO again. Here’s how the 1st DCA described the reasoning underlying its decision to reverse the probate court’s ruling:

It is undisputed in this case that appellees filed their claims against the decedent's estate more than two years after her death. Pursuant to section 733.710(1), the claims were barred. Contrary to appellees' argument, the decedent's directive that her estate pay her funeral expenses did not excuse their statutory obligation to file their claims against the estate within two years of the decedent's death. See Marshall Lodge No. 39, A.F. & A.M. v. Woodson, 190 So. 749, 751 (Fla.1939) (“We do not think that the provision of the will directing the executors to pay all of the just debts of the testator had any effect upon the operation of the statute of non-claim.”). Were that not the case, each of the decedent's creditors could have simply relied on the will and filed claims against the estate long after her death, thereby forever subjecting the estate to uncertainty. Such a situation would conflict with the purpose behind section 733.710(1).

Lesson learned:

If you even suspect an estate may owe you money, when in doubt file a claim . . . and do it sooner rather than later.  An early claim can always be withdrawn, a late claim is gone forever.

In case of first impression 2d DCA rejects Uniform Probate Code concept of a "partial objection" to creditor's claim

In re Estate of Cadgene, 2006 WL 2739334 (Fla. 2d DCA Sept 27, 2006)

Parties with an interest in a Florida estate that are unfamiliar with the inner workings of Florida's probate code proceed very much at their own risk.  In this case, New Jersey counsel for out-of-state creditors sought to enforce a settlement agreement the decedent had executed prior to his death.  The key sequence of events is as follows:

  • Creditor filed a statement of claim against the estate tracking the format of the form approved by the Florida Bar.
  • Personal representative of the estate filed an objection to the claim, which stated that the personal representative was objecting to only part of the claim.
  • As stated by the 2d DCA, the "objection was served on McLean Boulevard and it contained language informing McLean Boulevard that it was limited to a period of thirty days from the service of the objection within which to bring an action on the claim as provided in section 733.705, Florida Statutes (2000). McLean Boulevard never filed an independent or declaratory action on the claim." .  .  .  OOPS!!

Because the creditor failed to file an independent action on his claim within the permitted 30-day statutory time period, as a matter of Florida law he forfeited 100% of his claim . . . even if the PR's objection was by its own terms only a partial objection.  The probate court granted the PR's motion to strike the entire claim, and the creditor appealed arguing that the PR objected to only part of his claim, and thus he should not be deemed to have forfeited the un-objected-to portion of his claim.  The 2d DCA rejected the creditor's arguments, stating as follows:

The only requirements for filing an objection to a statement of claim pursuant to the 2000 version of section 733.705(2) were (1) that the personal representative or other interested person must have informed the claimant that it had thirty days from the date of service of the objection within which to file an independent action on the claim and (2) that the objection must have been served upon the claimant. Here, the personal representative met both of the requirements of section 733.705(2). With the exception of a personal representative's statement of claim,[FN2] Florida does not utilize the concept of a “partial objection” to a statement of claim. This concept is recognized under the Uniform Probate Code that has been adopted in eighteen states but not in Florida.[FN3]

FN2. See § 733.705(3), Fla. Stat. (2000) (now § 733.705(4), Fla. Stat. (2006)).

FN3. The jurisdictions which have adopted the Uniform Probate Code are Alaska, Arizona, Colorado, Hawaii, Idaho, Maine, Michigan, Minnesota, Montana, Nebraska, New Jersey, New Mexico, North Dakota, Pennsylvania, South Carolina, South Dakota, Utah, and Wisconsin. In re Estate of Kotowski, 704 N.W.2d 522, 526 n. 1 (Minn.2005). 

Lesson Learned:

Florida's probate code is purposely designed to stream-line the administration process whenever possible.  As such, the mechanism for dealing with contested creditor claims is extremely unforgiving to those who fail to comply with a deadline or otherwise fail to understand the unique procedural aspects of Florida probate proceedings.

Court says YES to widow's enforcement of decedesed husband's workers' comp' settlement agreement

Estate of Gunderson v. School Dist. of Hillsborough County, 2006 WL 2612678 (Fla. 1st DCA Sept. 13, 2006)

Apparently the Hillsborough County School District wanted to get out of a $52,808 workers'-comp' settlement agreement in the worst way possible.  The decedent in this case signed the settlement agreement -- then died before signing the general release agreed to as part of the deal.  When the decedent's widow sought to enforce the settlement agreement, the School District told her to take a hike.  Widow lost this argument before the probate court!  (Just goes to show, nothing is ever certain in litigation . . . even if the legal issues are a slum dunk in your favor.)

Widow then appealed the probate court's order - and won on appeal.  The 1st DCA reversed the probate court's order and rejected the School Board's two arguments for non-enforcement.  The School Board had argued that the settlement agreement was unenforceable (1) because execution of the general release - by the decedent - was a condition to the formation of a contract between the parties, and (2) the settlement agreement was a personal services contract that could only be performed by the decedent - because only he could sign the general release.  The 1st DCA unequivocally rejected both of these arguments.  The following excerpts from the linked-to opinion reflect the 1st DCA's rationale on both counts:

In defense of its failure to perform the settlement agreement, the E/C asserts that the deceased's execution of the general release and voluntary resignation were either conditions precedent or conditions subsequent to the formation of a valid contract and, thus, the failure to execute the documents renders the settlement agreement non-binding. This argument is without merit. Provisions of a contract will only be considered conditions precedent or subsequent where the express wording of the disputed provision conditions formation of a contract and or performance of the contract on the completion of the conditions. [Citations omitted.]  No such wording exists in the disputed contractual provisions.

*     *     *     *     *

The general rule is that contracts for personal services contain an implied condition that such contracts dissolve at the time of the contractor's death. See CNA Int'l Reinsurance Co., Ltd. v. Phoenix, 678 So.2d 378, 380 (Fla. 1st DCA 1996). Restatement (Second) of Contracts § 262 defines a contract for “personal services” as a contract where the existence of a particular person is necessary for the performance of a duty. In addition, section 733.612(2), Florida Statutes (2004), authorizes a personal representative to “perform or compromise, or when proper, refuse to perform, the decedent's contracts····” Similarly, section 733.612(24), Florida Statutes (2004), authorizes a personal representative to “satisfy and settle claims.”  .  .  .  The duty of performance on the claimant's part was a duty which could statutorily be performed by his representative in the event of his death through the effectuation of the necessary documents. These were not duties which the claimant's death rendered impossible to perform.  .  .  .  More importantly, the death of a claimant following the execution of a settlement agreement will not affect the agreement's enforcement if the personal representative can show that a binding contract was reached. See Jacobson v. Ross Stores, 882 So.2d 431 (Fla. 1st DCA 2004).

[Emphasis added.]

Another Trust-Litigation Venue Case

Weinberg v. Weinberg, 2006 WL 2265216, 31 Fla. L. Weekly D2094 (Fla.App. 4 Dist. Aug 09, 2006)

Is it just me, or does it seem like venue has all of a sudden become a hot topic in trust litigation?  I wrote previously about recent trust-litigation venue rulings here and here.  Well, you can add this case to the list as well.  Here the 4th DCA has weighed in on the subject in the context of a dispute involving a lawsuit by the adult-children-of-first-marriage against second wife, who revoked a trust in Palm Beach County then moved south to Miami-Dade County.  The kids sued her in Palm Beach County.  Second wife argued that since she was presently residing in Miami-Dade County, the lawsuit against her in Palm Beach County should be dismissed on venue grounds.  The trial court denied her motion, and she appealed.  On appeal the 4th DCA upheld the trial court's decision citing to the following set of facts as grounds for its ruling:

In this case, Palm Beach County was the situs of the trust and its assets, the trust was administered in Palm Beach County before Betty purported to revoke it, and the distributions would have been made by the trustee in Palm Beach County upon Sidney's death. When Betty attempted to revoke the trust in its entirety and take title to all of the trust property, the last event necessary to make her liable for breach of trust took place. That is where the injury to the sons first took place. We therefore hold that the cause of action for breach of trust accrued in Palm Beach County, where Betty purported to revoke the trust.

Our resolution of this issue makes it unnecessary to decide whether venue was proper on any other basis.

Lesson Learned:

I found it interesting that the 4th DCA never mentions Florida's trust-litigation venue statute (F.S. 737.202).  Regardless, this case underscores the level of scrutiny courts will apply to the unique facts of a case when determining venue disputes.  It seems to me that the party that most persuasively argues the facts establishing a clear link between its favored venue and the facts directly underlying the cause of action being litigated is most likely to win.

Intimate Betrayal: When the Elderly Are Robbed by Their Family Members

I recently wrote here about some of the tools available to Florida probate attorneys involved in cases where the decedent is alleged to have been the victim of financial elder abuse/exploitation.  The Wall Street Journal recently published an article entitled Intimate Betrayal: When the Elderly Are Robbed by Their Family Members, that underscores the comments I made regarding how prevalent this problem is.  Here is an excerpt from the linked-to story:

Note to retirees: Beware the family.

Financial swindles are one of the fastest-growing forms of elder abuse. By some estimates, as many as five million senior citizens are victimized each year, says Sara Aravanis, director of the nonprofit National Center on Elder Abuse, which provides information to federal and state policy makers. Because of the problem's spread, "many states have laws authorizing financial institutions to report suspicions of elderly abuse," says Bruce Jay Baker, general counsel for the Illinois Bankers Association. Earlier this summer, the Securities and Exchange Commission hosted a Seniors Summit to highlight the issue, with SEC Chairman Christopher Cox noting that protecting seniors' pocketbooks "is one of the most important issues of our time."

Yet it's not dodgy financial experts or crooked caregivers who are the biggest threat. It's family. Children, siblings, grandchildren, nieces and nephews, and even spouses are the people most likely to rob the elderly, according to elder-law advocates and attorneys. The data that exist -- albeit in a spotty manner -- suggest that financial crimes rank as the third-most prevalent abuse of the elderly.

Trustees: How Not to Get Sued

Lawsuits against trustees are on the rise.  That is the conclusion to be drawn from the following statistic, as reported in the on-line article entitled How Not to Get Sued:

[L]awsuits and arbitration cases concerning breach of fiduciary duties are increasing at a compound annual rate of 22 percent, according to an analysis of NASD figures by the Center for Fiduciary Studies, of Sewickley, Pa.

The linked-to article goes on to address key strategies for avoiding trustee lawsuits, which are encapsulated in the following 4 bullet points:

  • Know the client's risk tolerance
  • Serve the client's needs
  • Keep careful records
  • Be particularly careful to document anything unusual

The Society of Fiduciary Advisors has also published its BEST PRACTICES FOR INDIVIDUAL INVESTORS, which provides excellent risk-management guidance for trustee/investment advisors.

Higher Standards for Professional Trustees?

In trust litigation the identity of the trustee (i.e., individual vs. corporate, inexperienced vs. professional) has a large impact on how the case is handled.  Prof. Melanie B. Leslie (Professor of Law, Cardozo Law School) has recently published an interesting article addressing the different standards of care that are (or should be) applied to professional trustees in light of the fact that many jurisdictions, including Florida, have adopted the Uniform Trust Code, which some view as overly protective of corporate trustees.  The article is entitled Common Law, Common Sense: Fiduciary Standards and Trustee Identity, 27 Cardozo L. Rev. 2713 (2006).   The following is the article's SSRN abstract:

The past twenty years have seen significant changes in the law governing trustees' fiduciary duties. Though fiduciary duty law is a common law creation, recent changes are not a result of common-law evolution, but legislative action. The push to codify trust law, including fiduciary duties, has come from a few sources, including academics, who have argued that trust law should be more uniform, and banking institutions, who have pushed for legislation to ease the burdens of trust management.

In some significant respects, legislative changes to fiduciary duties have not improved upon the common law. In fact, a few important statutes have replaced theoretically sound common law standards with rules that undermine the historical objectives of trust law. In some instances, scholars have justified changes by claiming that they are necessary to protect the non-professional, poorly counseled trustee. But, by and large, it is the large, institutional trustees who have benefited - significantly - from the statutory changes in the rules.

This article argues that recent statutes would be much improved if they differentiated between professional and non-professional trustees. There are critical distinctions between professional and non-professionals: differences in settlor's expectations and objectives, negotiation settings, monitoring costs and the trustee's response to liability rules. These distinctions justify having different fiduciary standards for different types of trustees.

Courts, with their case specific approach to rules, intuitively understand that the identity of the trustee should make a difference in assessing liability for breach of fiduciary duty. Either expressly or implicitly, courts gradually have developed two sets of rules. Thus, changing fiduciary standards to protect the non-professional was never really necessary.

Estate lawyer's activities queried

In Florida, trustees and personal representatives have an affirmative statutory duty to keep trust and estate beneficiaries informed (see new Ch. 736 for trustees; 733.602 and 733.604 for PRs).  Additionally, being pro-active, let alone responsive, with respect to keeping everyone informed is probably the cheapest way to avoid getting sued by the beneficiaries, a point underscored in this newspaper article.  The following is an excerpt from the linked-to article:

Friday, August 18, 2006

AMHERST - When William J. Bernotas shot his estranged wife Jean Hosmer to death in front of the Northampton police station in 1999 and then turned the gun on himself, he left their two children orphans.

One of Hosmer's sisters came forward to take care of Sandra and Kevin Bernotas, but their estate was entrusted to Amherst lawyer Nancy J. Sardeson.

Now the family has questions about how the estate has been managed and Sardeson has been suspended from practicing law for failing to provide the answers.

Use of Power of Attorney to Prey on Elderly

Conseco Ins. Co. v. Clark, 2006 WL 2024401 (M.D.Fla. Jul 17, 2006) (NO. 8:06CV462 T30EAJ)

Exploitation of the elderly is endemic.  This case provides a good road map for probate litigators involved in cases where the decedent was victimized by his or her power-of-attorney holder, with the facts coming to light in the context of probate proceedings.

If someone has taken the time to prepare estate planning documents, a power of attorney is usually part of the package.  But my sense is that the POA usually doesn't receive the level of scrutiny is should -- especially when it comes to retirees who move to Florida and detach themselves from the web of family and friends that looked after and supported them "back home."

The victim in this case was Anthony Jeski, who was 89 years old when he died in 2005 the resident of a Florida nursing home.  Myra Clark acted as Mr. Jeski's power of attorney from 1997 to 2005.  Originally, the sole remainder beneficiary of Mr. Jeski's seven annuity contracts (paying $342,177.58 at his death), revocable trust, which contained $40,000 at his death,  a Prudential insurance contract whose value was unreported, and the heir who would receive title to his $158,000 condominium, was Mr. Jeski's nephew Joseph Dal Campo.  This all changed in 2002, when Ms. Clark used the power of attorney to write Mr. Campo out, and write herself in, as sole beneficiary of all of the annuity contracts, the revocable trust, the insurance policy, and last but not least, quit claim the condo to herself for $11.00.  Oh, and guess who was the agent that sold Mr. Jeski his annuity contracts?  Ms. Clark's husband.

Confronted with this set of facts, litigation counsel for Mr. Campo could pursue a number of different strategies.  In this case, Mr. Campo pursued the following claims, all of which were essentially "blessed" by the trial court.

  • Breach of Fiduciary Duty.  Key point here was that the trial court held that Mr. Campo was an "interested person" with respect to his uncle's power of attorney, and thus Ms. Clark owed him the same fiduciary duties applicable to trustees in Florida.
  • Fraud.  The trial court dismissed this claim, but hinted strongly that if the plaintiff could allege facts showing he had himself relied upon fraudulent statements made by Ms. Clark, then the claim could proceed.
  • Civil Conspiracy.  The trial court let this claim proceed.  Key point being that Ms. Clark's husband was thus brought into the case as a named defendant.
  • Exploitation of an Elderly Person.  The trial court dismissed this claim with instructions to the plaintiff on how to replead the claim, hinting again that the judge was predisposed to let this count proceed.  This can be a very powerful weapon, because by statute the successful plaintiff is entitled to treble damages and his attorney's fees.  See Counsel Beware: Considerations Before Implementing Florida’s Civil Theft Statute for a good summary of what trial counsel needs to know with respect to asserting these types of claims.
  • Tortious Interference with Expectancy.  The trial court let this count proceed with respect to all non-probate assets (i.e., everything except the condo).  This is an important weapon to keep handy when most if not all of the key assets in dispute fall outside of the probate court's jurisdiction.

For an interesting non-Florida case dealing with legal and ethical issues surrounding the drafting of a power of attorney see In re Winthrop, 848 N.E.2d 961 (Ill. 2006), and a related discussion of the case in Helen Gunnarson's article, POA Perils, 94 Ill. B.J. 403 (2006), in which she concludes as follows:

The complexity of the proceeding does . . . suggest that reinventing the wheel when it comes to drafting powers of attorney may be unwise. Even more important, an attorney would be well advised to exercise extra caution when a third party initiates a request for the attorney to draft an instrument for an elderly person.

Brooke Astor: Legal filing seeks removal of $2.3 million-a-year guardian

In this article CNN.COM first reported on the guardianship litigation involving Brooke Astor, one of America's most storied and prominent socialites, her only son and guardian, Anthony Marshall, and her grandson Philip Marshall, who is suing his 81 year old father for neglecting his 104 year old grandmother.  In a subsequent article reported here on CNN.COM, Anthony Marshall denies any wrongdoing.  Here is an excerpt from the first CNN.COM articles:

NEW YORK (AP) -- She wears torn nightgowns and sleeps on a couch that smells of urine. Her bland diet includes pureed peas and oatmeal. Her dogs, once a source of comfort, are kept locked in a pantry.

A court filing alleges that this is the life of 104-year-old Brooke Astor, the multimillionaire Manhattan socialite who dedicated much of her vast fortune to promoting culture and alleviating human misery.

In addition to be very sad, this story is instructive: guardianship disputes can erupt in any case, no matter how wealthy the ward may be.  This point was underscored in  this New York Times editorial reporting on proposed federal legislation intended to address this issue.  Here is an excerpt from the NY Times piece:

The scandal over Brooke Astor’s care has had the healthy side effect of getting people talking about the needs of the elderly. The 104-year-old former socialite and philanthropist now appears to be getting the attention she needs. But it has inspired people to ask what is being done for old and “older old” people who have no Rockefellers or Kissingers to come to their defense.

Last week the Senate Finance Committee unanimously approved a bill that would expand the federal system for protecting the elderly from physical, psychological and financial abuse. A second crucial measure, the reauthorization of the Older Americans Act, is also being considered by Congress. Important aspects of both bills — like the people they seek to protect — are in danger of sinking beneath the radar as other matters move ahead on the priority list. We’re hoping all the publicity over the alleged mistreatment of Mrs. Astor by her son will change that.

Greenberg Traurig Drawn Into Estate Case

In almost all estate litigation cases attorneys' fees become an issue.  This law.com article shines the spot light on one case in particular because Greenberg Traurig, one of the country's largest and well known law firms, is involved.  But the issues in dispute are part and parcel of almost all such litigation -- which means parties need to anticipate them and plan accordingly.

Here are excerpts from the linked-to story:

Greenberg Traurig has become enmeshed in a bitter family feud between two sisters, one of whom is married to a senior partner at the law firm.

The estranged sisters, Linda J. Spector and Barbara Berlin, had both been named beneficiaries of a trust created in November 2003 by their mother, Eleanor Spector. Eleanor and Linda served as co-trustees until Eleanor's death in January 2004.

Shortly after her mother's death, Linda sought to have her then-fiancé, Albert Jacobs, the senior chair of Greenberg Traurig's national intellectual property practice, appointed co-trustee, arguing that the successor designated in trust, attorney Joel Sankel, had told her over dinner he would step aside.

*     *     *     *     *

Greenberg Traurig billed the estate almost $130,000, which is now at issue in a pending contempt motion. Sankel claims the amount should be repaid to the trust since Greenberg Traurig's services were retained for the personal benefit of Linda Spector and Jacobs, whom she eventually married.

In the contempt motion, Sankel also noted the disparity between the fees paid to Greenberg Traurig and his own firm in the course of the dispute. He noted that his firm had billed the trust $22,000 in the same time period. He is requesting invoices from Greenberg Traurig to back up charges, some of which he claims were "wholly frivolous."

Venue and Trust Litigation

Meyer v. Meyer, __ So.2d __, 2006 WL 1708155 (Fla. 5th DCA June 23, 2006) 

Venue rulings can be powerful tools in litigation. Requiring parties to drop their lawsuit in one state and re-file in another (in this case New York) may sound like a minor inconvenience, but the real life implications are significant. A party seeking to enforce his or her rights under a Florida-law governed trust in another state must now hire two sets of lawyers: local counsel to file the initial complaint and navigate the civil procedure requirements of that jurisdiction plus Florida counsel to educate a probate judge in another state regarding what can be very complicated and state-specific Florida trust laws.

In this case an alleged beneficiary of the trust filed a petition in Florida seeking construction of a Florida-law governed trust. The trial court denied a motion to dismiss on venue grounds under F.S. § 737.203. The trial court was reversed by the Fifth DCA. The most significant aspect of the Fifth DCA’s opinion is that it basically maps out the factual allegations a party seeking to keep an action involving a Florida-law governed trust in this state should prove.

Here, the trust is being administered in New York where the trustee resides. None of the parties has any connection with the state of Florida, and we note that the petition filed by Laurie does not contain any factual allegations showing that venue properly lies in this state. Because a proper objection has been filed by parties who are beneficiaries of the trust protesting the proceedings by the Florida court concerning a trust registered or having its principal place of administration in New York, the trial court should have properly applied the dictates of section 737.203. We are unable to determine whether this is what the trial court did because it simply denied the motion to dismiss without revealing the basis for its denial. Accordingly, we reverse the order denying the motion to dismiss and remand for the purpose of allowing the trial court to determine whether all interested parties could be bound by litigation in New York. Perry. If the trial court finds the parties may be bound by New York litigation, “the court shall continue, stay, or dismiss the suit” filed by Laurie. Perry, 903 So.2d at 377. If the parties are not bound, the court may deny the motion to dismiss.

We note, parenthetically, that although the trust agreement contains a choice of law provision, it does not designate Florida as the principal place for administration of the trust. Unless specified in the trust agreement, the “principal place of administration of a trust” is “the trustee's usual place of business where the records pertaining to the trust are kept or, if he or she has no place of business, the trustee's residence.” § 737 .101(1), Fla. Stat. (2005). Accordingly, New York is the principal place for administration of the trust because the trustee is a resident of that state and the trustee's attorney for legal matters pertaining to the trust is also in New York.

Florida's "Relation Back" Doctrine


University of Miami v. Wilson, __ So.2d __, 2006 WL 1687685 (Fla. 3d DCA June 21, 2006)

The doctrine referred to in the headline for this blog post comes up most often in wrongful-death cases. For whatever reason the plaintiff is unable to be appointed personal representative of the estate prior to the statute-of-limitations period expiring. So he or she files the wrongful-death lawsuit before being appointed personal representative. Defendant responds by seeking to have the lawsuit dismissed arguing (a) that the named plaintiff lacked authority and (b) that since the statute-of-limitations period has since expired, the lawsuit is barred.

