Florida Probate & Trust Litigation Blog

2d DCA: Who has the burden of proving whether or not you're a "reasonably ascertainable" creditor of the estate?

Juan Antunez — Fri, 27 Jan 2012 19:55:04 -0500

Lubee v. Adams, --- So.3d ----, 2012 WL 163911 (Fla. 2d DCA January 20, 2012)

Are you a "reasonably ascertainable" creditor or not? If the answer is YES, then under F.S. 733.710 you have up to 2 years after the decedent dies to file your claim against the estate. If the answer is NO, then under F.S. 733.702 you only have 3 months after the estate's "notice to creditors" is first published to file your claim. 3 months vs. 2 years. That's a big difference.

This case is all about who has the burden of proving whether or not you're a "reasonably ascertainable" creditor.

Case Study:

Personal representatives have a duty under F.S. 733.2121 to search out the decedent's reasonably ascertainable creditors and personally serve them with a "notice to creditors." Once personally served, reasonably ascertainable creditors have 30 days to file their claims.

In this case Mr. Lubee, the creditor, wasn't identified by the personal representative as a reasonably ascertainable creditor of the estate, which means he was never served with a notice to creditors. Mr. Lubee saw things differently, arguing he was a reasonably ascertainable creditor, and as such he should have been personally served with a notice to creditors. Because he wasn't served with a notice to creditors, Mr. Lubee argued the 30-day post service deadline applicable to him (as a reasonably ascertainable creditor) was never triggered, which means he could file his claim any time within 2 years after the decedent's date of death (which he did).

Burden of Proof:

Mr. Lubee's argument works if you assume ALL creditors are reasonably ascertainable, and it's up to the estate to prove they're NOT. His argument fails if you assume NO creditor is reasonably ascertainable, unless proven otherwise. Unfortunately for Mr. Lubee, first the trial court, then the 2d DCA ruled creditors bear the burden of proof, so his claim failed.

According to the 2d DCA, because Mr. Lubee wasn't identified by the estate as a reasonably ascertainable creditor, he had two options: [1] file his claim within the 3-month post publication deadline generally applicable to all creditors; or [2] file for an extension of time under F.S. 733.702(3) within the 2-year window of F.S. 733.710, prove his status as a reasonably ascertainable creditor within the context of that proceeding, then subsequently file his creditor claim. He did neither, so his claim failed as a matter of law. By the way, this two-step process is the exact same formula previously adopted by the 1st DCA in Morgenthau v. Estate of Andzel, --- So.3d ----, 2009 WL 5151741 (Fla. 1st DCA Dec 31, 2009), which I wrote about here.

Bottom line, when in doubt, no one's a reasonably ascertainable creditor until a court says you are. Here's how the 2d DCA explained its ruling:

There is no dispute that Mr. Lubee did not file his claim in the probate proceeding within three months following the publication of notice to creditors and that he did not file a motion for extension of time or otherwise seek an extension. There is also no dispute that Mr. Lubee was not served with a copy of the notice to creditors pursuant to sections 733.702(1) and 733.2121(3)(a). However, Mr. Lubee contends that because he was a readily ascertainable creditor entitled to be served with a copy of the notice to creditors pursuant to those sections, he was only required to file his claim in the probate proceeding within thirty days after service of the notice on him or, at a maximum, within two years of the decedent's death. He argues that because he was never served with the notice to creditors, he timely filed his claim within the two-year window of section 733.710.

Because a notice to creditors was published on November 16, 2007, creditors not entitled to actual notice were required to file their claims on or before February 16, 2008. See § 733.702(1). Creditors who were served with the notice to creditors were required to file their claims within thirty days following service. See id. Because he was not served with a copy of the notice to creditors, Mr. Lubee was required to file his claim in the probate proceeding within the three-month window following publication. Alternatively, Mr. Lubee could seek an extension from the probate court pursuant to section 733.702(3) within the two-year window of section 733.710. See Morgenthau v. Estate of Andzel, 26 So.3d 628, 632 (Fla. 1st DCA 2009) [click here]; cf. Miller v. Estate of Baer, 837 So.2d 448, 449 (Fla. 4th DCA 2002) (affirming order enforcing claim against estate where creditor failed to file claim within three-month window of section 733.702(1) but did file motion for extension of time within two-year window of section 733.710). It is undisputed that he did neither. Mr. Lubee's filing of his claim in the probate proceeding within two years of the decedent's death did not amount to a request for an extension of time and did not otherwise comply with the requirements of section 733.702. Mr. Lubee's claim in the probate proceeding was untimely and therefore barred. As a result, the issue of whether or not Mr. Lubee was a readily ascertainable creditor was immaterial in the civil proceeding, and the trial court correctly granted partial summary judgment in favor of the personal representative.