That’s essentially what the University of Miami, as defendant, argued in this case. UM lost at the trial court level and again before the Third DCA, which held that because the named plaintiffs were in fact ultimately appointed personal representatives their powers as personal representative “relate back” to the time they filed their lawsuit. Here’s an excerpt from the Third DCA’s opinion: 

Ms. Wilson and Ms. Salmon argue that, because they were ultimately appointed personal representatives, their powers as personal representatives should relate back, thereby validating the actions they took prior to their appointment. We agree as there is both statutory and case law support for such a finding. Chapter 733 of the Florida Statutes is the Probate Code and deals with the administration of estates. Section 733.601, Florida Statutes (2002), specifically provides that

The duties and powers of a personal representative commence upon appointment. The powers of a personal representative relate back in time to give acts by the person appointed, occurring before appointment and beneficial to the estate, the same effect as those occurring after appointment. A personal representative may ratify and accept acts on behalf of the estate done by others when the acts would have been proper for a personal representative.

(Emphasis added in 3d DCA opinion).

Even early Florida jurisprudence recognized that acts of a personal representative prior to his/her appointment may be validated upon appointment. See Griffin v. Workman, 73 So.2d 844 (Fla.1954)(acknowledging the “ancient doctrine” which validates the acts of a personal representative prior to his appointment and noting that “a wide variety of acts and conduct” have been validated by subsequent qualification of an administrator, including an advancement to a distributee, the sale of estate property, the execution of a deed, and the institution of a wrongful death action); see also Talan v. Murphy, 433 So.2d 207, 208 (Fla. 3d DCA 1983)(holding that, although Talan brought a wrongful death action without having been appointed as personal representative, his subsequent appointment related back and his acts were thereby validated insofar as they were acts he could have performed had he been qualified as a personal representative, and finding that it was not necessary for him to allege in his original complaint that he was the personal representative).

(Emphasis added.)

Lesson Learned:

The general concept at issue here is whether a presumptive personal representative can act on behalf of the estate before being appointed. As the Third DCA pointed out in its opinion, this question comes up in various contexts, not just wrongful death claims. Probate lawyers should be aware of the “relation back” doctrine – you never know when it might just get your clients out of a jam.

Second DCA to Probate Court: Don't Rewrite the Will!

Owens v. Estate of Davis, ex rel. Holzauser, __ So.2d __, 2006 WL 1716786 (Fla. 2d DCA June 23, 2006) 

In this case the decedent’s surviving wife claimed her statutory “elective share” (30%) of the estate. So the question then became: after wife gets her 30%, who gets the remaining 70% of the estate? The decedent’s will did not address this scenario, so what the probate court should have done is simply order that the remaining 70% of the estate pass according to Florida’s intestate succession law (F.S. § 732.103). That is not what happened. Instead one of the heirs apparently convinced the probate court that to figure out the most "equal or equitable" way of distributing the rest of the estate he should consider extrinsic evidence regarding what the decedent would have wanted to happen. The probate court went along with that approach and was reversed by the Second DCA. Here’s how the Second DCA summed up its rationale for reversal:

"The terms of Mr. Davis's will are clear and unambiguous; however, the will does not specify how the probate court should distribute Mr. Davis's residuary estate if his wife claims her elective share. When Mr. Davis's wife claimed her elective share, rather than let the residuary estate pass according to the law of intestate succession, the probate court considered extrinsic evidence to determine how to distribute those assets. The trial court's consideration of extrinsic evidence to “rewrite” the will was error:

The court may not alter or reconstruct a will according to its notion of what the testator would or should have done···· It is not the purpose of the court to make a will or to attempt to improve on one that the testator has made. Nor may the court produce a distribution that it may think equal or more equitable. In re Estate of Barker, 448 So.2d 28, 31-32 (Fla. 1st DCA 1984) (quoting 18 Fla. Jur.2d Decedent's Property § 358, at 216)."

(Emphasis added.)

Botched Will Provision Unlawfully Devising 34-Acre Farm Leads to Litigation

Vinson v. Johnson, __ So.2d __, 2006 WL 1650609 (Fla. 1st DCA June 16, 2006)

Suppose a client with 9! children asks you what’s the best way to provide for the orderly disposition of his 34-acre farm. He wants to ensure that the farm either stays in the family intact, or is sold as a single property, not piecemeal. A simple way to effectuate this type of plan is to put the property in a trust, partnership or LLC and include purchase-and-sale provisions that achieve the desired outcome. The wrong answer is to say: “heck, that’s simple, just say in your will that all of the kids have to agree to a sale.”

That’s what the Vinson clan learned in this case. The portion of Vinson Sr.’s will at issue in the case was described as follows by the First DCA:

Hardy Vinson, Sr., executed a will leaving his 34-acre farm and home in Alachua County to his nine living children as tenants in common. The will provided in pertinent part:

The “Vinson Estate” shall not be subject to partition or forced sale by any heir, but shall only be sold upon agreement of all heirs. Taxes and ownership expenses shall be shared equally among the children. Any heir that pays more than his or her share shall be entitled to contribution from the nonpaying heirs upon sale of the property.

When 5 of Vinson Sr.’s 9 children sued for partition of the farm, the trial court ruled in their favor. On appeal the First DCA held that the clause in the will prohibiting partition or sale was an “unlawful restraint on alienation of real property” and upheld the trial court’s ruling. The First DCA explained its rationale as follows:

When real property is conveyed in fee simple, the grantee or devisee acquires a right to sell or dispose of the property as an incident to the right of ownership. The right of alienation is said to be an inherent and inseparable quality of the estate. See1. 61 Am.Jur.2d Perpetuities, Etc. § 102 (2002); 3 Thompson Real Property § 29.03(b), at 707 (2001). An absolute restraint on alienation is inconsistent with the right of ownership and is therefore invalid. See generally Iglehart v. Phillips, 383 So.2d 610 (Fla.1980) (surveying the case law pertaining to restraints on alienation).

The rule against restraints on alienation applies to restrictions on partition of real property, as well as restrictions on sale. The right to seek partition of property owned jointly in a tenancy in common is an incident to the right of individual ownership. See Richard R. Powell, The Law of Real Property, § 77 ¶ 846 (1991). While there appears to be no precedent in Florida for the precise issue presented in this case, other states have held that prohibitions against partition or forced sale of property devised in a will are unlawful restraints on alienation.

(Emphasis added.)

Trustee Sued for Breach of Trust Must Pay Back All Attorneys Fees to Trust

Brigham v. Brigham, __ So.2d __ (Fla. 3d DCA May 31, 2006)

This case should be printed out and kept in the desk drawer of every probate litigator in Florida. Whether you find yourself defending a trustee being sued for breach of trust or prosecuting this type of claim on behalf of trust beneficiaries, you will need to be aware of this case and its profound implications.

The law in Florida is clear: a trustee defending himself in litigation involving any form of breach of trust cannot pay his legal defense fees with trust funds in the absence of a prior authorizing court order. That was Miami-Dade Judge Rothenberg's ruling at the trial court level, and here's how the Third DCA summed up this rule when it affirmed his order:

Appellees brought suit against Appellants in their trust roles and as individuals for trust mismanagement. Because Appellants defended against individual liability, their personal interests conflicted with their position as trustees. See Shriner v. Dyer, 462 So.2d 1122, 1124 (Fla. 4th DCA 1984). When a trustee's individual interests conflict with his or her duties to a trust, court approval is necessary before a trustee can use trust funds to pay his or her own attorneys' fees. § 737.403, Fla. Stat. (2003).

By the way, this rule is retained under Florida's new trust code as new F.S. § 736.802(10) (see here).

Although every case is different, this opinion provides one possible road map for getting to a final ruling on this issue. Here is an extended excerpt from the opinion tracking the procedural steps and time-line in this case:

The settlor died in 2002. In June 2003, Appellees filed a multi-count complaint against Appellants alleging, among other things, undue influence, breach of fiduciary duty, self-dealing, conversion of trust assets, mismanagement of trust assets, intentional interference, fraud, and conspiracy. Appellants were sued in their individual capacities as well as their capacities as trustee and successor trustee.

After receiving an accounting, Appellees discovered that Appellants were using trust funds to pay their legal fees in the underlying litigation. In November 2004, Appellees filed a Motion to Restrict Payment of Attorneys' Fees, arguing that Appellants were prohibited from paying their individual attorneys' fees with the trust funds and without prior Court approval.

On January 18, 2005, the trial court, after a hearing, granted Appellees' motion in part, finding that Appellants were prohibited from paying their individual attorneys' fees with trust funds, and concluding that court approval was necessary to pay litigation expenses out of the trust, as a personal conflict may exist since Appellants were sued in their individual capacities as well as in their trustee roles.

In March 2005, upon motion by Appellants, the trial court appointed a Special Master to assist the court in determining which of the attorneys' fees and costs, already paid by the trust, were for the benefit of Appellants as trustee and successor trustee rather than as individuals.

In June 2005, the Special Master issued his Report and Recommendation, noting that he "does not believe that any of the fees incurred to date can be separated into [Dana Brigham's] individual defense as opposed to [Dana Brigham's] defense as trustee," and recommending that Appellants personally pay all attorneys' fees necessary to defend themselves against the litigation, and return all monies taken out of the trust for payment of attorneys' fees in the underlying litigation.

After a hearing on Appellants' Objection to the Report and Recommendation, the trial court adopted the Report and Recommendation and held that Appellants must pay the attorneys' fees back to the trust and refrain from paying further attorneys' fees and costs with trust assets without court approval.

Florida's "Family Member" Evidentiary Presumption

Della Ratta v. Della Ratta, 2006 WL 1235760, 31 Fla. L. Weekly D1325 (Fla. 4th DCA May 10, 2006)

Dating back to 1884, Florida's "family member" evidentiary presumption was at the heart of this recent piece of litigation revolving around a son's lawsuit against his mother and step-father for ownership of a condo' he lived in and fixed up based on an understanding that the property would be his. Intra-family disputes over vaguely defined economic arrangements are of course nothing new to the probate-litigation arena. What makes this case interesting is how a public-policy decision was made by the Florida Supreme Court in 1884 to "presume" the non-existence of economic obligations between family members living in the same home. Here's how the Fourth DCA articulated the rule:

The supreme court articulated the "family member presumption" in Mills v. Joiner, 20 Fla. 479, 1884 WL 2067 (1884). There, a daughter sued her father for payment for housekeeping services she performed for him and her mother in their home for almost ten years. During this time, she lived in the home with her parents. The daughter alleged that her father agreed to pay for her services. Seven years later, the father reneged on the deal. At trial, the court charged the jury that the daughter could not recover unless she proved "'a special contract or express promise that she was to be paid for her services.'" Id. at 492; Mills, 20 Fla. 479, 1884 WL 2067, at *4 (emphasis in original). The jury found for the father.

It is a presumption of law that the father is not bound to pay a child, though of full age, for services while living with him at home and as one of the family; but this presumption may be overcome by proof of a special contract,[FN1] express promise, or an implied promise; and such implied promise or understanding may be inferred from the facts and circumstances shown in evidence. Id. at 492-93; Mills, 1884 WL 2067, at *4 (boldface supplied); see also Brown, 47 So.2d at 759, 763 (supreme court followed Mills in affirming the ruling that a daughter had not proved an express or implied contract that overcame the family member presumption, even though the daughter had rendered services to her mother for many years).

The "family member presumption" described in Mills applies to personal services that a child performs for a parent while living "at home with [the parent] and as one of the family." Id. at 492; Mills, 1884 WL 2067 at *4.

[FN1.] In WPB, Ltd. v. Supran, 720 So.2d 1091, 1092 (Fla. 4th DCA 1998), we explained that a "special contract"

is one with peculiar provisions or stipulations not found in the ordinary contract relating to the same subject matter. These provisions are such as, if omitted from the ordinary contract, the law will never supply.

(citing 17 C.J.S. Contracts § 10 (1963))."A special contract is always an express contract, 'one whose provisions are expressed and not dependent on implication.' " Id. (citing Fitzpatrick v. Vermont State Treasurer, 144 Vt. 204, 475 A.2d 1074, 1077 (1984)).

The Sponsor's Note to F.S. § 90.302 does a good job of putting this case in context by explaining the significance of evidentiary presumptions in general:

All presumptions that are not conclusive are rebuttable presumptions. For several decades, courts and legal scholars have wrangled over the purpose and function of these presumptions. The view espoused by Professor Thayer (Thayer, Preliminary Treatise on Evidence 313-352 (1898) ) and Wigmore (9 Wigmore, Evidence §§ 2485-2493 (3rd ed. 1940) ), accepted by most courts (see Morgan, Presumptions, 10 Rutgers L.Rev. 512, 516 (1956) ), and adopted by the American Law Institute's Model Code of Evidence, is that a presumption is a preliminary assumption of fact that disappears from the case upon the introduction of evidence sufficient to sustain a finding of the nonexistence of the presumed fact.

Professors Morgan and McCormick argue that a presumption should shift the burden of proof to the adverse party. Morgan, Some Problems of Proof 81 (1956); McCormick, Evidence § 317 (1945). They believe that presumptions are created for reasons of policy and argue that, if the policy underlying a presumption is of sufficient weight to require a finding of the presumed fact when there is no contrary evidence, it should be of sufficient weight to require a finding when the mind of the trier of fact is in equilibrium or if he does not believe the contrary evidence.

Domicile ≠ Jurisdiction

Pastor v. Pastor, __ So.2d __ (Fla. 4th DCA April 19, 2006)

One of the overarching themes of Florida's probate code is the tension between constitutionally protected due-process rights and Florida's strong public policy favoring the speedy administration of estates. In order to move things along as quickly as possible, Florida law provides extremely short windows of opportunities for litigants to file objections. For example, under F.S. § 733.212 potential litigants served with a notice of administration have only 3 months to object "to the validity of the will, the qualifications of the personal representative, venue, or jurisdiction of the court" or those objections "are forever barred."

In this case the objecting party tried to get around the 3-month limitations period contained in F.S. § 733.212 by arguing that an objection to domicile was like objecting to the court's subject matter jurisdiction, and thus not subject to waiver. Not surprisingly, this argument was shot down both at the trial court level and by the Fourth DCA, which explained its ruling as follows:

For the purpose of overcoming the bar of section 733.212(3), Appellant contends that an issue of domicile is an attack on subject matter jurisdiction and is not waived by failing to timely file. The trial court correctly recognized that subject matter jurisdiction is not determined by the decedent's domicile; rather, it is based on the power of the court over the class of cases to which the controversy belongs. See Ruth v. Department of Legal Affairs, 684 So.2d 181, 185 (Fla.1996); Chase Bank of Texas Nat'l Ass'n. v. Department of Ins., 860 So.2d 472, 475 (Fla. 1st DCA 2003).

. . . . .

We are not unmindful of Appellant's argument that finding such an objection to subject matter jurisdiction can be waived under the statute will effectively allow Florida courts to probate a non-domiciliary's estate through domiciliary administration. Nevertheless, we conclude that Appellant may not challenge the court's jurisdiction where he received the notice of administration, the trial court determined domicile through the verified petition, and the three-month period to object to jurisdiction passed before filing his claims. There is a "strong public policy" in this state "in favor of settling and closing estates in a speedy manner." May v. Illinois Nat'l Ins. Co., 771 So.2d 1143, 1151 (Fla.2000). If the court were to hold that domicile is a component of subject matter jurisdiction, any estate could be re-opened based on such a belated objection. This would render section 733.212(3) meaningless and would contravene Florida's public policy as expressed in May. See also In re Estate of Williamson, 95 So.2d 244 (Fla.1957).

(Emphasis added.)

Lesson Learned:

In the probate-litigation context, there is a huge advantage to understanding how quickly claims may be cut off. If you represent the party expecting to defend against a possible challenge, the probate code provides ample opportunities for building almost air-tight defenses to litigation. If you represent a party that is thinking about filing an objection, quick decisive action is of paramount importance.

Forgetting That Wrongful Death Claims Are Litigated Within the Context of Probate Proceedings Can Be a VERY Costly Mistake

Second DCA Reverses Trial Court's Grant of $410,300 in Attorneys' Fees

Martinez v. Ipox, __ So.2d __ (Fla. 2d DCA April 07, 2006)

Probate issues do not, as they say, "drive the train" in wrongful death cases. But, as a matter of Florida law, these cases may ONLY be litigated by personal representatives. Because wrongful death cases MUST be litigated within the context of a probate proceeding, getting the probate issues "wrong" can come back to bite litigation counsel in a very big way - as demonstrated by this case.

This case started out as a medical malpractice action and was then amended to a wrongful death action when the infant at the center of the litigation died. After a jury trial the parents of the deceased child, acting as co-personal representatives of the child's estate, were awarded a judgement of $2.3 million. On a subsequent motion for attorneys' fees based on a proposal for settlement signed only by the child's mother . . . and only in her individual capacity, Hillsborough County Judge Sam D. Pendino awarded the child's parents $410,300 in attorneys' fees (about 18% of the total damages award).

On appeal the Second DCA reversed the trial court's fee award based on what I am sure appeared to be the height of "form" over substance to plaintiffs' counsel. If you take a minute to think about it, however, the Second DCA probably got this one right. Adopting the statutory analysis of a 2004 Third DCA opinion addressing a similar set of facts, Saia Motor Freight Line, Inc. v. Reid, 888 So.2d 102 (Fla. 3d DCA 2004), the Second DCA explained its ruling as follows:

We agree with the holding in Reid. . . . In a wrongful death case where there are joint personal representatives, the joint personal representatives are the party plaintiffs. As the party plaintiffs, only the joint personal representatives-acting in that capacity-are entitled to make a valid demand for judgment. The demand for judgment at issue here therefore was invalid. See §§ 768.20, 768.79, Fla. Stat. (2001); Reid, 888 So.2d at 103.

* * * * *

Section 733.615 provides that "multiple representatives must act in concert, and have no authority to act independently, regardless of the circumstances." Messina v. Scionti, 406 So.2d 529, 532 (Fla. 2d DCA 1981). See also Costello v. Davis, 890 So.2d 1179 (Fla. 2d DCA 2004) (holding that one co-personal representative did not bind the other co-personal representative to a contingent fee agreement with counsel because the other co-personal representative did not join in the agreement); Pearce v. Foster, 454 So.2d 721 (Fla. 4th DCA 1984) (holding that a co-personal representative could not unilaterally file a notice of appeal without concurrence of the other co-personal representative). In addition, there was no evidence that Rebeca Ipox had been delegated to act on behalf of the other co-personal representative. See § 733.615(1) (providing that concurrence of all joint personal representatives is not required "when a joint personal representative has been delegated to act for the others").

Because the proposal for settlement that served as the basis for the award of attorneys' fees in this case was not served by both the Ipoxes as joint personal representatives, the trial court erred in relying on it. Therefore, we reverse the award of attorneys' fees.

Unclaimed Property: When in Doubt, Who Gets It?

In re Estate of Faskowitz, __ So.2d __ (Fla. 2d DCA Mar 31, 2006)

The decedent left no surviving spouse or lineal descendants. At a hearing on a petition for determination of heirs, Highlands County Probate Judge J. David Langford ruled that the petitioners were the decedent's paternal heirs, and thus entitled to one-half of the estate. So far, so good. The probate court then went on to rule that because no evidence had been presented by the alleged paternal heirs that no maternal heirs existed, one-half of the estate would be held by the clerk of the court in accordance with F.S. § 733.816 for the unknown maternal kindred, where presumably it would escheat to the State if no maternal heirs claimed the funds within the 10-year claims period. This is where the probate court got it wrong.

The Second DCA reversed the probate court's ruling regarding the half of the estate set aside for the decedent's maternal kindred, providing the following excellent summary of the statutory framework governing unclaimed assets in Florida probate proceedings:

Under section 732.103(4)(c), "[i]f there is no paternal kindred or if there is no maternal kindred, the estate shall go to such of the kindred as shall survive." Pursuant to this provision, in the absence of any maternal kindred of Irving Faskowitz, his paternal kindred-- namely, the appellant and his sisters--are entitled to inherit the whole estate. The State does not have a right to half of an intestate estate when there are lawful heirs under section 732.103. The two specific provisions of the Florida Probate Code governing the escheat of estate property--sections 732.107 and 733.816--do not in any way displace the rule of descent set forth in section 732.103(4)(c).

Section 732.107(1) simply provides that "[w]hen a person leaving an estate dies without being survived by any person entitled to it, the property shall escheat to the state." [FN1] Here, the paternal kindred have established their status as lawful heirs under section 732.103(4)(c). Accordingly, the predicate for the operation of 732.107(1) --that "a person leaving an estate [has] die[d] without being survived by any person entitled to it"--does not exist in this case.

Similarly, the provisions of section 733.816 concerning the disposition of unclaimed property held by personal representatives do not defeat the rights the paternal kindred here have under section 732.103(4)(c). Section 733.816(1) addresses circumstances where "unclaimed property in the hands of a personal representative ... cannot be distributed or paid ... because of inability to find [the lawful owner] or because no lawful owner is known." Neither of these circumstances have been established here. Unless it is shown that there are maternal kindred entitled to inherit from the estate, the paternal kindred are the "lawful owner[s]" of the entire estate. Contrary to the trial court's ruling, there is nothing in the statutory scheme suggesting that once claimants have established their status as lawful heirs the State is entitled to escheat of a portion of the estate simply because there is uncertainty concerning whether there may be other lawful heirs.

Based on the clear language of the governing statutes, the Second DCA dismissed the probate court's evidentiary burden-shifting ruling as follows:

Nothing in the case law cited by the appellees undermines this straightforward interpretation of the relevant statutory provisions. The appellees rely primarily on two cases to support the trial court's ruling. The appellees cite In re Estate of Tim, 180 So.2d 161 (Fla.1965), and In re Estate of Russell, 387 So.2d 487 (Fla. 2d DCA 1980), for the proposition that the paternal heirs had the burden of proving the nonexistence of maternal heirs in order to avoid the operation of the statutory provisions providing for escheat of unclaimed estate property. Neither Estate of Tim nor Estate of Russell supports the position advanced by the appellees.

Third DCA Reverses Itself on Homestead Waiver Case

Demayo v. Chames, __ So.2d __ (Fla. 3d DCA Mar 15, 2006)

I previously wrote here about the Third DCA's initial ruling in this case enforcing a charging lien against the debtor's homestead property based on a written waiver. On its own motion the Third DCA subsequently reconsidered the case en banc and then completely reversed itself!
According to this Third DCA opinion even if a person knowingly waives his or her homestead protection against forced sale, such waiver is not enforceable unless it falls within one of exceptions specified in Article X, section 4 of Florida's constitution, which provides in relevant part as follows:

Homestead; exemptions.-- (a) There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien thereon, except for the payment of taxes and assessments thereon, obligations contracted for the purchase, improvement or repair thereof, or obligations contracted for house, field or other labor performed on the realty, the following property owned by a natural person.... (Emphasis added.)

The Third DCA was apparently uncomfortable with this outcome, but felt it had no choice under binding Florida Supreme Court precedent.

[Carter's Administrators v. Carter, 20 Fla. 558, 570 (1884)] and [Sherbill v. Miller Mfg. Co., 89 So.2d 28, 31 (Fla.1956)] confirm that Article X, section 4 "protects the homestead against every type of claim and judgment except those specifically mentioned in the constitutional provision itself" and that other than for the purposes stated in this provision, cannot be waived. . . . Because the attempted waiver in this case is unrelated to those purposes stated in Article X, section 4, it is invalid.

Perhaps recognizing the unfairness of the outcome in this case, the Third DCA took the extraordinary step of essentially asking the Florida Supreme Court to overrule itself. More specifically, the Third DCA certified the following question to the Florida Supreme Court as a matter of great public importance:


Denial of Motion to Dismiss Is NOT an Appealable Order

Somogyi v. Nevai, __ So.2d __ (Fla. 4th DCA Feb 22, 2006)

In the probate context it is not unusual to have multiple orders entered prior to completion of the estate administration that are subject to appeal under Florida Probate Rule 5.100 and Florida Rule of Appellate Procedure 9.110(a)(2). The Committee Note for the 1996 amendment to Florida Rule of Appellate Procedure 9.110(a)(2) recognizes this reality, and addresses it head on, stating in part as follows:

The addition of new subdivision (a)(2) is a restatement of former Florida Rule of Probate Procedure 5.100, and is not intended to change the definition of final order for appellate purposes. It recognizes that in probate and guardianship proceedings it is not unusual to have several final orders entered during the course of the proceeding that address many different issues and involve many different persons. An order of the circuit court that determines a right, an obligation, or the standing of an interested person as defined in the Florida Probate Code may be appealed before the administration of the probate or guardianship is complete and the fiduciary is discharged.

So every time the probate court issues an order, the attorney needs to immediately ask him or herself whether that order is subject to appeal under the special rule applicable to probate proceedings. The answer is not always clear (when in doubt, the prudent approach is to file the appeal and let the appeallate court determine the issue). In this case the question was whether an order denying a motion to dismiss was subject to appeal. The Fourth DCA said NO in the following one-paragraph opinion:


We grant appellee's motion to dismiss this appeal for lack of jurisdiction. The "Order Denying Motion to Dismiss Petition for Revocation of Portions of Will and Related Relief" does not finally determine a right or obligation of an interested person under Fla. R.App. P. 9.110(a)(2), where it merely denies a motion to dismiss and does not revoke the probate of the will. See Sanchez v. Masterhan, 837 So.2d 1161 (Fla. 1st DCA 2003).

Court to Pro Se Litigant: "Go Hire a Lawyer"

Benedetto v. Columbia Park Healthcare Systems, __ So.2d __ (Fla. 5th DCA Mar 10, 2006)

The question of whether a person should be required to hire a lawyer if he or she wants to petition a court to probate a will has been the subject of a good amount of blogosphere commentary lately. Texas law professor Gerry W. Beyer has covered the issue on his blog Wills, Trusts & Estates Prof Blog (see here, here, and here) and Chicago-area probate attorney Joel A. Schoenmeyer has done the same on his blog Death and Taxes - The Blog (see here and here).

In Florida, the answer is simple: with limited exceptions, every guardian and personal representative MUST hire a lawyer. That's the lesson to be drawn from the Fifth DCA opinion cited above. In this case the Fifth DCA was unable to tell from the record on appeal whether the personal representative was the "sole interested person" in the estate (thus qualifying for the exception to the general rule requiring representation) or not. If the personal representative was not the "sole interested person" in the estate, then his appeal was subject to dismissal. Here's how the Fifth DCA explained the law in Florida on this point:

Florida Rule of Probate Procedure 5.030(a) provides in relevant part as follows:

(a) Required; Exception. Every guardian and every personal representative, unless the personal representative remains the sole interested person, shall be represented by an attorney admitted to practice in Florida. A guardian or personal representative who is an attorney admitted to practice in Florida may represent himself or herself as guardian or personal representative.

Because an independent action on behalf of an estate is ancillary to the estate administration, this rule governs both the estate administration itself and any independent proceedings prosecuted or defended by the estate. Thus, unless Appellant is the "sole interested person," as defined by law, he is precluded from maintaining this appeal without counsel. See, Dimitroff v. Taylor, 651 So.2d 131 (Fla. 2d DCA 1995). See also § 731.201(21), Fla. Stat. (2005) (defining "interested person").

Under Florida Law Creditors Have a Right to Fully Litigate Their Claims in Independent Actions Against Estates

Simpson v. Estate of Simpson, __ So.2d __ (Fla. 5th DCA Feb 17, 2006)

In this case the personal representative of the estate knew that her nephew was claiming he was entitled to an ownership stake in a citrus business owned by the decedent. Nephew never received the notice-to-creditors mandated by F.S. § 733.701. Nephew filed a petition under F.S. § 733.702(3) seeking an extension of time to file his claim against the estate based on the estate's failure to provide the statutorily required creditors' notice.

The evidentiary hearing on Nephew's petition for extension of time did not end well for him. Unfortunately Lake County Probate Judge Mark J. Hill failed to distinguish between (1) a proceeding to determine Nephew's entitlement to an extension of time vs. (2) a proceeding to determine the validity of his claims. According to the Fifth DCA, the undisputed evidence presented at the hearing established that Nephew was a "reasonably ascertainable" creditor who was not given notice, and thus entitled to an extension of time to file his claim against the estate.

The undisputed evidence establishes that Mark's claim was not only reasonably ascertainable, it was known to Anita. Robert testified that shortly after Jim died, Anita said to him, "We've got to make sure Mark gets his stock." However, after Mark turned 21 on September 17, Anita changed her position, stating, "I can't do anything to get the stock to Mark for his 21st birthday because it's all tied up in the probate court, and we can't touch it." Then, on October 2, 2001, Robert wrote a letter to Anita asking her to give Mark the 10.5 shares of stock. Clearly, Anita had actual knowledge of Mark's potential claim.

Once the evidence established that Nephew was entitled to file his claim, the probate court should have stopped there and let the parties fully litigate Nephew's claim in a separate independent action. That's not what the probate court did. Which was reversible error according to the Fifth DCA:

Instead of ending its inquiry there, the probate court proceeded to determine the validity of Mark's claim. Under the applicable probate statutes, the merits of Mark's claim should have been determined in an independent action. In disputes over the validity of timely filed claims, section 733.705(4) requires the claimant to "bring an independent action upon the claim" if an objection to the claim is served. Section 733.705(5) contemplates the use of an independent action after the probate court permits the filing of an untimely claim. It states, "A claimant may bring an independent action or declaratory action upon a claim which was not timely filed pursuant to s. 733.702(1) only if the claimant has been granted an extension of time to file the claim pursuant to s. 733.702(3)." The term "independent action" requires the filing of a separate action upon a claim against the estate. In re Pridgeon's Estate, 349 So.2d 741 (Fla. 1st DCA 1977). This requirement allows pleadings and responses sufficient to set the issues before the court prior to hearing. In re Fornash's Estate, 372 So.2d 128, 129 (Fla. 2d DCA 1979).

Trust Construction 101

Roberts v. Sarros, __ So.2d __ (Fla. 2d DCA Feb 15, 2006)

Probate appellate decisions come in all flavors. Some sparkle with creative lawyering by one of the advocates (see here), some can make you dizzy following the appellate court's complex but ultimately convincing line of reasoning (see here), and some just get the job done. This is one of those cases that just get's the job done. No fireworks, just good lawyering and solid guidance for us practitioners.

In this case the Second DCA walks us through an exercise probate lawyers encounter every day: how to read or "construe" a trust agreement.

Step 1: Zero in on the problematic language. I say problematic because no matter how ambiguous a provision may be, it doesn't really matter if it has no impact on any of the interested parties. In this case the problematic language revolved around whether a surviving widow had the authority to revise a trust agreement after her husband had passed away. Surviving widow signed a trust amendment disinheriting one set of her grandchildren. Grandchildren understandably didn't think this was a good idea, and the case ended up in court. Here's the "problematic" language, as described by the Second DCA:

Article XV of the Trust provides, "AMENDMENT AND REVOCATION: This Trust is subject to revocation, change or amendment, in writing, by the Grantors from time to time." Article XII contains rules of construction for the Trust instrument, including the following provision that is pertinent to this appeal: "Unless the context required [sic] otherwise, masculine personal pronouns include the feminine, and the singular and plural may be construed interchangeably."

Step 2: Identify the applicable law. Here's what the Second DCA had to say about the law in Florida applicable to trust-construction disputes:

This court has recognized that "[t]he polestar of trust interpretation is the settlors' intent." L'Argent v. Barnett Bank, N.A., 730 So.2d 395, 397 (Fla. 2d DCA 1999). If the trust language is unambiguous, the settlors' intent as expressed in the trust controls and the court cannot resort to extrinsic evidence. Id.; Ludwig v. AmSouth Bank of Fla., 686 So.2d 1373, 1376 (Fla. 2d DCA 1997). In determining the settlors' intent, the court should not "resort to isolated words and phrases"; instead, the court should construe "the instrument as a whole," taking into account the general dispositional scheme. Pounds v. Pounds, 703 So.2d 487, 488 (Fla. 5th DCA 1997); see also L'Argent, 730 So.2d at 397.

Step 3: Apply law to the facts. At the trial court level the judge ruled that surviving widow lacked the authority to amend the trust agreement. The trial court agreed with the disinherited-grandchildren when they argued that use of the plural form "Grantors" in the trust-amendment section meant widow lacked authority to unilaterally amend the document. The Second DCA reversed, based on the following line of reasoning:

[I]n considering the trust instrument as a whole, it is clear that if the singular/plural clause were not applied, it would produce absurd results. Every reference in Article I is to the plural form "Grantors." Article I deals with the disposition of principal and income of the Trust to the Grantors during their lifetime. If the references to the "Grantors" were construed to mean only the plural form, then after the death of the first Grantor the surviving Grantor could no longer receive income from the Trust. Such a result is contrary to the stated purpose of the Trust, which is to provide for the McNeills "for so long as they may live." Article I also provides that "the Trustees shall make payments from the principal of the Trust Fund to or for the benefit of the Grantors in such sums and at such times as the Grantors may request from time to time." Again, if construed to mean only the plural "Grantors," then the surviving Grantor would have no access to the principal of the Trust even though the trust was established to provide proper care for the McNeills and to allow them to maintain "a style of living to which they have been accustomed."

Like Article I, Article XV must be construed in accordance with the singular/plural clause. This is consistent, as in Article I, with the overall plan that the Grantors retain control over their assets as long as either of them lived. Nothing in the context of Article XV requires that "Grantors" be construed to mean only the plural form. When construed to include the singular "Grantor," Louise M. McNeill, as the surviving Grantor, could amend the Trust pursuant to the power to revoke or amend contained in Article XV. Thus, we reverse the trial court's order granting summary judgment as to count I and determining that the Amendment by Louise M. McNeill was invalid and remand for further proceedings on the Appellees' complaint.

57.105 Attorney's Fee Sanctions in Probate

McMonigle v. McMonigle, __ So.2d __ (Fla. 2d DCA Feb 17, 2006)

Note: on its own motion the Second DCA withdrew its February 17, 2006, opinion and substituted the following in its place: McMonigle v. McMonigle, __ So.2d __ (Fla. 2d DCA Mar 29, 2006)

POP QUIZ: What do you do if you're the beneficiary of an estate and you think the personal representative owes the estate a debt he's not paying up on?

[A.] File a statement of claim in the estate.

[B.] File a separate cause of action seeking declaratory relief in the form of a determination of what interests the estate has in the funds allegedly owed by the personal representative to the estate.

[C.] File a petition seeking removal of the personal representative on conflict of interest grounds and appointment of a successor personal representative to file an action to recover the alleged debt.

[D.] All of the above.

If you picked any answer other than [C.], not only would you be wrong, but according to Pasco County Judge Stanley R. Mills, you'd be liable for the other side's attorney's fees under F.S. § 57.105. The grounds for such sanctions would be that because claims pursued under options [A.] and [B.] were dismissed on lack-of-standing grounds, they lacked "justiciable issues of law or fact."

Not so says the Second DCA, which reversed the trial court's sanctions order. The beneficiary in this case was legitimately attempting to protect the interests of the estate. The fact that he initially went about it the wrong way doesn't mean his actions rise to the level of warranting attorneys-fees sanctions.

The Second DCA explained its ruling as follows:

Although [Tiedeman v. City of Miami, 529 So.2d 1266 (Fla. 3d DCA 1988)] does suggest that the lack of standing may be the basis of an award of section 57.105 fees, it does not require that the fees be awarded. Clearly, Robert did not have standing to bring the separate civil action. However, the factual issues raised in the civil action were the same factual issues litigated in the probate action seeking the removal of Ronald as Personal Representative. To award fees under section 57.105, the trial court must conclude there is a total absence of a justiciable issue of either fact or law. Haas v. Roe, 696 So.2d 1254 (Fla. 2d DCA 1997); Fernandez v. Chiro Risk Mgmt., Inc., 700 So.2d 65 (Fla. 2d DCA 1997). Since the factual issues here were actionable, the trial court abused its discretion by finding a total lack of justiciable issue of fact. Because we conclude there was a justiciable issue of fact, fees should not have been awarded under section 57.105.

Furthermore, we find the facts of this case to be similar to those in O'Brien v. Sarka, 613 So.2d 47 (Fla. 2d DCA 1993). In O'Brien, Sarka, who was serving as the guardian of the deceased at the time of the deceased's death, filed an independent action against the estate to collect guardianship fees allegedly owed by the estate. O'Brien was a beneficiary of the estate and concluded that the personal representative had a conflict due to her business relationship with the guardian. Accordingly, O'Brien moved to intervene in the independent action, and the motion was granted. The guardian, Sarka, then moved for a judgment on the pleadings, which was granted. She then moved for section 57.105 fees against O'Brien, arguing that O'Brien should not have been allowed to intervene in the action as the estate already was represented and O'Brien's interest was but a claim under the estate. The trial court awarded the fees, but this court reversed. "As a beneficiary, [O'Brien] was attempting to protect the assets of the estate. Although her intervention was invalid, the action was not so frivolous as to require that she and her attorney be punished for attempting it." Id. at 48.

Getting Paid for Appellate Work

In re Estate of Wejanowski, __ So.2d __ (Fla. 2d DCA February 15, 2006)

It's not unusual for a personal representative to seek explicit prior approval from the probate judge when contemplating some sort of litigation involving the estate - even is such authority is not required. This type of pre-approval is sought pursuant to F.S. § 733.602(2), which removes liability for any act of administration of the state if the act was "authorized" at the time.

This case is an example of what can go wrong when asking a probate judge for prior approval. You may not like the answer you get. Here the personal representative filed a motion with the probate court seeking approval of costs and fees associated with prosecuting an appeal of a wrongful-death judgment pending against the estate.

The trial court denied the personal representative's motion without prejudice to resubmit the request at the conclusion of the appeal upon a showing of monetary benefit to the estate and ordered him not to expend estate funds for prosecution of the appeal, to include attorney's fees and costs.

The Second DCA reversed, essentially holding that a monetary benefit (i.e., prevailing party) standard was too high a bar for approval of fees and costs associated with an appeal, stating as follows:

Requiring [the personal representative] to show a monetary benefit to the estate before he is entitled to reimbursement for appellate expenses narrows the definition of "benefit to the estate" to an unworkable level in this appellate context. An appellate attorney has an ethical duty not to prosecute a baseless or frivolous appeal. Payment of appellate fees and costs cannot be contingent upon prevailing on appeal because neither party can guarantee the outcome. The true benefit to an estate provided by an appellate attorney is the presentation of a good-faith appeal and its ultimate resolution. Our system affords litigants the right to resolve disputes with due process, safeguarded by appellate review of the trial court's decisions. Cf. Brake v. Murphy, 693 So.2d 663 (Fla. 3d DCA 1997) (reversing an order that required the personal representative and her husband to post a bond in order to file further pleadings in a surcharge proceeding because the order violated the access to the courts provision and due process clause of the state constitution).

Ward's Estate Wins Attorney-Client-Privilege Battle v. Guardian: New Blanket-Privilege Legislation Proposed to Avoid These Disputes

Tripp v. Salkovitz, __ So.2d __ (Fla. 2d DCA Feb 08, 2006)

Adult Comprehensive Protection Services ("ACPS") was appointed the decedent's plenary guardian prior to his death. Following his death, the decedent's estate sued ACPS for negligence and breach of fiduciary duty. During the discovery process the estate filed a motion seeking an order from Pinellas County Judge Kelly N. Khouzam addressing the following:

  • requiring the production of documents regarding confidential communications between ACPS and its lawyer during the pendency of the guardianship, and
  • ruling on whether ACPS could raise the attorney-client privilege at deposition in response to questions related to confidential communications between ACPS and its lawyer during the pendency of the guardianship.

The probate court ruled in favor of the ward's estate on both issues, determining that the attorney-client privilege now belonged to the estate. The problem with this ruling is that it failed to recognize that some of the confidential communications between ACPS and its lawyer had to do with protecting ACPS' self interests: not its ward. The Second DCA reversed the trial court with instructions to parse its ruling so that communications between ACPS and its lawyer having to do with protecting ACPS' self interests remained privileged. The Second DCA based its ruling on the same logic it applied when addressing the same issue in a trust context:

In Jacob, this court explained who holds the attorney-client privilege in trust situations:

Usually, a lawyer retained by a trust represents the trustee, not the beneficiary, even though the fees are paid with trust funds that would otherwise go to the beneficiary. If the attorney represents the trustee, the trustee holds the lawyer-client privilege. In some circumstances, however, the beneficiary may be the person who will ultimately benefit from the legal work the trustee has instructed the attorney to perform. See, e.g., Riggs Nat'l Bank of Washington, D.C. v. Zimmer, 355 A.2d 709, 711 (Del.Ch.Ct.1976) (noting that legal memorandum concerning trust tax issues, written before beneficiaries' litigation against trustee began, was prepared for the benefit of the trust beneficiaries) (cited in [ Barnett Banks Trust Co., N.A. v.] Compson, 629 So.2d [849, 850 (Fla. 2d DCA 1993)] ). In that situation, the beneficiary may be considered the attorney's "real client" and would be the holder of the lawyer-client privilege. But if the "real client" is the trustee, the beneficiary would have to prove the existence of some exception to overcome the privilege.

Jacob, 877 So.2d at 937 (some citations omitted). (Emphasis added.)

New legislation should make these types of disputes a thing of the past. As I reported here, the Florida Bar's Probate & Trust Litigation Committee is proposing the following new blanket-privilege legislation:

(Passed by Committee at meeting in Palm Beach, August, 2005 and passed by the Executive Council of RPPTL in November 2005)

90.5021 Fiduciary Lawyer- Client Privilege

(1) A communication between a lawyer and client acting as a fiduciary described in subsection (2) shall be privileged and protected from disclosure under section 90.502 to the same extent as if the client were not acting as fiduciary. For the purpose of applying section 90.502 to such a communication, the person or entity acting as fiduciary is the lawyer's only, real and true client.

(2) For the purpose of this section, a client acts as a fiduciary when serving as personal representative as defined in section 731.201, an administrator ad litem as used in section 733.308, a curator as used in section 733.501, a guardian or guardian ad litem as defined in section 744.102, a conservator as defined in section 710.102, a trustee as used in section 731.201 (35), and an attorney-in-fact as used in Chapter 709.

Yes, It's Safe to Put Homestead Property in a Revocable Trust

Engelke v. Estate of Engelke, __ So.2d __ (Fla. 4th DCA February 8, 2006)

Navigating Florida's homestead-protection laws is one of the primary focus points for estate planning attorneys in this state. There were two Florida Supreme Court opinions in 2005 alone attempting to unravel the thorny probate issues inherent to Florida homestead properties (see here and here).

In this case the 4th DCA addressed one of the most common questions faced by Florida estate planning attorneys: should the homestead property be put into the client's revocable trust? According to the 4th DCA, the answer is an unqualified YES. There has been hesitation in the past to put homestead property into a revocable trust because of an unfortunate Florida bankruptcy-court opinion that stood for the proposition that homestead property in a revocable trust was not owned by a "natural person," thus it lost its creditor protection. As far as I know, every published Florida opinion addressing the same issue since then has ruled the other way. The 4th DCA case linked-to above does the same, directly answering two key estate-planning questions as follows:

  • "We note that in this case while [the decedent's] residence was held in a revocable trust, it was owned by a "natural person" for purposes of the constitutional homestead exemption. Because [the decedent] retained a right of revocation, he was free to revoke the trust at any point in time. Accordingly, he maintained an ownership interest in his residence, even though a revocable trust held title to the property. We therefore conclude that [the decedent's] interest as beneficiary of his own revocable trust would entitle him to constitutional homestead protections." (Emphasis added.)
  • Frequently, as here, the trust contains provisions regarding the payment of expenses of the estate after the settlor's death. We have found no case in which a general direction to pay the estate expenses has trumped the constitutional homestead protections which are the rights of the heirs as much as the decedent. Because revocable trusts are merely will-substitute devices, we see no reason why the reasoning of Thompson v. Laney, precluding use of the homestead to satisfy estate debts, should not apply with equal force when homestead property is transferred through a revocable trust. Therefore, unless the trust specifically directs that the freely devisable homestead be sold, the rights of the heirs attach at the death of decedent, and the property is protected from the claims of all creditors." (Emphasis added.)

Knowledge of the Law + Wonderful Oral Advocacy + No Evidence = Getting Reversed on Appeal

Faerber v. D.G., 2006 WL 287322 (Fla. 2d DCA Feb 08, 2006)

Probate proceedings take place before judges, not juries. As such the parties involved (including judges), may not always feel strict compliance with Florida's rules of evidence is a necessary precaution (although Florida Probate Rule 5.170 states explicitly that the rules of evidence in civil actions generally apply to probate proceedings). That point of view is usually harmless because many of the evidentiary rules designed to shelter juries from unfair inferences may not be necessary where, as in probate proceedings, the judge is also the fact finder.

But simply skipping the need for ANY evidence is NOT acceptable, a point made by the 2d DCA in this case when it reversed a ruling by Collier County Judge Hugh D. Hayes granting a petition made pursuant to F.S. § 733.702(3) seeking leave to file a late claim against the estate because the purported creditor had allegedly been provided with insufficient notice of the claims period. According to this newspaper article, the 2d DCA's ruling will result in the dismissal of a $10 million lawsuit against the estate.

A trial court's ruling on a petition for more time to file a claim against an estate is usually reversed only if the trial court has "abused its discretion." This is a tough burden to overcome, but, as the 2d DCA makes clear in the following excerpt from its opinion, a ruling based on NO evidence is an abuse of discretion and subject to reversal:

[A]s the trial court acknowledged in its order, neither party presented any evidence below. Although, at the hearing, counsel for D.G. made certain representations as to how the Decedent and his family knew D.G. and how the Decedent's family was aware of D.G.'s involvement in the criminal case against the Decedent, counsel for Appellants objected, noting that such representations did not amount to factual evidence. We agree. See Steinhardt v. Intercondominium Group, Inc., 771 So.2d 614 (Fla. 4th DCA 2000) (stating that facts in dispute must be proven absent stipulation and that representations of counsel are insufficient). Because there was no other evidence presented at the hearing, we can only conclude that the trial court erroneously based its ultimate conclusion that D.G. was a reasonably ascertainable creditor on the assertions of D.G.'s counsel. This was an abuse of discretion. See Allstate Floridian Ins. Co. v. Ronco Inventions, LLC, 890 So.2d 300, 304 (Fla. 2d DCA 2004) ("Reaching the legal conclusion that [a]ppellees had shown due diligence when there was no evidence presented upon which to make such a finding is clearly an abuse of discretion."). Accordingly, we reverse the trial court's order granting D.G.'s petition for extension of time to file a claim against the Estate.

Because D.G. scheduled the hearing on his motion, failed to present any evidence at that hearing to establish that he had received insufficient notice of the claims period, and did not try to remedy the error when it was pointed out by Appellants' counsel, on remand the trial court is instructed to enter an order denying D.G.'s petition. (Emphasis added.)


Good Facts Rescue "Ambiguous" (Maybe Non-Existent?) Elective Share Waiver in Prenuptial Agreement

Weisfeld-Ladd v. Estate of Ladd, 2006 WL 231481 (Fla. 3d DCA Feb 01, 2006)

Clearly, the couple at the center of this dispute thought that when they signed their prenuptial agreement they were waiving any spousal rights they had to each other's separate property - including rights of a surviving spouse to an elective share under F.S. § 732.201. Nonetheless when husband died, surviving spouse went ahead and filed a petition seeking an elective share of his estate. The 3d DCA summarized her testimony regarding the couple's clear intent as follows:

"Most importantly, the wife testified as to her understanding of the Prenuptial Agreement. It was her understanding that if she would have passed away, her son would have inherited all of her separate property, and that upon her husband's death, his children would inherit all of his separate property."

"[Wife] even acknowledged that if she would have predeceased her husband, her son would have been entitled to inherit all of her separate property. Based upon the wife's interpretation of the Prenuptial Agreement, it is clear that the husband and wife's intent would have been defeated if the surviving spouse was permitted to receive an elective share. There is no doubt that the wife clearly understood that, by entering into the Prenuptial Agreement, she would not receive any of the husband's separate property upon his death, and that all of his separate property would go to his two children."

The only problem was that the prenuptial agreement didn't actually say what the parties thought they were agreeing to. In fact, the key language of the prenuptial agreement doesn't mention waiving spousal elective share rights at all, what it does say is, to say the least, "ambiguous":

"It is [husband's] intent that, in the event of his death, all of his separate property be given to his children, STEVEN M. LADD and BETHANY S. LADD, or as otherwise provided for in his Last Will and Testament."

Was that one sentence enough under F.S. § 732.702 to effectuate a valid waiver of spousal elective share rights? According to Dade County Probate Judge Maria M. Korvick it was, so she denied surviving spouse's elective-share petition. By the way, here are the portions of F.S. § 732.702 focused on by the 3 DCA:

"rights of a surviving spouse to an elective share ··· may be waived, wholly or partly, before ··· marriage, by a written contract···· Unless the waiver provides to the contrary, a waiver of 'all rights,' or equivalent language, in the property or estate of a ··· prospective spouse ··· is a waiver of all rights to elective share···· (emphasis added by 3d DCA)."

What I find most interesting about this case is how the 3 DCA seems to go out of its way to affirm the trial court's ruling denying the surviving spouse's elective share claim. Obviously swayed by a compelling set of facts, the 3 DCA arrived at the "right" conclusion as follows:

First: Assume findings of fact NOT included in the trial court's order:

"The trial court did not make a specific finding as to whether the Prenuptial Agreement was ambiguous or unambiguous. However, as the trial court allowed the wife to testify as to her intent when entering into the valid Prenuptial Agreement, we assume that the trial court found that the Prenuptial Agreement was susceptible of more than one construction and, therefore, ambiguous."

Second: Agree with findings of fact ASSUMED into the record:

"Upon review of the Prenuptial Agreement, we agree with the trial court's determination that the Prenuptial Agreement was ambiguous."

Third: After assuming factual findings into the record that weren't there to begin with, then agreeing with the trial court's assumed findings of fact, hold that "PAROL EVIDENCE," i.e., testimony by the surviving spouse completely undermining her own petition, was validly admitted to construe the "ambiguous" prenuptial agreement:

"As the agreement was ambiguous, the trial court properly admitted parol evidence to shed light on the intent of the parties when entering into the Prenuptial Agreement."

Presto! Good facts save the day!

Does a Ward's Spouse Have a Due Process Right to a Hearing Prior to a Court Entering an Order over Her Objections Authorizing a Change of Residence for the Ward? According to the Third DCA, Apparently Not

Vargas v. Acosta, 2006 WL 120182 (Fla. 3d DCA Jan 18, 2006)

In this case the ward's daughter from a prior marriage was his guardian. According to a spirited dissent in this case by Third DCA Justice Ramirez, the animus between these two was "obvious even from the sparse record" before the court. The explicit issue before the Third DCA in this case was whether Miami-Dade County Judge Arthur Rothenberg had complied with the requirements of F.S. § 744.2025 by entering an order sua sponte authorizing the change of the ward's residence from Miami to Cape Coral over his wife's objections and in spite of the fact that counsel for the wife, Candis Trusty, had served a motion to vacate such order.

The Third DCA upheld the trial court's decision. Justice Ramirez dissented by arguing that the ward's spouse had been denied any meaningful level of due process in the proceedings. Here are a few representative excerpt's from Justice Ramirez's dissent:

"The trial court did not hold a hearing. Thus, there is no judicial record to support the change in the ward's residence. The majority finds, without explanation, that the statutory requirements were met by "[considering] the reason [given] for ... relocation." Op. at ----. Does this mean that the court "considered" the reasons in private? Or does the majority mean that the court "considered" the reasons at the after-the-fact hearing on March 7th? When did the trial court "consider" placing the ward in any local facility?

The majority states that there was no dispute that the ward's needs would be best met by living in a facility close to the guardian's home. I find no record support for that statement. I also find no record support for the contrary, but that is the problem. The merits of the move from Miami to Cape Coral were never discussed at the trial level. The only hearing, on March 7, was not to discuss the merits of the move, but to allow the wife an opportunity to vent. Only the process, or lack thereof, was discussed."

"I can appreciate the exigencies of the situation where the medical facility was threatening to remove the ward, but it seems that the wife's counsel filed a hand-written motion before the ward was removed. There was nothing to prevent an emergency hearing taking place at that moment. The right to due process cannot be so casually ignored. Neither appellee's brief nor the majority opinion cite a single case to justify what happened at the trial level. (Emphasis added.)"

One way to rationalize the Third DCA's majority opinion with the points made by the dissent is to assume that under Florida law interested parties other than the ward have very little, if any, constitutionally protected rights. In a case I wrote about here the Second DCA reversed a trial court's decision denying a petition for visitation rights filed by a child-ward's grandmother. The Second DCA held that unlike a natural parent, a child-ward's guardian is simply an agent or "arm" of the court, and thus such guardian does not have the same constitutionally protected "privacy rights" that a natural parent has. The following are a few representative excerpts from that opinion:

"In Florida . . . the power and responsibility of a court exercising guardianship jurisdiction over minors is such that the court itself is considered to be the minor's guardian. See Brown v. Ripley, 119 So.2d 712, 717 (Fla. 1st DCA 1960). Thus "the legal guardian of a minor is regarded as the agent of the court and of the state in the discharge of his duty as such." Id."

"Considering the guardian's status as an arm of the court, the implications of our supreme court's decision in the Watland case, and the weight of authority from other jurisdictions, we conclude that the probate court has the power to direct a guardian to permit a grandparent or other person to visit a minor ward when the best interests of the minor will be promoted by such visitation."

Bottom Line:

Based on the Second DCA's analysis in the grandparent-visitation-rights context (i.e., guardians do not have the same privacy rights that natural parents enjoy) and the Third DCA's willingness above to approve orders entered in the absence of any meaningful due process for the ward's spouse, it appears that in Florida interested third parties should expect to take a back seat to the trial court's discretion in all material matters, and that such interested third parties have few (if any) constitutionally-mandated protections if they disagree with the trial court's decisions. This assumption, if accurate, has profound implications for how Florida attorneys should represent clients involved in contested guardianship proceedings.

Does the refusal to settle claims by parents of a brain-damaged infant trigger the mandatory appointment of a guardian ad litem for their injured child? First DCA says NO.

Tallahassee Memorial Regional Medical Center, Inc. v. Petersen, 2006 WL 88489 (Fla. 1st DCA Jan 17, 2006)

In this case the parents of a child apparently brain damaged during delivery filed a pre-suit petition to determine compensability under the Florida Birth-Related Neurological Compensation Act (the "Act," see F.S. §§ 766.301-766.316). At the conclusion of these administrative proceedings, the administrative law judge ("ALJ") awarded the parents lifetime medical expenses for their child, plus $100,000, plus reasonable expenses incurred in connection with the filing of their claim. The parents rejected this award and moved forward with filing their medical malpractice claims against the Tallahassee Memorial Regional Medical Center ("TMRMC").

When counsel for the TMRMC learned of the parents intent to reject the ALJ's award and sue instead, they immediately filed an emergency motion for appointment of a guardian ad litem. The trial judge said no and they petitioned the First DCA for writ of certiorari seeking review of the trial court's non-final order. The First DCA upheld the trial court's decision on two grounds. First, the defendants failed to demonstrate that the child's parents were not acting in the best interests of their child. Second, in the absence of clear evidence indicating a conflict of interest, imposing a guardian ad litem would be a violation of the parents' constitutional privacy rights.

The following are excerpts from the linked-to opinion addressing the two grounds put forward by the First DCA as underlying its decision:

Lack of Conflict of Interest:

"TMRMC fails to demonstrate that the interests of the Petersens are so adverse to that of Jennifer as to require the appointment of a guardian ad litem. The mere decision to proceed in an attempt to gain fuller recovery for the child is not, even in the face of some risk, tantamount to an adverse interest. By filing the complaint for medical malpractice in circuit court, the Petersens sought monetary damages for bodily injury including pain and suffering, and other general damages. These claims are not adverse to Jennifer's interests. Indeed, the facts as presented indicate that the interests of Jennifer coincide fully with the interests of the parents. Cf. Mistretta v. Mistretta, 566 So.2d 836 (Fla. 5th DCA 1990) (holding that child's interests were properly represented by mother where mother sought payment of child support from former husband who held himself out to others as the child's father)." (Emphasis added.)

Constitutional Privacy Rights:

"The Florida Supreme Court has repeatedly held that natural parents have a right to make decisions about their child's welfare without interference by third parties. See generally Von Eiff v. Azicri, 720 So.2d 510 (Fla.1998). In Von Eiff, the Florida Supreme Court held that "[n]either the legislature nor the courts may properly intervene in parental decision-making absent significant harm to the child threatened by or resulting from those decisions." 720 So.2d at 514. As discussed above, TMRMC does not show that any significant harm to the child will result from the Petersens' decision to waive the compensation award under the Act and seek further damages in the circuit court action. TMRMC has merely shown that the Petersens' election of a civil remedy has some risk and does not preserve the guaranteed return of the administrative compensation award. This is an insufficient basis upon which to invade the Petersens' fundamental parental privacy rights." (Emphasis added.)

Is Standing to Sue a Substantive or Procedural Matter for Choice of Law Purposes? Forth DCA Says It's Substantive

Siegel v. Novak, 2006 WL 119545 (Fla. 4th DCA Jan 18, 2006)

Probate litigation is often rife with conflict of law issues. For example, it is not uncommon to have a trust governed by the law of one jurisdiction (e.g., Florida law) administered in another jurisdiction (e.g., New York). In this case the parties were litigating whether the decedent's sons had standing to challenge trust disbursements made from their mother's revocable trust prior to her death. Both sides agreed New York law applied to the trust accounting issue. The point of contention arouse around standing. Under New York law the sons had standing to sue, under Florida law they apparently did not.

Question for Florida Court: Does New York law apply to the standing issue or does Florida law apply? In other words, is standing to sue a substantive or procedural matter for choice of law purposes?

Palm Beach County Judge Gary L. Vonhof ruled the decedent's sons lacked standing under Florida law and thus dismissed their claims on summary judgment. The Fourth DCA reversed holding that standing is a substantive matter for choice of law purposes, thus New York law applied because New York bore the most significant relationship to the trust, thus the decedent's sons had standing to sue. The Fourth DCA explained its ruling as follows:

"In a choice of law context, Florida maintains the traditional distinction between substantive and procedural matters." "As the forum state in this case, Florida law determines whether [the issue of standing] is substantive or procedural for choice of law purposes." Generally, when confronted by a choice of law problem, a court will apply foreign law when it deals with the substance of the case and will apply the forum's law to matters of procedure. Substantive law generally relates to the rights and duties of a cause of action, while procedural law involves the "'machinery for carrying on the suit.'".

No Florida case has decided whether standing is a substantive or procedural matter for choice of law purposes. Recently, the eleventh circuit has indicated that "[u]nder Florida's choice of law provisions, Florida law governs all substantive issues, including the question of whether an individual has standing and capacity to sue." In Merkle v. Robinson, 737 So.2d 540, 542 (Fla.1999), the Florida Supreme Court held that "statute of limitation choice of law questions [should be treated] the same as 'substantive' choice of law questions which,···· Florida decides pursuant to the 'significant relationship' test."

In this area, the question of standing to assert a claim is analogous to a statute of limitations defense. Both issues relate to whether a cause of action may proceed; neither involves the "machinery for carrying on the suit" once the right to proceed has been determined. The ability to bring an action at law is a "most valuable attribute" of a legal right, a factor favoring the classification of standing as a substantive matter.

Here, the right of the [decedent's sons] to challenge the distributions from the trust should be decided under New York law. For the challenged distributions, New York bears the most significant relationship to the trust.

(Emphasis added; internal citations omitted.)

Does "Clear and Convincing Evidence" of Incapacity Preclude the Existence of Conflicting Evidence? Fifth DCA Says No

Smith v. Smith, 2005 WL 3555852 (Fla. 5th DCA Dec 30, 2005)

In this case counsel for the ward argued that as a matter of law where, as happened here, there is conflicting expert testimony regarding a person's mental competence, the trial court is precluded from finding that there is "clear and convincing evidence" to support a finding of incapacity, as required by F.S. § 744.331(6). Orange County Judge Lawrence R. Kirkwood didn't buy this argument, and neither did the Fifth DCA, holding as follows:

Although the two experts hired by the defense disagreed with the conclusions drawn by the examining committee, this conflict in the evidence does not preclude a finding that the evidence of incompetency was clear and convincing. Nor would conflicts in the evidence require the court to find a lack of clear and convincing evidence. A similar problem existed in Manassa v. Manassa, 738 So.2d 997, 997 (Fla. 1st DCA 1999). In rejecting the argument that conflicts in the evidence precluded a finding of incompetency, the court explained:

In the case at bar, the record is replete with conflicting medical reports and testimony regarding Manassa's competence. It is the purview of the trial court to determine the credibility and weight of the evidence. See LeWinter v. Guardianship of LeWinter, 606 So.2d 387, 388 (Fla. 3d DCA 1992). This court will not reweigh the testimony and evidence, or substitute its judgment for that of the trier of fact. See In re Adoption of Baby E.A.W., 658 So.2d 961, 966 (Fla.1995). The trial court noted that, with the exception of the examining committee which has seen hundreds of cases to determine incapacity, the medical reports were from physicians who are not professionals in mental health care proceedings. The examining committee opined that Mr. Manassa was incapacitated, and it recommended appointment of a plenary guardian. The trial court weighed the evidence and accepted the recommendation of the examining committee.

Id. at 997-998.

In Shaw v. Shaw, 334 So.2d 13 (Fla.1976), the court said that appellate courts have a right to reject "improbable testimony or evidence." Id. at 16. However, this case does not involve improbable testimony or evidence. It involves multiple experts with competing views, and the court found the evidence of the four experts appointed by the court to be "clear and convincing evidence," which the court properly could do.

Florida Supreme Court on Freely Devisable Homestead Property

McEnderfer v. Keefe, 2006 WL 129320 (Fla. Jan 19, 2006)

In 2005 I wrote here about the Florida Supreme Court's decision in Warburton construing Florida's homestead laws as applicable to otherwise freely devisable homestead property. This was a companion case to the 2005 decision, and the Court merely restates its earlier position.

This Court recently quashed Warburton and answered the certified question in the negative. We therefore answer the certified question in this case in the negative and hold that where a decedent is not survived by a spouse or minor children, the decedent's homestead property passes to the residuary devisees, not the general devisees, unless there is a specific testamentary disposition ordering the property to be sold and the proceeds made a part of the general estate. See McKean v. Warburton, 30 Fla. L. Weekly S613, --- So.2d ----, 2005 WL 2155180 (Fla. Sept. 8, 2005).

The following briefs were filed with the Court in this case:

My Running List for 2007

This is my running list of significant Florida trust and probate cases for 2007. Like any compilation, the criteria for inclusion is somewhat subjective, so I'm certainly not guaranteeing that I've identified every case that could conceivably be related to probate matters in Florida. However, if you think I've missed an important probate-related case that deserves wider notice, please let me know. As new cases are published, they'll be added to this list.

All of the cases listed below are also cross referenced by topic, so if you ever want to come back to that homestead case you remember seeing, you can simply jump to all of the homestead cases and scroll through those.

1.  Disque v. Unger, 2007 WL 101375 (Fla. 4th DCA Jan 17, 2007) (Practice & Procedure)

2.  Hernandez v. Hernandez, 2007 WL 120051 (Fla. 5th DCA Jan 19, 2007) (Removal of Personal Representatives and Surcharge)

3.  Spoerr v. Manhattan Natl. Life Ins. Co., 2007 WL 128815 (S.D.Fla. Jan 12, 2007) (Practice & Procedure)

4.  Keller v. Estate of Keller, 2007 WL 162770 (Fla. 4th DCA Jan 24, 2007) (Will and Trust Contests)

5.  Glover v. Miller, 2007 WL 247899 (Fla. 4th DCA Jan 31, 2007) (Practice & Procedure)

6.  Simpson v. In re Estate of Norton, 2007 WL 397463 (Fla. 3d DCA Feb 07, 2007) (Practice & Procedure)

7.  Hernandez v. Gil, -- So.2d. ---, 2007 WL 466029 (Fla. 3d DCA Feb 14, 2007) (Will & Trust Contests)

8.  Harding v. Rosoff, --- So.2d ----, 2007 WL 461381(Fla. 4th DCA Feb 14, 2007) (Will and Trust Contests)

9.  Juega v. Davidson, --- So.2d ----, 2007 WL 465523 (Fla. 3d DCA Feb 14, 2007) (Practice & Procedure)

10.  EHQF Trust v. S & A Capital Partners, Inc. , --- So.2d ----, 2007 WL 45838 (Fla. 4th DCA Jan 09, 2007) (Appellate Practice in Probate)

11.  Arthur v. Milstein, --- So.2d ----, 2007 WL 602630 (Fla. 4th DCA 2007) (Decedent's Remains)

12.  Cutler v. Cutler, --- So.2d ----, 2007 WL 601866 (Fla. 3d DCA Feb 28, 2007) (Homestead)

13.  In re Gosman, 2007 WL 707365 (Bankr.S.D.Fla. Mar 05, 2007) (Homestead)

14.  In re Estate of Coukos, 947 So.2d 1290, 32 Fla. L. Weekly D433 (Fla. 2d DCA Feb 09, 2007) (Dependent Relative Revocation)

15.  Trenchard v. Gray, --- So.2d ----, 2007 WL 837294 (Fla. 2d DCA Mar 21, 2007) (Spousal Elective Share Claims)

16.  Schilling v. Herrera, --- So.2d ----, 2007 WL 981627 (Fla. 3d DCA Apr 04, 2007) (Tortious Interference with Inheritance)

17.  Garcia v. Morrow, --- So.2d ----, 2007 WL 983053 (Fla. 3d DCA Apr 04, 2007) (Personal Representatives)

18.  Fach v. Brown Bros. Harriman Trust Co. of Florida, 949 So.2d 260 (Fla. 4th DCA Feb 07, 2007) (Appellate Practice in Probate; Venue)

19.  The Florida Bar v. Maurice, --- So.2d ----, 2007 WL 1074948 (Fla. Apr 12, 2007) (Ethics)

20.  Morrison v. West, --- So.2d ----, 2007 WL 1135659 (Fla. 4th DCA Apr 18, 2007) (Settlement Agreements)

21.  Miller v. Goodell, --- So.2d ----, 2007 WL 1201892 (Fla. 4th DCA Apr 25, 2007) (Contested Guardianship Proceedings)

22.  Phillips v. Hirshon, --- So.2d ----, 2007 WL 1263475 (Fla. 3d DCA May 02, 2007) (Homestead)

23.  Bryan v. Dethlefs, --- So.2d ----, 2007 WL 1425499 (Fla. 3d DCA May 16, 2007) (Trust Construction)

24.  Diaz v. Ashworth, --- So.2d ----, 2007 WL 1484550 (Fla. 3d DCA May 23, 2007) (Will and Trust Contests)

25.  Key v. Trattmann, --- So.2d ----, 2007 WL 1517827 (Fla. 1st DCA May 25, 2007) (Resulting Trusts)

26.  Marshall v. HQM of Winter Park, LLC, --- So.2d ----, 2007 WL 1647561 (Fla. 5th DCA Jun 08, 2007) (Death Certificates)

27.  Weiss v. Berkett, 949 So.2d 1092 (Fla. 3d DCA Feb 07, 2007) (Lack of Prosecution)

28.  Forman v. State Dept. of Children & Families, 2007 WL 601628 (Fla. 4th DCA Feb 28, 2007) (Powers of Attorney)

29.  City of Key West v. Knowles, 948 So.2d 58 (Fla. 3d DCA Jan 10, 2007) (Dead Bodies)

30.  Creasy v. Estate of Mabie, 2007 WL 1773197 (Fla. 1st DCA Jun 21, 2007) (Appellate Practice in Probate)

31.  Commercial Capital Resources, LLC v. Giovannetti, 955 So.2d 1151 (Fla. 3d DCA Mar 28, 2007) (Settlement Agreements)

32.  Greene v. Borsky, --- So.2d ----, 2007 WL 2119215 (Fla. 4th DCA Jul 25, 2007) (Appellate Practice in Probate)

33.  In re Guardianship of Graham, --- So.2d ----, 2007 WL 2189111 (Fla. 4th DCA Aug 01, 2007) (Contested Guardianship Proceedings)

34.  In re Estate of Musil, --- So.2d ----, 2007 WL 2317189 (Fla. 2d DCA Aug 15, 2007) (Lost Wills/Virtual Adoption)

35.  Gunster, Yoakley & Stewart, P.A. v. McAdam, --- So.2d ----, 2007 WL 2376658 (Fla. 4th DCA Aug 22, 2007) (Attorney Malpractice)

36.  Becker v. Davis, 491 F.3d 1292 (11th Cir.(Fla.) Jul 11, 2007) (Trust Accountings)

37.  Barber v. Parrish, --- So.2d ----, 2007 WL 2384521 (Fla. 1st DCA Aug 23, 2007) (Slayer Statute)

38.  Vaughan v. Boerckel, --- So.2d ----, 2007 WL 2428516 (Fla. 4th DCA Aug 29, 2007) (Funding Revocable Trusts)

39.  Ziino v. Baker, --- F.Supp.3d ----, 2007 WL 2433902 (M.D.Fla. Aug 22, 2007) (Spendthrift Trusts)

40.  Kravitz v. Levy, --- So.2d ----, 2007 WL 2480538 (Fla. 4th DCA Sep 05, 2007) (Suing PR/Statue of Limitations)

41.  Ramunno v. Terranova, --- So.2d ----, 2007 WL 2480980 (Fla. 4th DCA Sep 05, 2007) (Evidence)

42.  Ripoll v. Comprehensive Personal Care Services, Inc., --- So.2d ----, 2007 WL 2043483 (Fla. 3d DCA Jul 18, 2007) (Temporary Injunctions)

43.  J.P. Morgan Trust Co., N.A. v. Siegel, --- So.2d ----, 2007 WL 2710957 (Fla. 4th DCA Sep 19, 2007) (Corporate Trustee Compensation Dispute)

44.  Berlin v. Pecora, --- So.2d ----, 2007 WL 2710764 (Fla. 4th DCA Sep 19, 2007) (Tenants by the entireties)

45.  In re Estate of Magee, --- So.2d ----, 2007 WL 2781131 (Fla. 2d DCA Sep 26, 2007) (Elective Share Statute)

46.  In re Guardianship of Stephens, --- So.2d ----, 2007 WL 2811591 (Fla. 2d DCA Sep 28, 2007) (Contested Guardianship Proceedings)

47.  Wolfe v. Stevens, --- So.2d ----, 2007 WL 2891413 (Fla. 2d DCA Oct 05, 2007) (Constructive Service of Process)

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

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

50.  Graham v. Florida Dept. of Children and Families, --- So.2d ----, 2007 WL 4245627 (Fla. 4th DCA Dec 05, 2007) (Contested Guardianship Proceeding; Criminal Contempt)

51.  Liberty Life Assur. Co. of Boston v. Miller, Slip Copy, 2007 WL 4233547 (S.D.Fla. Nov 29, 2007) (Power of Attorney; Life Insurance Beneficiary Designations)


1.  Baker Botts, L.L.P. v. Cailloux, --- S.W.3d ----, 2007 WL 460643 (Tex.App.-San Antonio Feb 14, 2007) (Conflicts of Interest)

2.  Estate of Hester v. U.S., --- F.Supp.2d ----, 2007 WL 703170 (W.D. Va. Mar 02, 2007) (Estate Tax)

3.  Estate of Zlotowski v. C.I.R., T.C. Memo. 2007-203 (Jul 24, 2007) (PR Liability/Tax Penalty)

Yes . . . Those Pesky Beneficiary Designation Forms Actually Matter!!

Smith v. Smith, 2005 WL 3439889, 30 Fla. L. Weekly D2845 (Fla. 5th DCA Dec. 16, 2005)

Both in the divorce context and for estate planning purposes, reviewing beneficiary designation forms for insurance policies, IRAs, and pension plan benefits is one of those "to do" items that often gets left to the end. Well, this case should be the sort of "cautionary tale" you may want to share with those clients who never quite get around to signing their change of beneficiary designation forms.

As part of Mr. and Mrs. Smith (that's their real names) divorce, they signed a marital settlement agreement (prepared by Mrs. Smith) splitting everything up including, at least they thought, their respective insurance policies, IRAs and pension plans. Unfortunately for the beneficiaries of Mr. Smith's estate, he sat on the change of beneficiary designation forms for a year and half before he died - without having executed the forms (oops!). Seminole County Trial Judge Nancy F. Alley sided with Mr. Smith's estate, and ruled that the marital agreement was enough all by itself to entitle the estate to the disputed funds generated by Mr. Smith's life insurance policies and retirement plan benefits.

The Fifth DCA said not so fast, reversing the trial judge based on the following:

In Cooper v. Muccitelli, 661 So.2d 52 (Fla. 2d DCA 1995) ("Cooper I"), the Second District Court of Appeal held that "without specific reference in a property settlement agreement to life insurance proceeds, the beneficiary of the proceeds is determined by looking only to the insurance contract." Id. at 54. The Florida Supreme Court affirmed, saying that a contrary holding would put insurance companies in an "impossible position." Cooper v. Muccitelli, 682 So.2d 77, 79 (Fla.1996) (" Cooper II"). The high court pointed out that despite specific and clearly worded language in an insurance contract, a carrier could never be certain to whom to pay the proceeds. The lesson from Cooper I and Cooper II is that while it may be possible in a marital settlement agreement to waive one's right as a beneficiary of insurance policies, that waiver can only be accomplished if the waiving party specifically gives up his or her rights to the "proceeds" of these policies.FN1 Otherwise, one must look only to the beneficiary designation made by the insured and filed with the insurer.

In the present, case the marital settlement agreement fails to make specific reference to the proceeds of the life insurance policy in question, and the decedent, in the words of the Florida Supreme Court in Cooper II,"did just what he needed to ensure that the proceeds would go to [Ms. Smith]-he did nothing." Cooper II, 682 So.2d at 79. He had a year and a half to execute change of beneficiary forms as required by his policy of insurance, but for whatever reason, he did not do so. Thus, Ms. Smith is entitled to the proceeds of the life insurance policies. (Emphasis added.)

FN1. Obviously some other language such as "death benefits" would likely suffice.

The Fifth DCA came to the same conclusion with respect to the decedent's IRAs and pension plan benefits: no change of beneficiary form means the disputed funds go to the original beneficiary - Mr. Smith's ex-wife.

How to Fix a Broken Trust: Post Mortem Trust Reformations of Drafting Mistakes

Popp ex rel. Estate of Davis v. Rex, 2005 WL 3299727, 30 Fla. L. Weekly D2760 (Fla. 4th DCA Dec 07, 2005)

I've written before (see here) on how challenging it can be for attorneys drafting estate-planning documents to cover every issue that possibly could come up decades in the future when the document is put to the test in a probate-related dispute. Even minor mistakes/omissions can morph into years of probate litigation. Well, that's exactly what happened in this case.

The case involves the reformation of the Virginia F. Davis 1986 Irrevocable Trust (the "1986 trust"), which provided that when Mrs. Davis died it would be divided in half with one share for each of her two sons and each son's share would be distributed in three installments-one immediately, one five years later, and the last one five years after that. Mrs. Davis died on November 2, 2000, predeceased by her husband (i.e., about 14 years after the 1986 trust was signed). The litigation in question arose in the context of probate-administration proceedings involving one of Mrs. Davis' children, Scott F. Davis, who died without issue on November 19, 2002 (i.e., about 16 years after the 1986 trust was signed) - having received only one of the three installment payments he was originally entitled to under the 1986 trust.

Under Mr. Davis' will, the residuary beneficiaries of his estate were the Pittsburgh State University Foundation, Inc. and the WPBT Communications Foundation, Inc.

According to the Fourth DCA, the 1986 trust contained the following drafting error:

The 1986 trust, as a result of a drafting error, omitted instructions as to what would happen if one of the sons died without children before he had received his installment payments. The trust provisions expressly covered what would happen if a son died with children (providing that the unpaid installments would go to those children) but stopped without going to the next step, directing where the unpaid installments should go if a son had no issue. (Emphasis added.)

Based on the following evidence, Palm Beach County Judge Gary L. Vonhof entered a final judgment reforming the 1986 trust so that the share of a deceased son without issue would go to the other son:

  • Testimony of drafting attorney in favor of the requested trust reformation;
  • Testimony of a financial advisor who worked with Mrs. Davis in connection with creating the 1986 trust, also in favor of the requested trust reformation; and

  • The text of a comparable, but separate, revocable trust established by Mrs. Davis that provided that in the event one of her two sons died without issue, his share was to go to her other son.

The Fourth DCA upheld the trial court's ruling, based on the following:

When this court previously decided [Davis v. Rex, 876 So.2d 609 (Fla. 4th DCA 2004)], we sent the case back to the trial court to determine if the trust should be reformed. We held, citing In re Estate of Robinson, 720 So.2d 540, 543 (Fla. 4th DCA 1998), "that a trust with testamentary aspects may be reformed after the death of the settlor for a unilateral drafting mistake so long as reformation is not contrary to the interest of the settlor." Davis, 876 So.2d at 611. This mistake must be shown by clear and convincing evidence. Robinson, 720 So.2d at 542.

Family to Contest Revised Will of St. Petersburg Millionaire: Latest Twist in a Two-year Battle over $1.5 Million Estate

Any time an attorney writes himself or one of his relatives into a client's will, red flags should shoot up all over the place. If this same attorney is also cutting the testator's family out of the will, the ethical and legal issues become so thick the attorney is almost guaranteeing future litigation over the will. That's exactly what happened in a St. Petersburg, Florida, case, as reported in this newspaper story. Here are a few excerpts from that story:

The millionaire walked into the St. Petersburg law office.

Harry Lieffers Jr., 76, looked over a five-page document and, with a few strokes of a pen, cut his two daughters and stepson out of his will.

On that October day in 2003, Lieffers decided that his roughly $1.5-million estate would be divided equally among two people: His 43-year-old real estate agent and the agent's 22-year-old girlfriend.

"I wish to reward them for the kindness they have shown me," the will said.

The attorney who drafted the will was the girlfriend's uncle.

The document, filed after Lieffers' death last month, is the latest point of contention in a two-year battle over Lieffers' health and estate.

Lieffers' children say he was vulnerable because of dementia and Alzheimer's disease. They say his real estate agent, Gerard Growney, and the attorney, Alan Watson, took advantage of Lieffers.

The family has filed a complaint against Watson with the Florida Bar and plan to contest the will.

* * * *

Lieffers' children know a lengthy court battle may wipe out all of the funds, but they believe Lieffers would have wanted them to push forward.

"If we ever needed Dad, he was there for us," said daughter Reibel. "We will continue to be there for him, to preserve his last wishes now that he is gone." (Emphasis added.)

Did Drafting Attorney Violate Florida Bar Ethics Rule?

Based on the linked-to story, the answer appears to be NO. Rule Reg. Fla. Bar 4-1.8(c) prohibits an attorney from preparing an instrument giving the attorney or a person related to the attorney any "substantial gift" from a client, including a testamentary gift, unless the client is related to the proposed donee. A person's niece or nephew is not considered "related" for purposes of this rule. The Florida Bar will have to grapple with this case, but the overriding question for all concerned should be "why get caught up in this mess to begin with?"

Contested Guardianship Proceeding as Precursor to Probate Litigation

One final note, if you read the linked-to story you'll note this family drama started out as a contested guardianship proceeding, emphasizing once again the remarks I've made (see here and here) regarding how these types of proceedings usually end up being precursors to probate litigation. Perhaps if someone had sought discovery of Mr. Lieffers' will as part of the contested guardianship proceedings the parties would have found out about his will's controversial dispositive provisions before his death and worked out these issues while he was still around to comment.

Source: Thanks to Heraldblog@gmail.com for brining this item to my attention!

Family Feud Over $25 Million Fortune Sheds Light on Differences in Probate Practices From State to State

When I wrote here about the brewing probate dispute involving Rosa Park's estate, I mentioned that contested guardianship proceedings are often simply precursors to the real battle: probate litigation. An on-going guardianship dispute that is now receiving national attention, as described in this New York Times article, also highlights a second issue driving many guardianship disputes: forum shopping. In this case, the family is split over whether a court in Texas or one in New Jersey should have jurisdiction over the dispute. The following are a few excerpts from the New York Times article:

Lillian Glasser, by all accounts, never intended to spend her twilight years in Texas. Or her $25 million fortune.

Beyond the personal drama, the case highlights the checkerboard practices of local probate courts, which govern the transfer of property from people who die or are declared incompetent. The courts are not federally regulated, but in response to a growing number of interstate disputes, the National Conference of Commissioners on Uniform State Laws is drafting nationwide probate standards similar to those in the field of child custody.

"These cases are popping up all over the country," said Terry Hammond, executive director of the National Guardianship Association, a nonprofit group of lawyers, social workers and other professionals seeking uniform standards. "The combination of the mobile character of society plus the demographics of an aging population combine to create a potentially volatile situation," said Mr. Hammond, a lawyer in El Paso who briefly represented Mrs. Glasser's son in the Texas dispute.

To Russell Verney, an investigator with Judicial Watch, which has been studying probate courts, the issue boils down to "forum shopping."

"In my opinion," Mr. Verney said, "this is a case about a resident of New Jersey who amassed her fortune in New Jersey and never indicated any interest in subjecting herself or her estate to the probate laws of Texas. If anyone has jurisdiction, it should be the State of New Jersey."

Sharon B. Gardner, a Texas lawyer representing Ms. Glasser's daughter and former guardian, Suzanne Matthews, has responded publicly to the charges being made against her client (and the jurisdiction of the Texas courts) in an e-mail message published here on the Wills, Trusts and Estates Prof Blog.

As reported here, in the latest turn of events the case has wound up in Federal Court, where a judge ruled yesterday. Here are a few excerpt from the linked-to story describing the judge's ruling:

In a sharply worded order that spanks the squabbling children of Lillian Glasser, the 85-year-old New Jersey woman mired in a nasty Texas probate struggle, U.S. District Judge Fred Biery took over a chunk of the complex case Wednesday.

Calling the dispute a "legal fratricide" between sibling rivals that has consumed millions of dollars in attorneys' fees, Biery's order said "the end result ... is the creation of a Glasser chess game in which Mrs. Glasser has become a pawn."

His ruling sends parts of the case back to Bexar County Probate Court where a trial will be held over who should become the guardian of Glasser and her $25 million estate. But because the principal parties come from three states, Biery kept control over other issues.

Florida Judges Have "Limited Discretion" When Appointing Guardians

Wilson v. Robinson, 2005 WL 3499495 (Fla. 5th DCA Dec 23, 2005)

F.S. § 744.312 lays out the statutory preferences and factors applicable in Florida regarding the appointment of guardians. In this case Robert Wilson appealed an order entered by Seminole County Judge James E.C. Perry denying his petition to be appointed plenary guardian of his wife, Beverly Wilson (who was incapacitated due to Alzheimer's disease), and, instead, appointing their daughter, Bambi Robinson, to serve as Ms. Wilson's guardian.

Although unclear from the opinion, it appears Ms. Wilson expressed a preference for the appointment of her husband as her guardian. On appeal, the Fifth DCA upheld the trial court's appointment of Ms. Wilson's daughter as plenary guardian based on the following:

"[I]n guardianship cases, as in other cases, discretionary acts are subject to the test of reasonableness, i.e., they must be supported by logic and justification for the result and founded on substantial, competent evidence." In re Guardianship of Sapp, 868 So.2d 687, 693 (Fla. 2d DCA 2004) (citing In re Guardianship of Sitter, 779 So.2d 346, 348 (Fla. 2d DCA 2000)); see generally Canova v. Smith ex rel. S.G.S., 854 So.2d 852 (Fla. 5th DCA 2003) (upholding a guardianship decision because it was supported by substantial competent evidence). Discretion is abused when no reasonable person would take the view adopted by the trial court. Canakaris v. Canakaris, 382 So.2d 1197, 1203 (Fla.1980).

The trial court's discretion in the selection of a guardian has been described as "limited discretion" in the sense that it must be exercised consistent with the Florida Statutes. See Poteat v. Guardianship of Poteat, 771 So.2d 569, 572 (Fla. 4th DCA 2000) (citing In re Castro, 344 So.2d 270, 271 (Fla. 4th DCA 1977)). (Emphasis added.)

Newsflash to Probate Bar: Even in Probate Proceedings Due Process Rights Still Mean Something

Fleming v. Demps, 2005 WL 3481367 (Fla. 2d DCA Dec 21, 2005)

In this case there was a dispute regarding whether $317,000 in a certain bank account belonged to the probate estate or the decedent's niece, Ms. Henrietta Fleming, the designated beneficiary of the account. This is the sort of issue probate judges deal with every day. Which may explain in part why Hillsborough Judge Rex Martin Barbas felt it was OK to enter a final judgment ruling in favor of the estate and against Ms. Fleming without conducting an evidentiary hearing.

Ms. Fleming appealed, and the Second DCA reversed the trial judge on the following due-process grounds:

Concerning the lack of an opportunity to be heard prior to entry of the final judgment, "[d]ue process requires that a party be given the opportunity to be heard and to testify and call witnesses on his behalf, and the denial of this right is fundamental error." Pettry v. Pettry, 706 So.2d 107, 108 (Fla. 5th DCA 1998) (citations omitted); see also Pope v. Pope, 901 So.2d 352, 353-54 (Fla. 1st DCA 2005) (same); Hinton v. Gold, 813 So.2d 1057, 1060 (Fla. 4th DCA 2002) (same). Here, the personal representative's motion of March 1, 2004, to determine who is the rightful owner of the funds and whether the funds should be administered as estate assets or otherwise distributed to the proper owner was resolved without giving Ms. Fleming any opportunity to be heard and to present evidence on the issues. (Emphasis added.)

Lesson Learned:

The probate-administration process is often criticized as being too slow and costly. In contested proceedings, this criticism can conflict with basic notions of fairness underlying every Floridian's due process rights. Hopefully the parties (and the trial judge) will realize this without having to incur the extra cost and expense associated with appellate proceedings.

Third DCA Enforces Waiver of Homestead Rights to Pay Attorney's Fees

Demayo v. Chames, 2005 WL 3180187, 30 Fla. L. Weekly D2692 (Fla. 3d DCA Nov 30, 2005)

In December 2002 Henry DeMayo retained Deborah Chames and her law firm, Heller and Chames, P.A., to represent him in a post-dissolution proceeding to modify his child support and alimony obligations. The retainer agreement included the following clause:

It is specifically agreed that Heller & Chames, P.A. shall have and is hereby granted all general, possessory and retaining liens and all equitable, special and attorney's charging liens upon the client's interests in any and all real and personal property within the jurisdiction of the court for any balance due, owing and unpaid as well as a lien in any recovery whether by settlement or trial; and such lien or liens shall be superior to any other lien subsequent to the date hereof and that the client hereby knowingly, voluntarily and intelligently waives his rights to assert his homestead exemption in the event a charging lien is obtained to secure the balance of attorney's fees and costs. (Emphasis added.)

In October 2003 Miami-Dade Judge Robert N. Scola, Jr. granted Heller and Chames' request to withdraw from representing Mr. DeMayo and shortly thereafter entered a final judgment in the sum of $33,207.76 in favor of the law firm. The trial court expressly enforced the waiver provision of the retainer agreement.

On appeal, the Third DCA upheld the trial court's ruling on the following grounds:

[W]e see no reason why an owner of homestead property should not be able to waive [his constitutional right under Article X, Section 4 of the Florida Constitution against divestment of homestead property via a forced sale] if he so desires. As the Florida Supreme Court stated in Caggiano, 605 So.2d at 59,"the homestead exemption ··· was intended simply to guarantee that the homestead would be preserved against any involuntary divestiture by the courts····" See also Havoco, 790 So.2d at 1022 ("The homestead guarantee uses broad language protecting the homestead from involuntary divestiture····"). Absent a plain and unambiguous statement in the Florida Constitution to the contrary, we decline to imply a prohibition against a voluntary divestiture of one's constitutional right to homestead protection.

Warning: see this post: on is own motion Third DCA reconsidered this case en banc and then completely reversed itself!

Failure to Account for Statutory Apportionment of Taxes and Administrative Expenses Leads to Post Mediation Litigation

Sheets v. Palmer, 2005 WL 3403620 (Fla. 1st DCA Dec 14, 2005)

In this case the parties settled a will contest by executing a settlement agreement that provided, in part, that the party challenging the will would

"receive a $38,500.00 credit from the Estate as a specific bequest made to him under the terms of the . . . [w]ill."

Apparently when the settlement agreement was signed the parties did not address if this "bequest" would bear any of the taxes and administrative expenses of the estate. Well, they should have. The residuary assets of the estate were insufficient to cover these expenses. As such, the personal representative said the $38,500.00 specific bequest would have to bear a proportionate share of these expenses. The will-challenger said NO, arguing the parties never intended that result. Duval County Judge James L. Harrison agreed.

The First DCA said not so fast, holding as follows:

  • In the absence of specific language in the will voiding the statutory apportionment scheme, a probate court does NOT have the discretionary authority to relieve a specific bequest of its obligation to bear a proportionate share of estate taxes and administrative expenses, thus warranting reversal of this portion of the probate court's order. F.S. §§ 733.817(5)(a)1. and 733.805(1)(d).
  • A probate court DOES have the discretionary authority to direct from what part of the estate attorneys' fees and costs shall be paid, thus these items could be allocated away from the settlement bequest. F.S. § 733.106(4).
  • A probate court DOES have the discretionary authority to direct from what part of the estate interest and penalties on estate taxes shall be paid, thus these items could be allocated away from the settlement bequest. F.S. § 733.817(5)(g).

Lesson Learned:

It can be incredibly frustrating to find yourself in litigation after apparently settling a case in mediation. However, as this case makes clear, carefully drafting the settlement agreement is just as important as negotiating the underlying deal. If the parties had explicitly addressed in the settlement agreement whether or not the $38,500.00 specific bequest would have to bear a proportionate share of the estate's taxes and expenses, the acrimony, expense and delay associated with this post mediation litigation might have been avoided.

Gannett Newspaper Fortune: Probate Administration Malpractice Update #2

As I previously reported here, two heirs to the Gannett newspaper sued West Palm Beach, Fla.-based Gunster Yoakley & Stewart alleging that the firm colluded with its client JPMorgan Trust Co., a subsidiary of New York City-based JPMorgan Chase & Co., in running up fees for planning and administering the estate of their father, Charles McAdam Jr., a Wellington resident who was worth more than $57 million when he died in 2003.

Well, as reported in this Palm Beach Post article, the suit has not gone well for Gunster Yoakley. In a move that sent Circuit Judge Jonathan Gerber back to the books to do legal research, the jury awarded the brothers $1.2 million -- $331,496 more than the heirs requested as damages for this portion of the case. The jury found that the firm breached its fiduciary responsibility and committed legal malpractice in its handling of the estate.

And there may be more bad news to come. In a related upcoming trial the Gannett heirs will be claiming another $7 million that they had to pay in taxes and fees because of other oversights made by Gunster Yoakley. "I'm confident that we will be successful," said attorney Steven Katzman, who represented the heirs. Calling the verdict "an aberration," Donald Beuttenmuller, the managing shareholder of Gunster Yoakley, said it will be appealed.

Lesson Learned:

Estate planning and probate administrations can be complex, high-stakes affairs that even the largest and most well respected law firms get burned by on occasion. This is no place for amateurs.

Florida Probate Courts Have the Legal Authority to Mandate Grandparent Visitations

K.A.S. v. R.E.T., 2005 WL 3179763 (Fla. 2d DCA Nov 30, 2005)

In the latest round in the battle by grandparents to obtain legal visitation rights with their grandchildren, the Second DCA held that guardians do not enjoy the same constitutional privacy rights natural parents enjoy regarding the care and custody of their children. As such, the constitutional privacy rights that have been the undoing of various legislative efforts to establish grandparent visitation rights in Florida simply do not apply. Bottom line, a Florida probate court has the legal authority to mandate grandparent visitations if such family contact is in the best interest of the ward.

The Second DCA explained the rationale underpinning its decision as follows:

The probate court's reliance on Sullivan and similar cases that have invalidated grandparent visitation statutes assumed that the appointment of the Ward's maternal grandparents as the guardians of his person transferred to them the parents' fundamental liberty interest to raise their children free from state interference in the absence of a compelling state interest. But the appointment of the Ward's maternal grandparents as the guardians of his person did not bestow upon them the constitutional privacy interest that natural parents enjoy regarding the care and custody of their children. See M.G. v. R.V., 58 P.3d 1145, 1147 (Colo.Ct.App.2002); In re Joshua S., 260 Conn. 182, 796 A.2d 1141, 1155-57 (Conn.2002); Casper v. Bushman (In re Guardianship of Wemark), 525 N.W.2d 7, 9 (Iowa Ct.App.1994); Luby v. Da Silva (In re Brown), 153 Wash.2d 646, 105 P.3d 991, 994 (Wash.2005). Therefore, Sullivan and the other cases that address grandparent visitation statutes are not controlling here. Likewise, a stepparent, custodian, guardian, or other person standing in loco parentis to a child does not acquire all of the rights or assume all of the obligations of a natural parent. It follows that a guardian of the person of a minor does not have the exclusive right that a natural parent would have to determine what persons may visit the child. See Reynolds, 141 P.2d at 503; Casper, 525 N.W.2d at 9; Luby, 105 P.3d at 994. In this case, the Guardians of the Person enjoy the care and custody of the Ward not because of the natural bond between parent and child but, rather, by virtue of their appointment by the probate court. Because the Guardians of the Person function as an arm of the probate court, they are subject to its supervision and control in the best interests of the Ward concerning what persons may visit him. (Emphasis added)

As this 2003 AARP article makes clear, grandparent visitation rights have been hotly contested in various states. This opinion is sure to draw much attention from advocates on both sides of this debate.

Wanting to Keep Your Wife Happy Does Not Undue Influence Make

Zoldan v. Zohlman, 2005 WL 3180190 (Fla. 3d DCA Nov 30, 2005)

The decedent was 90 years old when his 78 year old wife threatened to divorce him unless he signed an irrevocable contract requiring him to treat his step-daughter as an heir equal to his three sons under his will. Afraid he might be abandoned/divorced if he didn't comply, the decedent signed the contract. That was enough for Dade County Judge Herbert Stettin to invalidate the whole deal on undue influence grounds. The Third DCA said not so fast, reversing on the grounds that wanting to keep your wife happy does not undue influence make. Well, OK, that's not what they said exactly, but it's what they meant. The Third DCA's more judicious way of making the point was as follows:

The Florida Probate Code provides that a will is void, either wholly or in part, if its execution is procured by fraud, duress, mistake, or undue influence. § 732.5165, Fla. Stat. (2003). The undue influence required for invalidation of a testamentary document is conduct amounting to duress, force, or coercion to such a degree that the free agency and willpower of the testator is destroyed. Mere affection and attachment or a desire to gratify the wishes of one who is esteemed or trusted may not alone be sufficient to amount to undue influence. E.g., In re Peters' Estate, 155 Fla. 453, 20 So.2d 487, 492 (Fla.1945); Derovanesian v. Derovanesian, 857 So.2d 240 (Fla. 3d DCA 2003), rev. denied,868 So.2d 522 (Fla.2004); Raimi v. Furlong, 702 So.2d 1273, 1287 (Fla. 3d DCA 1997); Coppock v. Carlson, 547 So.2d 946 (Fla. 3d DCA 1989); and cases cited therein. (Emphasis added)

Court to Guardian: Surprise! You're Surcharged

Snell v. Guardianship of Snell, 2005 WL 3159591 (Fla. 1st DCA Nov 29, 2005)

In the rush to "do the right thing" in guardianship proceedings, sometimes little niceties such as "due process" get overlooked. In this case Duval County Judge Jean M. Johnson ruled on a fee petition filed pursuant to F.S. § 744.108(1) by counsel for a former guardian. The former guardian did not attend the fee-petition hearing (although he received notice of the hearing, there was no indication that he might be surcharged), and during the course of the hearing there was absolutely no discussion regarding possibly surcharging the former guardian for overpayments.

The trial judge subsequently ruled that because the amount of fees and costs being awarded was less than the amount already paid to counsel, the overage could be recovered directly from the former guardian. The First DCA reversed noting that under Florida Probate Rule 5.025 proceedings to surcharge a guardian are treated as adversary proceedings requiring formal notice and an opportunity to be heard.

Woe Be it to the Litigant Who Loses the Moral High Ground

DeMello v. Buckman, 2005 WL 2990487 (Fla. 4th DCA Nov 09, 2005)

When advising parties involved in trust litigation there are two fronts I like to focus on: (i) the legal substance of the case and (ii) what I refer to as "capturing the moral high ground." Being right on the law is crucial, although not always sufficient. When in doubt, the litigant occupying the moral high ground is much more likely to get the nod from the trial judge (and the other side is just as likely to get hammered).

This case deals with the suit by one sister against another sister as trustee of their deceased parents' inter vivos trust. I'll leave it up to you to decide who captured (or lost) the moral high ground here before Broward County Judge Mark A. Speiser. Fortunately for the losing side, however, the Fourth DCA reversed most of the trial judge's final judgment on appeal (lesson learned: sometimes it pays to appeal). The most interesting issues addressed by the Fourth DCA were the following:

  • Courts have a limited role in supervising the exercise of a trustee's discretion, thus warranting reversal of the trial judge's award of damages for selling a residence owned by the trust for less than the contesting trust beneficiary thought the house should have been sold for.
The court has a limited role in supervising the exercise of the trustee's discretion. As stated in Scott on Trusts: [T]he court will not control [a trustee's] exercise of [discretion] as long as he does not exceed the limits of the discretion conferred upon him. The court will not substitute its own judgment for his. Even where the trustee has discretion, however, the court will not permit him to abuse the discretion. This ordinarily means that so long as he acts not only in good faith and from proper motives, but also within the bounds of a reasonable judgment, the court will not interfere; but the court will interfere when he acts outside the bounds of a reasonable judgment. In other words, although there is a field, often a wide field, within which the trustee may determine whether to act or not and when and how to act, beyond that field the court will control him. How wide that field is depends upon the terms of the trust, the nature of the power, and all the circumstances. (Footnote omitted). 3 Austin Wakeman Scott & William Franklin Fratcher, The Law of Trusts § 187 (4th ed. 1988).

A recent Florida Bar Journal article I wrote about here provided a comprehensive survey of current Florida law on this subject.

  • Under Florida Civil Procedure Rule 1.120(g), "special damages" must be specially plead in the complaint. It is not uncommon to seek compensation for lost income arising from trustee mismanagement. Here's what the Fourth DCA had to say about special damages in this case:
The court awarded three items of damage to Buckman: (1) mortgage payments not received in the amount of $33,832.89; (2) foregone investment income on mortgage down payment not received in the amount of $3,928.50; and (3) foregone investment income on other mortgage payments not received in the amount of $821.88. Even if we were to decide that these were compensable items of damage, which we do not decide, none of these items of damage were specially pleaded in the complaint, and all of them constitute items of special damage. Therefore, Buckman is not entitled to recover these items of damage.
  • In the absence of contrary evidence, it was improper to award as damages the trust's payment of legal fees incurred by the trustee in the administration of the trust prior to litigation, especially if the amount is within that deemed presumptively reasonable by F.S. § 737.2041.
  • In the absence of contrary evidence, it was improper to award as damages the trust's payment of the CPA who prepared the tax return for the trust. The Fourth DCA specifically noted that trustees are obligated under F.S. § 737.402(u) to file tax returns and pay taxes on the trust, as well as authorized under F.S. § 737.402(2)(y) to hire accountants.

Rosa Parks's Death Stirs Up Bitter Feud Over Her Estate

A long-simmering feud between the family of civil-rights icon Rosa Parks and the people who cared for her at the end of her life has erupted into a court fight over her estate. The Wall Street Journal first ran a story on this unfortunate turn of events here, although a later story reported by the Detroit News here seems to indicate an amicable settlement may be within sight.

Most probate litigators also handle contested guardianship proceedings. This is not by coincidence. Unresolved guardianship disputes have a way of spilling over after a person's death. Ms. Park's story is all too common. The best way to manage these disputes is to work through them at the first available opportunity. Ignoring unresolved grievances while a person is under the care of a guardian wont make them go away. They simply come back around again as probate litigation.

Can a Personal Representative Sell Freely Devisable Homestead Property?

Harrell v. Snyder, 2005 WL 2899461 (Fla. 5th DCA Nov. 4, 2005)

In this case, the decedent had divorced his wife several years before his death, but never got around to changing his will. So when he died, his ex-wife became personal representative of his estate under the terms of his last will (although she was deemed to have predeceased him for purposes of the will's dispositive provisions). The decedent was not survived by any minor children and had not remarried prior to death, so his homestead property was freely devisable . . . or was it?

Brevard County Judge Kerry I. Evander ruled that the personal representative had the authority to both take control of the freely-devisable homestead property and to sell it. The Fifth DCA disagreed, holding as follows:

  • Under F.S. § 733.608(2), a trial court MAY authorize a personal representative to take possession of homestead property to preserve it for the heirs.
  • This same statute does NOT grant to a personal representative the power to sell such property.

Bottom line, in the absence of specific instructions authorizing the personal representative to sell freely-devisable homestead property, such property passes to the residuary beneficiaries of the decedent's estate. In an opinion I wrote about here, the Florida Supreme Court provided the following directive regarding the sale of freely-devisable homestead property:

We therefore . . . hold that where a decedent is not survived by a spouse or minor children, the decedent's homestead property passes to the residuary devisees, not the general devisees, unless there is a specific testamentary disposition ordering the property to be sold and the proceeds made a part of the general estate.

11th Circuit Estate-Tax Case: "Substantially Modified" Buy-Sell Agreement

Estate of Blount v. C.I.R., --- F.3d ----, 2005 WL 2838478 (11th Cir. Oct 31, 2005)

Buy-sell agreements are often used in business succession planning to fix the fair market value of a closely held business interest for gift and estate tax purposes. In this case the decedent, George C. Blount (founder of Blount Construction Company), executed an amendment to his 1981 buy-sell agreement in November of 1996, about one month after being diagnosed with cancer and a little under a year prior to his death in September of 1997. After his death the IRS successfully challenged the tax-planning effectiveness of the buy-sell agreement on grounds that came into play only because the agreement had been "substantially modified" after October 8. 1990.

Two Key Points:

  • Always exercise extreme caution when revising any buy-sell agreement entered into before October 8, 1990 because of the IRS's aggressiveness in disallowing estate-tax valuation discounts if the agreement was "substantially modified" after that date.
  • If a closely-held business purchases life insurance to fund a buy-sell agreement obligation, the value of those insurance proceeds may not be counted for purposes of establishing the estate-tax value of the business.

How often may a probate judge rule on the issue of "family allowance"? As often as necessary.

Valdes v. Estate of Valdes, 2005 WL 2861179 (Fla. 3d DCA Nov. 2, 2005)

Ambiguity is the bane of a probate practitioners life. When the answers are clear, opposing parties are able to define their positions with certainty and usually come to some sort of negotiated compromise without the need for expensive litigation. When the law is "fuzzy," litigation is often the only tool available to achieve clarity.

Which is why the concrete, unambiguous, nuts-and-bolts guidance provided by the Third DCA in this case should be welcomed. Here the key legal question was the following: may a probate judge revisit earlier decisions setting the amount of reasonable family allowance? Miami-Dade Probate Judge Arthur Rothenberg said YES, and was upheld on appeal (although his second ruling reducing the amount of family allowance was reversed). The appellate court provided the following summary of the law:

Section 732.403 authorizes a probate court to award a "reasonable allowance" out of the money of the estate for the benefit of a surviving spouse or lineal heirs the decedent was supporting or was obligated to support during administration of the estate. § 732.403, Fla. Stat. A surviving spouse and qualified lineal descendant are "entitled" to a family allowance without regard to the necessity of the allowance. DeSmidt v. DeSmidt, 563 So.2d 193, 194 (Fla. 2d DCA 1990). However, the reasonableness of the allowance must still be established. Id. As such, we conclude the probate court necessarily retains the authority to re-examine and modify an award, either upward or downward as circumstances may require, during the course of administration of the estate. Id.

Mom's estate successfully sues daughter for return of $84,000 taken from joint account prior to mom's death

Sandler v. Jaffe, 2005 WL 2655765 (Fla. 4th DCA Oct. 19, 2005)

Elderly parents often title bank accounts jointly with their children. Although extremely common, the problem with this type of arrangement is that the temptation to walk away with some of mom or dad's funds can sometimes be irresistible. This case is a prime example of that risk.

Facts: Concerned about possible incapacity issues arising out of her advanced age, mom titled all her bank accounts jointly with her daughter; daughter then transferred $84,000 from one of these joint accounts to an account titled in the name of her own husband and daughter (the family dynamics of this case are "interesting" to say the least). Mom finds out about transfer, sues daughter for return of funds, then dies while lawsuit is pending. Mom's other child, son, carries on with suit as personal representative of mom's estate.

Key points of the case:

  • Daughter argued that F.S. § 655.78(1) absolved her from any liability. The 4th DCA rejected this argument, noting that this statute is intended to protect banks from getting drawn into disputes between title holders of an account. It in no way shields joint title holders from liability for their own actions.
  • Daughter argued that since she was a joint title-holder with right of survivorship, she was entitled to all of the funds at mom's death anyway or, in the alternative, mom gifted all of these funds to her when she titled the bank accounts jointly. So no harm done. These arguments failed because mom actually found out about the transfers pre-death and sued for their return.

Lesson learned:

Obviously mom was trying to plan for her incapacity; she certainly never intended to gift all of her estate to her daughter at the expense of her son. Joint bank accounts are a clumsy way of planning for incapacity and often run afoul of the "Trust, but verify" maxim. Revocable trusts are a much better alternative.

"Win-Win" Trust Administration: How to please BOTH current income beneficiaries and remaindermen

Conflicts between current beneficiaries of a trust that want to maximize current income distributions and remainder beneficiaries of a trust that want to maximize their remainder interest are at the core of almost all disputes involving a trust's administration. In the past the best trustees could do to manage this inevitable conflict was to invest trust assets in income producing securities (e.g., bonds) while also trying to ensure an acceptable level of capital appreciation for the remainder beneficiaries. This type of investing inevitably leads to lower overall growth of the trust's portfolio.

Savvy use of Florida's Principal and Income Act can deliver a win-win solution to this age old conundrum. Here's how:

  • First, increase the anticipated remainder interest of the trust by investing the trust's portfolio in accordance with the Modern Portfolio Theory. This investment approach is in stark contrast to traditional trust investment approaches that artificially skewed portfolios in favor of high income producing assets (e.g., bonds).
  • Second, increase current distributions to the income beneficiaries by relying on the authority granted under F.S. § 738.104 to make adjustments between principal and income or the authority granted under F.S. § 738.1041 to convert the trust into a "unitrust."

This solution works because investing in accordance with the Modern Portfolio Theory increases the size of the trust "pie," thereby creating win-win options for all concerned.

Using a case-study approach the authors of The Appropriate Withdrawal Rate: Comparing a Total Return Trust to a Principal and Income Trust, 31 ACTEC J. 118 (2005), do a great job of explaining in plain English how a trustee can both increase current distributions and deliver a higher expected return to the remaindermen using the solution outlined above.

Source: Wills, Trusts & Estates Prof Blog

"Maxcy rule" strikes again: Fort Lauderdale attorney ordered to return $1.6 million in fees in probate case

On September 23, 2005 the Daily Business Review reported that Broward County probate judge Mel Grossman ordered Fort Lauderdale attorney Stephen Rakusin to return $1.6 million in fees and costs that were challenged by Holy Trinity Orthodox Seminary, a Russian Orthodox monastery. The Monastery was represented by Robert Judd, a partner at Gunster Yoakley in Fort Lauderdale, in connection with the fee dispute.

According to the Daily Business Review, judge Grossman ruled that under the "Maxcy rule" (see Maxcy v. Citizens National Bank of Orlando, 240 So.2d 93 (Fla. 2d DCA 1970)), after four years of work on the case attorneys Stephen Rakusin and Craig Donoff (both of whom were engaged by the personal representative of the estate) would have to contend themselves with a $151,500 flat-fee originally negotiated by Donoff. Judge Grossman ruled that Rakusin's billing was a violation of the Maxcy rule because he was contracted to perform the same legal services on an hourly basis that Donoff had agreed to do for a flat fee.

Lesson learned: In probate, winning is only half the battle. Getting paid for your work is often just as difficult and hotly contested as the underlying litigation.

Probate litigator successfully spots substantive issues, but falls flat on civil procedure

Herskovitz v. Hershkovich, 2005 WL 2254003, 30 Fla. L. Weekly D2209 (Fla. 5th DCA Sept. 16, 2005) (Trial Court Affirmed)

This case is yet another example of why probate litigation can be especially challenging. Not only must counsel in these cases have the ability to quickly spot the often highly technical probate-law issues in play in the relatively short period of time permitted to challenge a will in probate, he or she must also be sufficiently knowledgeable in civil procedure and trial techniques to successfully venture into the litigation arena.

The decedent's surviving brother in this case challenged the validity of a second codicil to his brother's will (which completely cut him out of the estate) on the grounds that the two attesting witnesses to that codicil were unaware of the testamentary nature of the instrument they were signing. In other words, counsel for surviving brother correctly identified a substantive issue under Florida probate law that favored his client. Counsel made this argument when he successfully opposed a summary judgment motion filed by the surviving spouse. So far, so good. Unfortunately, counsel failed to make this argument again when the probate court conducted an evidentiary hearing on the matter . . . thereby waiving the issue on appeal. The Fifth District Court of Appeal summed up its ruling on this point as follows:

In [his memorandum opposing summary judgement, surviving brother] contended questions of fact existed as to whether the witnesses could authenticate the documents. Subsequently, the trial court denied [surviving spouse's] motion for summary judgment. Once the summary judgment was denied, it was incumbent upon [surviving brother] to present whatever arguments and documents he believed relevant to determining those questions of fact to the trial court at the evidentiary hearing. By failing to do so, he waived this issue for appellate review.

A Trustee's Duties and Responsibilities Under Discretionary Invasion Provisions

Disputes revolving around whether the trustee of a "discretionary" trust acted appropriately or not often get bogged down because one side or the other fails to grasp the following basic concept: in Florida, discretionary authority does not translate into "I-can-do-whatever-I-want" authority. This Florida Bar Journal article by attorney Peter B. Tiernan does an excellent job of summarizing the current state of the law in Florida on this point.

Creditor strikes out again: Florida Probate Rules do not provide for "vacatur" of mistaken orders

Interim Healthcare of Northwest Florida, Inc. v. Estate of Ries, 2005 WL 2219224 (Fla. 4th DCA September 14, 2005) (Trial Court Affirmed)

Two public-policy priorities play themselves out every time a creditor seeks to satisfy its claim against a probate estate: (1) on the one hand, there is the public policy favoring expeditious and low-cost completion of the probate administration process; (2) on the other hand, a creditor's constitutionally protected due process rights must respected. As this case makes clear, procedural safety nets available to litigants in general civil litigation (think due process) do not always apply in the probate context. In general civil litigation Rule 1.540 of the Florida Rules of Civil Procedure provides for the "vacatur" of mistaken orders. As the creditor in this case learned, Rule 1.540 runs head on against the public policy favoring the expeditious and low-cost completion of probate proceedings. As such, as the Fourth District Court of Appeal makes clear in Footnote 1 to this opinion, Rule 1.540 simply does not apply in the probate context.

FN1. The Florida Probate Rules do not contain a provision for vacatur of orders--and this includes those striking claims as untimely--made final by the lapse of the time for appeal. The Rules of Civil Procedure no longer apply in probate except as specified in the probate rules. See Fla. Prob. R. 5.010. At one time a statute applied the civil rules to adversary proceedings in probate, but that statute was repealed in 2002. See Ch.2001-226, § 8, Laws of Fla. Thus, even though rule 1.540 might logically seem to support an attempt to vacate an earlier probate order made final by the lapse of the time for appeal, in this case that rule has no application. See In re Estate of Clibbon, 735 So.2d 487 (Fla. 4th DCA 1998).

Another example of why planning focused on addressing potentially contentious beneficiaries (or their guardians) is so important

The LA Times recently reported here on the bitter and lengthy on-going litigation involving a $400 million testamentary trust between the decedent's third ex-wife (who also happens to be the guardian of the 13 year old boy who is the principal beneficiary of the trust) and the trustees. Battles over how an estate is administered, be it a probate estate being administered by a personal representative or a trust estate being administered by one or more trustees, are far and away the leading causes of probate litigation. These disputes are foreseeable, and can be mitigated (although not eliminated) with proper planning.

Source: Wills, Trusts and Estate Prof Blog

When is a sweetheart gift really a "gift" or just words worth less than the paper they are written on?

Rasmussen v. Rasmussen, 2005 WL 2138710 (Fla. 2d DCA September 7, 2005) (Trial Court Reversed)

Although this is a divorce case, the issue of when and "if" a gift actually transfers property rights comes up quite often in the probate-litigation context. So this case should be of interest to trusts and estates planners as well as litigators.

Former major league ball player Dennis L. Rasmussen signed the following note, dated June 10, 1999, which bore the signature and stamp of a notary public (but without a jurat or acknowledgment):

I, Dennis Rasmussen, in sound mind and body, wish to have my wife, Jan S. Rasmussen, receive all property, including personall [sic], in the event of death or separation. I hereby give up any right of any joint or individually held monetary [sic] and property due to any of the above circumstances. This agreement will remain in effect until an [sic] mutually agreed upon revision replaces the above. (Emphasis added.)

Not unreasonably, Mrs. Rasmussen tried to hold him to this "gift" after filing for divorce. Mr. Rasmussen apparently had a change of heart and argued he didn't really mean to give her anything. Hillsborough County Judge Manuel A. Lopez didn't buy this argument, and ruled against him. Unfortunately for the soon-to-be "ex" Mrs. Rasmussen, on appeal the Second District Court of Appeal reversed the trial judge, basing its ruling on the following excellent summary of the current state of the law in Florida with respect to when a gift effectively passes title to property:

We have previously outlined the principles used for determining whether there has been a valid gift: It is well settled that to effectively pass title by gift there must be a surrender of dominion over the res, coupled with the intent then and there to pass title. In other words, there must be an immediate vesting of some interest in the donee, complete and irrevocable. If the donor withholds divestiture it is not a legal gift. A delivery which does not confer the present right to reduce the res into possession of the donee is insufficient. . . .

Under these principles, the note of June 6, 1999, did not make a valid gift of the husband's property to the wife. According to the terms of the note, the wife's rights would come into existence only "in the event of death or separation." The note thus provided for a conditional, future transfer of the property; it did not give the wife a present right to the property. Since the note was ineffective as a gift of the husband's property to the wife, the trial court erred in treating the assets in question as marital assets subject to equitable distribution.

My Running List for 2006

This is my running list of Florida probate cases for 2006. Like any compilation, the criteria for inclusion is somewhat subjective, so I'm certainly not guaranteeing that I've identified every case that could conceivably be related to probate matters in Florida. However, if you think I've missed an important probate-related case that deserves wider notice, please let me know. As new cases are published, they'll be added to this list.

All of the cases listed below are also cross referenced by topic, so if you ever want to come back to that homestead case you remember seeing, you can simply jump to all of the homestead cases and scroll through those.

1. Tallahassee Memorial Regional Medical Center, Inc. v. Petersen, 2006 WL 88489 (Fla. 1st DCA Jan 17, 2006) (Contested Guardianship Proceedings)

2. Siegel v. Novak, 2006 WL 119545 (Fla. 4th DCA Jan 18, 2006) (Practice & Procedure)

3. Vargas v. Acosta, 2006 WL 120182 (Fla. 3d DCA Jan 18, 2006) (Contested Guardianship Proceedings)

4. McEnderfer v. Keefe, 2006 WL 129320 (Fla. Jan 19, 2006) (Homestead Litigation)

5. Weisfeld-Ladd v. Estate of Ladd, 2006 WL 231481 (Fla. 3d DCA Feb 01, 2006) (Spousal Elective Share Claims)

6. Eccles v. Nelson, 2006 WL 192633 (Fla. 5th DCA Jan 27, 2006) (Practice & Procedure)

7. Faerber v. D.G., 2006 WL 287322 (Fla. 2d DCA Feb 08, 2006) (Creditors' Claims)

8. Engelke v. Estate of Engelke, __ So.2d __ (Fla. 4th DCA February 8, 2006) (Homestead Litigation)

9. Tripp v. Salkovitz, __ So.2d __ (Fla. 2d DCA Feb 08, 2006) (Contested Guardianship Proceedings)

10. In re Estate of Wejanowski, __ So.2d __ (Fla. 2d DCA February 15, 2006) (Compensation Disputes)

11. Roberts v. Sarros, __ So.2d __ (Fla. 2d DCA Feb 15, 2006) (Will and Trust Contests)

12. McMonigle v. McMonigle, __ So.2d __ (Fla. 2d DCA Feb 17, 2006) (Compensation Disputes)

13. Simpson v. Estate of Simpson, __ So.2d __ (Fla. 5th DCA Feb 17, 2006) (Creditors' Claims)

14. Somogyi v. Nevai, __ So.2d __ (Fla. 4th DCA Feb 22, 2006) (Appellate Practice in Probate)

15. Benedetto v. Columbia Park Healthcare Systems, __ So.2d __ (Fla. 5th DCA Mar 10, 2006) (Practice & Procedure)

16. Demayo v. Chames, __ So.2d __ (Fla. 3d DCA Mar 15, 2006) (Homestead Litigation)

17. In re Estate of Faskowitz, __ So.2d __ (Fla. 2d DCA Mar 31, 2006) (Practice & Procedure)

18. McMonigle v. McMonigle, __ So.2d __ (Fla. 2d DCA Mar 29, 2006) (Compensation Disputes)

19. Martinez v. Ipox, __ So.2d __ (Fla. 2d DCA April 07, 2006) (Wrongful Death Claims)

20. Pastor v. Pastor, __ So.2d __ (Fla. 4th DCA April 19, 2006) (Will and Trust Contests)

21. Della Ratta v. Della Ratta, 2006 WL 1235760, 31 Fla. L. Weekly D1325 (Fla. 4th DCA May 10, 2006) (Will and Trust Contests)

22. Brigham v. Brigham, __ So.2d __ (Fla. 3d DCA May 31, 2006) (Compensation Disputes)

23. Vinson v. Johnson, __ So.2d __, 2006 WL 1650609 (Fla. 1st DCA June 16, 2006) (Will and Trust Contests)

24. University of Miami v. Wilson, __ So.2d __, 2006 WL 1687685 (Fla. 3d DCA June 21, 2006) (Wrongful Death Claims)

25. Owens v. Estate of Davis, ex rel. Holzauser, __ So.2d __, 2006 WL 1716786 (Fla. 2d DCA June 23, 2006) (Will and Trust Contests)

26. Meyer v. Meyer, __ So.2d __, 2006 WL 1708155 (Fla. 5th DCA June 23, 2006) (Practice & Procedure)

27. Conseco Ins. Co. v. Clark, 2006 WL 2024401 (M.D.Fla. Jul 17, 2006) (NO. 8:06CV462 T30EAJ) (Contested Guardianship Proceedings)

28. Weinberg v. Weinberg, 2006 WL 2265216, 31 Fla. L. Weekly D2094 (Fla.App. 4 Dist. Aug 09, 2006) (Practice & Procedure)

29. Estate of Gunderson v. School Dist. of Hillsborough County, 2006 WL 2612678 (Fla. 1st DCA Sept. 13, 2006) (Creditors' Claims)

30. In re Estate of Cadgene, 2006 WL 2739334 (Fla. 2d DCA Sep 27, 2006) (Creditors' Claims)

31. Bush v. Webb, 2006 WL 2872522 (Fla. 1st DCA October 11, 2006) (Creditors' Claims)

32. In re Estate of Stisser, 932 So.2d 400, 31 Fla. L. Weekly D1008 (Fla. 2d DCA Apr 07, 2006) (Practice & Procedure)

33. Aronson v. Aronson, 930 So.2d 766, 31 Fla. L. Weekly D1317 (Fla. 3d DCA May 10, 2006) (Practice & Procedure)

34. Fleck-Rubin v. Fleck, 933 So.2d 38, 31 Fla. L. Weekly D1369 (Fla. 2d DCA May 12, 2006) (Will and Trust Contests)

35. Pierre v. Estate of Pierre, 928 So.2d 1252, 31 Fla. L. Weekly D1434 (Fla. 3d DCA May 24, 2006) (Will & Trust Contests)

36. Janien v. Janien, 2006 WL 2956304 (Fla. 4th DCA Oct 18, 2006) (Spousal Elective Share Claims)

37. Pisciotti v. Stephens, 2006 WL 3077750 (Fla.App. 4 Dist. Nov 01, 2006) (Practice & Procedure)

38. Cone v. Anderson, 2006 WL 2986471, 31 Fla. L. Weekly D2621 (Fla. 1st DCA Oct 20, 2006) (Practice & Procedure)

39. Morgan v. Cornell, --- So.2d ----, 2006 WL 2987107, 31 Fla. L. Weekly D2632 (Fla. 2d DCA Oct 20, 2006) (Will Construction Litigation)

40. Hayes v. Guardianship of Thompson, 2006 WL 3228916 (Fla. Nov 09, 2006) (Contested Guardianship Proceedings)

41. Baldwin v. Estate Of Winters, 2006 WL 3299834 (Fla. 4th DCA Nov 15, 2006) (Will and Trust Contests)

42. Rice v. Greene, 2006 WL 3327665 (Fla. 5th DCA Nov 17, 2006) (Practice & Procedure)

43. In re Raborn, --- F.3d ----, 2006 WL 3409104 (11th Cir.(Fla.) Nov 28, 2006) (Will and Trust Contests)

44. Joseph v. Chanin, 940 So.2d 483, 31 Fla. L. Weekly D2470 (Fla. 4th DCA Oct 04, 2006) (Will and Trust Contests)

45. Werner v. Estate of McCloskey, 2006 WL 3613178 (Fla. 1st DCA Dec 13, 2006) (Removal of Personal Representatives and Surcharge)

46. Johnson v. Clark, 2006 WL 3780511 (M.D.Fla. Dec 20, 2006) (Will and Trust Contests)

47. Miami Rescue Mission, Inc. v. Roberts, 943 So.2d 274, 31 Fla. L. Weekly D2979 (Fla. 3d DCA Nov 29, 2006) (Will and Trust Contests)

48. Matsumoto v. American Burial and Cremation Services, Inc., --- So.2d ----, 2006 WL 3733310, 32 Fla. L. Weekly D26 (Fla.App. 2 Dist. Dec 20, 2006) (Practice & Procedure)

49. In re Alexander, 346 B.R. 546, 19 Fla. L. Weekly Fed. B 356 (Bankr.M.D.Fla. Jul 25, 2006) (Homestead)

50. In re Edwards, --- B.R. ----, 2006 WL 3788803 (Bankr.M.D.Fla. Oct 04, 2006) (Homestead)

51. Robinson v. Weiland, 936 So.2d 777 (Fla. 5th DCA Sep 01, 2006) (Newly Discovered Evidence/Fraud on the Court)

52. Kranias v. Tsiogas, 941 So.2d 1173 (Fla. 2d DCA Oct 13, 2006) (Evidence/Privilege)

53. Register v. State, 946 So.2d 50 (Fla. 1st DCA Dec 15, 2006) (Guardianship/Due Process)

54. Marlowe v. Brown, 944 So.2d 1036 (Fla. 4th DCA Aug 02, 2006) (Lateral Thinking)

55. Taylor v. Maness, 941 So.2d 559 (Fla. 3d DCA Nov 15, 2006) (Homestead Deeds)

56. Favreau v. Favreau, 940 So.2d 1188 (Fla. 5th DCA Oct 06, 2006) (Pro Se Litigants)

The "Mother" of all probate-litigation fee disputes: widow seeks return of $50 million in "excessive" fees and gifts

As reported in this New York Law Journal article, Manhattan law firm Graubard Miller has been hit with a suit claiming some of its partners tried to extract almost $50 million in "gifts" and unearned fees from a longtime client, the 80-year-old widow of one of New York City's largest real estate developers, Sylvan Lawrence, who died in 1981. Mr. Lawrence's estate has been embroiled in litigation ever since. Mark Zauderer of DLA Piper Rudnick Gray Cary, who represents Graubard Miller, said Ms. Lawrence's suit against the firm is aimed at avoiding paying a "well-earned fee." Ms. Lawrence, who is represented by Leslie D. Corwin of Greenberg Traurig, is seeking rescission of her retainer agreement and the return of all fees previously paid to the firm and all gifts paid to the partners. The complaint also requests punitive damages and attorney fees.

What is the "Trust Exception" to the statute of limitations applicable to probate creditors' claims and when does it apply?

Scott v. Reyes, 2005 WL 2172231 (Fla. 2d DCA September 9, 2005) (Trial Court Affirmed)

A little-known "exception" to F.S. § 733.702, the statute of limitations applicable to creditor claims against an estate, is the so-called "trust exception" or "equitable title to specifically identifiable property exception." In this case the Second District Court of Appeal provided the following summary of just what the "trust exception" is and when it applies:

Considering the changes to prior law effected by the adoption of the Code and the new statutory language concerning the filing of claims, we summarized the current state of the law relative to the trust exception as follows:

[T]he "trust exception" or "equitable title to specifically identifiable property" exception to the requirements of the nonclaim statute, as those exceptions pertain to recovery of property from an estate, have effectively been limited to those situations where the decedent clearly held the property on behalf of the actual owner either by way of an express trust or some other clearly defined means. In other words, if a decedent asserted beneficial ownership of the property before his death, a claim to the property would be barred unless filed according to section 733.702. The reason being that the dispute as to ownership, creating the cause of action, arose before the decedent's death because the decedent, prior to his death, adversely claimed the property as his own. If, however, the decedent was merely in possession of the property but made no such assertion of ownership prior to his or her death, the assertion of ownership being made by the personal representative or heirs for the first time after the decedent's death would not require the filing of a claim.

In addition to an express trust, the Second District Court of Appeal provided the following additional "candidates" for when the "trust exception" might apply: "a trust imposed by statute . . ., a bailment, and a lease of personal property."

Are law firms seeing an increase in estate litigation?

In 2006 the exemption amount for federal estate taxes is $2.0 million, in 2009 it goes up to $3.5 million. If the Republicans have their way, estate taxes will either disappear all together or essentially become inconsequential. The Democratic response is to freeze the estate tax exemption at the 2009 level.

Even in the absence of estate tax repeal, estates that are inconsequential for estate-tax planning purpose are already more than large enough for most families to litigate over. Moreover, demographic trends may soon lead to dramatic jumps in estate litigation. A March 2006 newspaper article entitled Law firms see rise in inheritance feuds, had the following to say about the expected increase in estate disputes as the World War II generation passes away leaving trillions to their children, the baby-boomer generation:

Legal disputes over inherited property are making headlines [locally and] . . . nationwide in the case of Anna Nicole Smith, a former Playmate of the Year. But the millions at stake in these high-profile lawsuits pale in comparison to the trillions of dollars of wealth that will be bequested, inherited and fought over in the next 50 years. As in-court arguments over inherited wealth become more common, law firms are strengthening their trust-and-estate litigation services to meet the demand.

*    *    *    *    *
The perfect storm

The reasons for the flurry of trust-and estate-related legal battles are many.
According to an article in the Dispute Resolution Journal, an estimated $41 trillion of wealth will be transferred in the United States from the “Greatest Generation” to their kids, the baby boomers, between 1998 and 2052 [click here]. The massive transfer in wealth alone is enough to spur more family feuds . . .

*    *    *    *    *

Some lawyers say baby boomers seem much more willing to air their family problems in court than their parents were. Well-publicized trials also contribute to the rise in demand for estate litigation.


McKean v. Warburton, 2005 WL 2155180 (Fla. September 8, 2005) (4th DCA Reversed)

REVISED OPINION: McKean v. Warburton, 2005 WL 3601898 (Fla. September 8, 2005)

The Florida Supreme Court reversed this Fourth DCA decision permitting the distribution of freely devisable homestead property to satisfy a preresiduary bequest. For the reasons discussed here, I think the Florida Supreme Court got this one wrong, turning what should be a benefit, i.e., Florida's homestead protection laws, into one very big trap for the unwary.

In light of skyrocketing real estate values in Florida, for most Florida homeowners, their single most valuable asset is their home. If a homeowner is survived by a spouse or minor children, his or her residence is protected homestead property under Florida's Constitution (Art. X, § 4(c)) and Probate Code (F.S. § 731.201(29)), and thus not subject to devise pursuant to F.S. § 732.4015. However, if the homeowner's residence is NOT protected homestead property, one might be forgiven for assuming that the residence was "freely" devisable.

Not so fast says the Florida Supreme Court. If a homeowner that expects NOT to be survived by a spouse or minor children wants to make sure that his or her single most valuable asset at death can be used to satisfy pre-residuary bequests, the Florida Supreme Court's holding in this case will require that the homeowner specifically provide in his or her Will that the homestead property be sold and added to the general probate estate. Specifically, the Florida Supreme Court summed up its holding in this case as follows:

We therefore . . . hold that where a decedent is not survived by a spouse or minor children, the decedent's homestead property passes to the residuary devisees, not the general devisees, unless there is a specific testamentary disposition ordering the property to be sold and the proceeds made a part of the general estate.

The following appellate briefs were filed with the Florida Supreme Court for this case:

Ambiguous Drafting Leads to Litigation over Definition of a Decedent's "Heirs at Law" under Florida Law

Karasek v. William J. Lamping Trust, 2005 WL 2086183 (Fla. 4th DCA August 31, 2005) (Trial Court Reversed)

Precise drafting is the single most effective barrier against costly probate litigation. What makes estate planning documents especially challenging for attorneys is that the careful drafter needs to consider the very real possibility that the Will or Trust he or she drafts today could become a disputed matter decades in the future (or even hundreds of years in the future under Florida's new rule against perpetuities statute, see F.S. § 689.225). That's what happened in this case. A Will that was executed in 1967 became the subject of litigation in 2003 . . . 36 years after the date it was signed!

The 1967 Will contained a "default" clause common to any well drafted Will. Essentially, the document directed that in the event the testator's children predeceased his surviving spouse, upon the death of his surviving spouse the trust corpus was to be distributed to the "heirs" of his deceased children. What was unclear was whether the 1967 definition of heirs was applicable or the 2003 definition of heirs was applicable. The Fourth District Court of Appeals ruled that under Florida law the presumption is that the testator intended the term "heirs at law" to be construed under the statutes in existence at the time the Will was executed, i.e., 1967.

The entire dispute could have been avoided if the default clause had stated what law was applicable, as the following example does:

If any property is subject to this article under another provision of this Trust Agreement, the Trustee shall distribute that property to my heirs at law determined under Florida law then in effect as if I had died intestate and unmarried on that date as a resident of Florida.

Party Reasonably Expected to Pursue a Personal Injury Cause of Action Against an Estate Is a Creditor Entitled to Actual Notice That the Probate Proceedings Are Pending

Longmire v. Estate of Ruffin, 2005 WL 2016944 (Fla. 4th DCA August 24, 2005) (Trial Court Reversed)

This Fourth District Court of Appeals opinion should make clear once and for all that if a personal representative should reasonably expect that the estate will be sued by a particular party, F.S. § 733.2121(3)(a) requires that the personal representative treat that potential plaintiff like a creditor entitled to actual notice that the probate proceedings are pending. Although this case involved a personal injury cause of action, there is no reason to believe the applicable rule would be different with respect to any other type of cause of action. Lesson learned: if a personal representative wants to take full advantage of the liability shield created by F.S. § 733.702(1), potential plaintiffs must receive actual notice that the probate proceedings are pending.

Divided Families: Civil Disengagement Instead of War

Mediated settlement agreements are the norm in Florida when in comes to probate litigation. An excellent resource for thoughtful articles on why probate mediation has "taken off" over the last decade can be found here on the Mediate.com website. But just when you thought mediation was the answer to all of your problems, this interesting post on the Wills, Trusts & Estates Prof Blog (which is reproduced below) discusses yet another option for the creative probate attorney: civil disengagement.

In a recent newsletter, Gerald Le Van, a strong proponent of family wealth mediation, introduces the concept of "civil disengagement" as an alternative to financially and emotionally costly litigation when family members cannot reach an amiable solution.

Mr. Le Van explains that civil disengagement:

  • acknowledges current irreconcilable differences,
  • but avoids family litigation;
  • manages each divided camp separately,
  • but leaves the door open to family reunification in later generations.

See Gerald Le Van, Divided Families: Civil Disengagement Instead of War (Aug. 2005).

"Dear Abby" Column: Wife Discovers Man's Will Would Leave Her Homeless

Who would have thought that "Dear Abby" could teach us something about practicing trusts and estates law in Florida? Read the following exchange (also available here) and ask yourself three questions:

  • Assuming the estate planning attorney described below only represented the husband, did the attorney violate his confidentiality obligations under Florida Ethics Rule 4-1.6? Answer: Yes.
  • Under Florida Bar Ethics Opinion 95-4, could the estate planning attorney represent both husband and wife in the scenario described below? Answer: No.
  • Is this type of behavior great advertising for Florida's homestead protection laws and spousal elective share rights? Answer: Yes!!!

DEAR ABBY: My husband, "Girard," and I have been married two years. We both have children from previous marriages. Girard always told me I would have a home if I outlived him, even though his children will eventually inherit the property.

One day I asked Girard if it was in the will, and he said no, but that he and his children "had discussed it." When I asked him to put it on paper, he agreed. His attorney drafted a document for him to sign. After it had laid around the house for more than a week, Girard told me he had lost it. I reminded him to get another copy, sign and return it. After two more weeks passed with no signed document, Girard told me his attorney was "busy" and "would get to it when he could."

I decided to call the attorney myself. Well, you guessed it. I was told the papers had been executed. When I confronted Girard he admitted he had lied and promised to have the will done over. When I looked at the document he had signed, I saw that Girard was giving me 90 days to get out of the house after his death.

I was upset, so he tore up the document. Am I being unreasonable? I am 76, and he is 84. -- DOESN'T WANT TO BE HOMELESS IN BATON ROUGE

DEAR DOESN'T: It's not unreasonable to want a roof over your head should your husband predecease you. Thank heavens you found out now what was planned for you, rather than being hit with it while you were helpless and grieving. Now that you know how your husband thinks, consult an attorney of your own and find out exactly what your rights are as a wife in the state of Louisiana. The law can vary from state to state, and it is extremely important that you know what you are entitled to.

Source: Wills, Trusts & Estates Prof. Blog

Court lacks authority to order the Department of Children and Families to Provide Services to Cognitively Impaired and Autistic Adult

Department Of Children And Families v. Coll, 2005 WL 1959190 (Fla. 4th DCA August 17, 2005) (Trial Court Reversed)

The Florida Department of Children and Families ("DCF") isn't always the easiest government agency to deal with. As one family learned in this case, they have their own ways of doing things, and not even a court order can change that.

In guardianship proceedings initiated by the mother of an adult son who is cognitively impaired and autistic, Palm Beach County Judge Gary L. Vonhof attempted to expedite DCF's evaluation process of the ward by entering an order compelling the DCF to determine if the ward was eligible for developmental services and to appear at a status conference to report on its findings. One problem though, DCF wasn't a party to these proceedings, which means the court didn't have the authority to order them to do anything. The DCF petitioned the Fourth DCA for a writ of prohibition challenging the circuit court's order, and the Fourth DCA agreed: it held that the circuit court had exceeded its authority under Ch. 744 (Florida's guardianship statutes), it thus quashed the order and provided the following guidance for families seeking DCF services in the future:

The statutes requires one seeking developmental services to submit a written application to DCF. See § 393.065(1), Fla. Stat. (2005). DCF is required to notify the applicant of its eligibility determination. See § 393.065(3), Fla. Stat. (2005). DCF's decision is subject to an administrative appeal. There is no requirement that DCF notify a court or any counsel in guardianship proceedings of its determination.

Nothing in the guardianship statutes authorizes the court to create its own procedure for assessment for developmental services, and there is no evidence that DCF has failed to comply with its obligations under section 393.065.

This I Believe: Always Go to the Funeral

When I first started out as a trusts and estates lawyer one of the senior partners at my firm gave me some very good advice. He told me that if you're ever unsure about visiting someone at the hospital or going to a funeral . . . always opt for showing up. This report on NPR's "This I Believe" series reminded me of that wise advice. The following are a few highlights from that piece:

I believe in always going to the funeral. My father taught me that.

The first time he said it directly to me, I was 16 and trying to get out of going to calling hours for Miss Emerson, my old fifth grade math teacher. I did not want to go. My father was unequivocal. "Dee," he said, "you're going. Always go to the funeral. Do it for the family."

Sounds simple -- when someone dies, get in your car and go to calling hours or the funeral. That, I can do. But I think a personal philosophy of going to funerals means more than that.

"Always go to the funeral" means that I have to do the right thing when I really, really don't feel like it. I have to remind myself of it when I could make some small gesture, but I don't really have to and I definitely don't want to. I'm talking about those things that represent only inconvenience to me, but the world to the other guy. You know, the painfully under-attended birthday party. The hospital visit during happy hour. The Shiva call for one of my ex's uncles. In my humdrum life, the daily battle hasn't been good versus evil. It's hardly so epic. Most days, my real battle is doing good versus doing nothing.

In going to funerals, I've come to believe that while I wait to make a grand heroic gesture, I should just stick to the small inconveniences that let me share in life's inevitable, occasional calamity.

On a cold April night three years ago, my father died a quiet death from cancer. His funeral was on a Wednesday, middle of the workweek. I had been numb for days when, for some reason, during the funeral, I turned and looked back at the folks in the church. The memory of it still takes my breath away. The most human, powerful and humbling thing I've ever seen was a church at 3:00 on a Wednesday full of inconvenienced people who believe in going to the funeral.

Source: Legacy Matters Blog

Court says YES to dismissal of personal injury action based on plaintiff's failure to file a timely motion to substitute a party defendant within 90 days after a suggestion of death was filed

Martin v. Hacsi, 2005 WL 1842678 (Fla. 5th DCA August 5, 2005) (Trial Court Affirmed)

Counsel for the defendant in a personal injury action filed a motion for enforcement of Florida Rule of Civil Procedure 1.260(a) based on the plaintiff's failure to move to substitute a party defendant within 90 days after a suggestion of death was filed. Sumter County Circuit Court Judge Hale R. Stancil granted the motion and dismissed the lawsuit. On appeal, the 5th DCA affirmed, providing some very helpful guidance along the way for plaintiffs trying to figure out what to do when a defendant dies and no personal representative is appointed.

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Wrongful Death Act: Decedent's Adult Children Have Standing to Object to Wrongful Death Action Settlement Terms and a Right to a Hearing on Their Objections

Brunson v. McKay, 2005 WL 1677939 (Fla. 2d DCA July 20, 2005) (Trial Court Reversed)

Polk County Judge Ronald A. Herring was apparently convinced that the decedent's adult children had a negligible interest, if any, in a $450,000 wrongful death action settled by the decedent's surviving spouse (who was also the sole personal representative of his estate). As such, when the children sought to object to the terms of the settlement agreement under Florida's Wrongful Death Act, the probate judge held that they lacked standing to do so and denied their request. On appeal, the surviving spouse argued that the probate judge's order was a non-appealable, non-final order. The surviving spouse also argued on appeal that even if the surviving adult children had standing to object, the probate judge was not required to give them a hearing on their timely objections because F.S. § 768.25 does not specifically provide that objecting survivors are entitled to a hearing on their objections.

Although the Second DCA clearly signaled that it was inclined to agree with the probate judge's assessment of the "merits" of the adult children's claims, on strict procedural grounds it ruled against the surviving spouse on all issues, holding as follows:

  • Citing Fla. R. App. P. 9.030(b)(1)(A) and 9.110(a)(2), the Second DCA ruled that the probate judge's order approving the settlement was an appealable, final order.
  • Noting that the probate judge had confused the issue of "standing" with the question of the "merits" of the adult children's claims, the Second DCA held that the adult children fell within the definition of "survivors" contained in F.S. § 768.18(1) of the Wrongful Death Act, and thus had standing as a matter of law to object to the terms of the settlement agreement.
  • Recognizing that F.S. § 768.25 does not specifically provide that objecting survivors are entitled to a hearing on their objections, the Second DCA nonetheless held that "routine practice under the Act requires one where there is an objection to a proposed settlement."

Establishment of legal guardianship not required to enforce minor's pre-injury arbitration agreement

Global Travel Marketing, Inc. v. Shea, 2005 WL 1576244, 30 Fla. L. Weekly S511 (Fla. July 7, 2005) (Fourth DCA Reversed)

In a case that is sure to be of interest to personal injury attorneys (and the probate/guardianship attorneys they work with), the Florida Supreme Court reversed the Fourth DCA and held that an arbitration agreement incorporated into a commercial travel contract is enforceable against the minor's estate in a tort action arising from the contract. Although not central to the Supreme Court's ruling, the Court did provide the following helpful summary of current Florida law regarding when legal guardianships must be established to settle a minor's civil claims:

Under section 744.301(2), Florida Statutes (2004), parents, acting as the natural guardians of their minor children, [FN6] may settle their children's claims for amounts up to $15,000. A net settlement greater than $15,000 on behalf of a minor requires establishment of a legal guardianship. See § 744.387(2), Fla. Stat. (2004). If a legal guardian and a minor have potentially adverse interests, or if otherwise necessary, the trial court may, for a settlement greater than $15,000, and must, for a settlement greater than $25,000, appoint a guardian ad litem to represent the minor's interests. See § 744.301(4)(a); Fla. Stat. (2004). A presuit settlement on behalf of a minor requires court authorization, which may be given if the court determines that the settlement is in the minor's best interest. See § 744.387(1), Fla. Stat. (2004). Settlement of a pending claim also requires court approval. See § 744.387(3)(a), Fla. Stat. (2004).

FN6. For children of divorced parents, "the natural guardianship shall belong to the parent to whom the custody of the child is awarded." § 744.301(1), Fla. Stat. (2004).

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Former attorney for personal representative entitled to compensation for services benefitting estate after date he withdrew as counsel

Foreman v. Northern Trust Bank of Florida, N.A., 2005 WL 1553963 (Fla. 2d DCA July 6, 2005) (Trial Court Reversed)

For obvious reasons, compensation cases are always of interest to practitioners. In this latest Second DCA opinion addressing claims for attorneys fees by former counsel for a personal representative (see here for the prior Second DCA case this year involving a compensation dispute), the court reversed Sarasota County Judge Nancy K. Donnellan and held as follows:

  • Former counsel for personal representative is entitled to fees for services he performed if they benefitted the estate . . . even if those services were rendered after the date he withdrew as counsel.
  • Former counsel for personal representative is entitled to fees for the time he spent trying to obtain payment for services he rendered to the estate.
  • Former counsel for personal representative is entitled to an award of reasonable expert witness fees. The Second DCA also noted that F.S. § 733.6175(4) "makes such an award mandatory if expert testimony is offered."

Is it possible for three children completely cut out of their mother's last will, as well as the three wills she previously executed, to somehow end up as sole beneficiaries of her estate? Yes

Wehrheim v. Golden Pond Assisted Living Facility, 2005 WL 1537448 (Fla. 5th DCA July 1, 2005) (Trial Court Reversed)

Most cases provide good examples of mistakes you want to avoid, for example, how mishandling homestead property can lead to unintended consequences (see here) or how to make sure you've served formal notice on a minor to cut off future litigation (see here). Sometimes a case comes along that simply reflects good, creative lawyering. This is one of them.

In this case the Fifth DCA grappled with the following scenario, which seemed ready made for litigation. The decedent executed wills in 1998, 1999, 2000 and 2002. All four wills completely cut out her three children. The 2002 will ended up primarily benefitting the assisted living facility the decedent resided in at the time of her death. This last change was a complete departure from the three previous wills the decedent had executed. When the decedent died her children and the assisted living facility favored under her 2002 will were (surprise!) soon locked in litigation. Orange County Judge Lawrence R. Kirkwood granted a summary judgment motion in favor of the assisted living facility thereby denying petitions filed by the children (1) challenging the decedent's 2002 will and (2) seeking removal of the personal representative. The Fifth DCA reversed the trial court and in the course of its decision shed light on some pretty creative lawyering.

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"Specific Devisee" has standing to petition for removal of a personal representative until the moment he or she actually receives full payment; Florida Probate Rules fail to provide for service of Formal Notice on Minors

Cason v. Hammock, 2005 WL 1488650 (Fla. 5th DCA June 24, 2005) (Trial Court Reversed)

Florida's probate code and procedural rules are designed to cut off possible litigation as soon as possible . . . whenever possible. Used wisely by an experienced probate attorney, these statutory and procedural rules are a powerful shield. On the other hand, not focusing on these seemingly mundane details exposes an estate to all the potential delays, expenses and rancor inherent to litigation.

In this case the estate was challenged on two fronts: petitions were filed seeking (1) removal of the personal representative and (2) revocation of the probate proceedings. Citrus County Judge Richard Howard denied both petitions on purely procedural grounds. In other words, the estate seemed to have successfully employed the "litigation shields" built into Florida's probate code and procedural rules. On appeal, the Fifth DCA snatched both victories away from the estate.

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Court says NO to holding personal representative personally liable for attorney's fees and costs in unsuccessful wrongful death lawsuit

Beseau v. Bhalani, 2005 WL 1488584 (Fla. 5th DCA June 24, 2005) (Trial Court Reversed)

In the underlying wrongful death suit, the defendants prevailed after a jury trial. They then obtained an order awarding attorney's fees and costs against the personal representative of the decedent's estate . . . in her individual capacity. Apparently Volusia County Judge J. David Walsh thought this was OK because the personal representative was named "individually" in the complaint's caption and she never objected. The Fifth DCA made quick work of the case pointing out that regardless of what the complaint's caption may have said, the body of the complaint made clear that the lawsuit was brought on behalf of the estate, not the individual who happened to be serving as personal representative. And if you're not a party to the lawsuit, the court can't assess a judgment against you . . . even if you don't object.

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Choice-of-law Clause Will Not Override Florida's Statutory Regime for Designating the Venue of Trust Litigation

Perry v. Agnew, 2005 WL 1397427 (Fla. 2d DCA June 15, 2005) (Trial Court Reversed)

Sometimes the best defense is a good offense. In this case, an individual trustee working out of his office in Boston, Massachusetts was sued by three beneficiaries, one of whom was a resident of Florida. The trustee moved to dismiss the complaint for improper venue under F.S. § 737.203. Charlotte County Judge Isaac Anderson, Jr. denied the trustee's motion to dismiss on two grounds, the most interesting of which was based on a finding that the trust's Florida choice-of-law provision exempted it from the application of F.S. § 737.203.

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Avoid Litigation - Don't Surprise or Confuse Your Heirs

The California based Estate Business and Tax Law Blog reported here that this litigation-related excerpt from the new book by Nancy Keates, The Wall Street Journal Guide to the Business of Life was in today's Wall Street Journal:

Don't surprise or confuse your heirs:

A contested will can make legal fees skyrocket. Making clear decisions, telling your heirs exactly what to expect, and being explicit in your will, will help reduce the risk of a legal fight. One common problem is a poorly drafted will that can lead to ambiguities about the deceased's wishes and, ultimately, increase the risk of legal fights. Another thing to watch out for are conflicting directives between the will and, say, a life insurance policy or a retirement account.

I couldn't have said it better myself.

Fourth DCA says party being sued does not have the right to complain that a terminated trust's "winding up" period is being unduly extended by the litigation

McMullin v. Beaver, 2005 WL 1278870 (Fla. 4th DCA June 1, 2005) (Trial Court Reversed)

When a trust terminates as of a certain date, it is reasonable to assume that winding up the affairs of that trust may take some time after the termination date. But what if the "winding up" process includes filing a lawsuit after the trust termination date? Indian River Circuit Court Judge Robert A. Hawley ruled that was too much, and granted final summary judgement against the plaintiff trustee, finding that the trustee lacked standing to bring the action because the trust was already terminated. Although unclear from this opinion, apparently the defendants in this case argued that the trustee was attempting to unduly extend the winding up period for the trust by commencing litigation after the trust's termination date.

The Fourth DCA disagreed, and reversed the trial court finding that the trustee did in fact have standing to file his lawsuit after the trust termination date.

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Questioning the Trust Law Duty of Loyalty: Sole Interest or Best Interest?

The March 2005 edition of the Yale Law Journal contains this interesting (perhaps even provocative) article by the noted Yale Law School Professor John H. Langbien. The logic underlying his thesis is somewhat circular in nature, although it is sure to warm the hearts of corporate fiduciaries (or more specifically, the "business development" folks at large banks). In a world dominated by an ever smaller group of financial-services conglomerates that maximize shareholder returns by cross selling an ever growing array of financial products and services to a single set of clients (the fancy word for this is "synergy"), it is no surprise that corporate fiduciaries seek to cross sell to their trust clients as well. The only problem is that they are hampered by these old fuddy duddy fiduciary self-dealing prohibitions that were developed within the context of a supposedly more genteel 18th century English business culture. The gist of Prof. Langbien's article is that if today's corporate environment conflicts with two-century's worth of Anglo-American fiduciary common law, then there must be something wrong with the law (see what I mean by the circular nature of this argument). Prof. Langbien proposes a technical fix that could be easily incorporated into state statutory regimes governing trustees and other fiduciaries (e.g., personal representatives of estates).

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Court says AHLA nursing home arbitration clause is "void as contrary to public policy"; and even if enforceable, a health care proxy lacks authority to bind an incapacitated nursing home patient to arbitrate claims

Blankfeld v. Richmond Health Care, Inc., 2005 WL 1226070 (Fla. 4th DCA May 25, 2005) (Trial Court Reversed)

In what will surely be a disturbing decision to all Florida nursing home administrators, the Fourth DCA just made it a lot tougher to avoid trials in nursing home cases. First, the Fourth DCA held that an arbitration clause administered by the American Health Lawyers Association "substantially limits the remedies created by [F.S. § 400.023(2)] and is [thus] void as contrary to public policy." Second, the Fourth DCA held that even if the AHLA's arbitration clause were enforceable, which it's not, a person acting under the health care proxy authority granted by F.S. § 765.401 can only make "health care decisions," and agreeing to arbitration is not a health care decision. If a nursing home wants to bind an incapacitated patient to a valid arbitration clause, it will have to seek the appointment of a temporary guardian pursuant to F.S. § 744.3031(1) to sign the agreement. As the concurring opinion put it . . .

If a nursing home wants to deal with someone competent to make such decisions, it has the right to seek the appointment of a guardian. For only a court appointed guardian could waive or compromise property rights, such as civil remedies in negligence or the right to trial by jury.

"The Case of Theresa Schiavo" by Joan Didion in the New York Review of Books

Thanks to the Legacy Matters blog for posting this link to an excellent article in the New York Review of Books by Joan Didion tracing the history of the Terry Shiavo case through all its twists and turns. Highly recommended.

Hospital attorneys brace themselves for new legislation in the aftermath of the Terri Schiavo case

Thanks to Florida blog Abstract Appeal for identifying this Corporate Counsel article discussing how in-house hospital attorneys are bracing themselves for new legislation in the aftermath of the Terri Schiavo case that could make it tougher to remove someone from life support. For example, Louisiana and Alabama are considering laws that would prohibit doctors from removing feeding tubes or other means of nutrition and hydration, even with the consent of a guardian. Kansas is considering a change that would compel guardians to seek court permission before withholding food or water. Michigan is weighing a law that would bar anyone having an extramarital affair from making life support decisions for his or her spouse.

Previously commenced probate proceedings are not necessarily trumped by a subsequently filed lawsuit in the Circuit Court's general jurisdiction division

Kutlesic v. Estate of Mervel, 30 Fla. L. Weekly D753 (Fla. 3 DCA March 16, 2005) (Trial Court Affirmed)

The decedent allegedly promised his entire estate to his girlfriend. Unfortunately for her, he then died intestate, leaving her with nothing. Probate proceedings were commenced in 1999. In 2000 the girlfriend sued the decedent's estate on a number of grounds in the general jurisdiction division of the Circuit Court, all of which were eventually dismissed but for a "quantum meruit" claim. The estate then commenced an adversary proceeding before probate-division Judge Sidney B. Shapiro, that resulted in the girlfriend being ordered to vacate the decedent's former apartment. The Third DCA held that this ruling was not an abuse of discretion, even though the girlfriend's "quantum meruit" claim remained pending in the general jurisdiction division of the Circuit Court.

If you're going to remove a guardian, you have to give reasonable notice . . . unfortunately this one-paragraph opinion fails to provide any guidance regarding what reasonable notice may be

Foust v. Maldonado, 30 Fla. L. Weekly D895 (Fla. 5 DCA April 1, 2005) (Trial Court Reversed)

Proceedings for removal of guardians are initiated pursuant to F.S. § 744.477 and Probate Rule 5.660. In this one-paragraph opinion, the Fifth DCA reversed Osceola County Circuit Court Judge Jeffords D. Miller for apparently failing to comply with the requisite notice requirements in a removal proceeding, but provides zero guidance for anyone other than the parties to this litigation for where the trial court went wrong.

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Just because a person makes bad decisions, doesn't mean he should be declared incapacitated and have all his rights stripped away

McJunkin v. McJunkin, 30 Fla. L. Weekly D840 (Fla. 2 DCA March 30, 2005) (Trial Court Reversed)

In March 2001 the ward's two sons had him declared incapacitated at age 79 because he apparently wasn't managing his money as prudently as he could have. Two years later, in October 2003, the ward filed a "Suggestion of Capacity" seeking to have his rights restored. Even though the medical evidence presented in 2003 clearly showed that the ward was not incapacitated, and it was doubtful that he was ever incapacitated, Highlands County Circuit Court Judge J. David Langford ruled against him, declining to restore his rights. In reversing the trial court, the Second DCA makes clear that attorneys representing wards need to be advocates . . . not social workers, protecting individuals from, among other dangers, well intentioned relatives and courts guided by misplaced paternalism.

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Dependent Relative Revocation doctrine falls short in attempt to fix an estate plan gone awry

Rosoff v. Harding, 2005 WL 1163101 (Fla. 4th DCA May 18, 2005) (Trial Court Affirmed)

Sometimes a belts-and-suspenders approach to estate planning is not just overkill, it actually ends up doing more harm than good. In this case "Brother" wanted to look out for his sister. So far, so good. So Bother's Will creates a testamentary trust for Sister's life-time benefit and gives her a testamentary power of appointment over the trust corpus. Again, so far so good. But just in case Sister might be victimized, Brother's Will required that any exercise of Sister's power of appointment within 18 months of her death had to be witnessed by a corporate officer of his Corporate Trustee. In theory, this last clause probably sounded like a good idea. In practice, this belts-and-suspenders approach resulted in unintended consequences that the Fourth DCA characterized as "extremely unfortunate" and "unintentional," but beyond the "court's power to correct."

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The 90-day time limit for moving to substitute parties under Florida Rule of Civil Procedure 1.260 does not apply when the personal representative of an estate dies

Estate of Morales v. Iasis Healthcare Corporation, 2005 WL 1107067 (Fla. 2 DCA May 11, 2005) (Trial Court Reversed)

Normally, Florida Rule of Civil Procedure 1.260 requires that a plaintiff be substituted in a pending lawsuit within 90 days after the original plaintiff's death is "suggested on the record." Failure to comply with this deadline results in dismissal of the pending lawsuit. In this case, the personal representative of the estate died while a medical malpractice lawsuit was pending. Pinellas County Circuit Court Judge James R. Case dismissed the pending malpractice lawsuit under Civil Procedure Rule 1.260 because the estate's successor personal representative did not file a motion for substitution within 90 days of the suggestion of death.

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When two trust beneficiaries sue the same bank-trustee in two different counties . . . then appeal to two different DCAs . . . then obtain conflicting rulings on the same issue . . . well, things get interesting

Whitener v. First Union National Bank of Florida, 2005 WL 1047268 (Fla. 5th DCA May 6, 2005) (Trial Court Order Quashed)

This case involves a single trust divided into two parts. The same trustee for both trusts was First Union National Bank of Florida ("First Union"). One beneficiary sued First Union in Duval County, which falls under the jurisdiction of the First DCA. In the course of the Duval-county litigation, the First DCA ruled that certain documents fell within the crime-fraud exception of the attorney-client privilege, and were thus discoverable. The second beneficiary sued First Union in Seminole County, which falls under the jurisdiction of the Fifth DCA. In the course of the Seminole-county litigation, the Fifth DCA ruled in the case cited at the top of this post that the same documents addressed by the First DCA were privileged, and thus due to their previous disclosure, counsel for the Seminole-county litigant was disqualified. Not to be so easily deterred, the Seminole-county litigant simply hired the lawyers involved in the Duval-county litigation and moved forward with her case . . . with the benefit of the "privileged" documents her previous attorneys were disqualified for obtaining.

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Order Determining Entitlement to the Elective Share Is Not Appealable

Dempsey v. Dempsey, 2005 WL 954856 (Fla. 2 DCA April 27, 2005) (Appeal Dismissed)

Under Florida Probate Rule 5.360, determining the elective share is a two step process. First, the trial court must rule on the issue of entitlement (Rule 5.360(c)). Second, if the trial court finds entitlement, then it must determine the amount of the elective share, the assets to be distributed to satisfy the elective share, and, if contribution is necessary, the amount of contribution for which each recipient is liable (Rule 5.360(d)).

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Court Says No to Attorney's Fees for Litigation over Whom Will Be Appointed Guardian

Butler v. Guardianship of Peacock, 30 Fla. L. Weekly D889 (Fla. 5 DCA April 1, 2005) (Compensation Disputes)

Marion County Circuit Court Judge Brian D. Lambert ruled that under F.S. § 744.108(1) a petitioner seeking an order to determine the incapacity of her mother was entitled to an award of attorney's fees and costs incurred in the guardianship proceedings up to the date the petitioner's siblings objected to her being appointed guardian . . . fees and costs incurred thereafter were not for "services rendered on [the ward's] behalf."

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