3d DCA: Revenge of the disappointed heir: tortious interference with an expected inheritance

Juan Antunez — Tue, 17 Jan 2012 07:23:56 -0500

Saewitz v. Saewitz, --- So.3d ----, 2012 WL 10854 (Fla. 3d DCA January 04, 2012)

Tortious interference with an expected inheritance is a relatively new cause of action that's still evolving. So anytime one of these cases makes it into a Florida appellate opinion, it's noteworthy. The last time was back in 2007, coincidentally also before the 3d DCA. See Schilling v. Herrera, --- So.2d ----, 2007 WL 981627 (Fla. 3d DCA 2007). In that case the issue on appeal was when probate proceedings will effectively bar a tortious interference claim [click here]. This time around the issue is damages; or more specifically, how the lack of concrete damages evidence can get your case tossed out of court.

The five elements of this cause of action are generally described as follows:

the existence of some sort of expectancy on the plaintiff's part involving an inheritance;
the defendant's intentional interference with such expectancy;
involvement of tortious conduct, such as fraud, duress, or undue influence, in the defendant's interference;
reasonable certainty that the plaintiff's expectancy would have been realized if not for the defendant's interference; and
damages.

No damages = No case:

In this case the decedent's two daughters sued their stepmother for tortiously interfering with their expected inheritance. Both the trial court and the 3d DCA seem to concede that the first four elements of the plaintiffs' case were proved. However, just because you have evidence of wrongdoing doesn't mean you have a lawsuit. You also need to quantify - and prove - economic damages. I'm often contacted by potential plaintiffs with sad stories of some truly appalling conduct, but when you try to nail them down on how they've been hurt economically, they can't tell you. Just because you've been wronged, doesn't mean you have a lawsuit. You need to be able to quantify concrete economic damages. Here's how the 3d DCA put it:

The daughters' initial brief on this appeal persuasively chronicles the record evidence presented to the jury of manipulative activity taken by their stepmother during their father's dying days and preceding months to contravene their father's wishes with respect to the disposition of his estate. It is apodictic, however, that a plaintiff's initial proof of a prima facie case of both conversion and tortious interference in her case-in-chief requires more than proof of liability. Prima facie proof of damages is required as well.

For trusts and estates litigators, the primary value of this case is the 3d DCA's discussion of what kind of damages evidence you need to put on. First you need to define what expected inheritance the defendant defrauded you out of; then you need to prove with "reasonable certainty" the amount of economic damages you've suffered.

The substance of the evidence the daughters presented to the jury on the element of damages is found in the testimony of three witnesses: Jack Rosenberg, the decedent's accountant; Ron Goldstein, a friend of the decedent; and Lynn Saewitz. Rosenberg provided general testimony that the value of the assets involved in the litigation was “over a million dollars” or “in the millions [of dollars].” Goldstein similarly testified the value of the allegedly misappropriated assets at “seven figures.” Although denying any wrongdoing, Lynn Saewitz similarly indicated the value of the assets in question was in the “millions of dollars.” However, none of the testimony was tied to a legally relevant time period. . . . This omission alone deprives this testimony of any probative value.
Additionally, this testimony is insufficient to satisfy the “reasonable certainty” threshold necessary to be considered legally probative of the amount or extent of damages suffered by the daughters. “Under the reasonable certainty rule, ... recovery is denied where the fact of damages and the extent of damages cannot be established with a reasonable degree of certainty.” . . . The proof adduced must be sufficiently definite for a reviewing court to perform its review obligation. . . . In the case before us, the proof adduced by the daughters in their case-in-chief fails to meet this fundamental requirement. . .

Improvise. Adapt. Overcome.

To say the decedent's daughters must have been crushed by the outcome of this case is probably putting it mildly. Why? Because according to them they weren't able to prove damages with reasonable certainty due to their stepmother's failure to turn over accounting documents she was supposed to produce during pre-trial discovery. In a lesson for all of us, this complaint got them nowhere. According to the 3d DCA counsel for the daughters needed to, as we used to say in the Marine Corps when things didn't go as planned: "improvise, adapt and overcome." In other words, if your opponent doesn't hand you the facts needed to prove your case, you don't just cry foul, you find some other way to get the job done: you improvise, you adapt, you overcome. Here's how the 3d DCA made this same point in the milder vernacular of appellate-court speak:

The daughters argued below, and renew their argument before us, that they were prevented from proving their damages in this case by the failure of counsel for the stepmother to engage in discovery in good faith. The daughters specifically point to the fact, revealed during the testimony of Jack Rosenberg, that defense counsel failed to inquire of him or his accounting firm for documents relating to the value of the decedent's assets in response to a request for production that indisputably included them. As trustee of the Max P. Saewitz Revocable Trust, [stepmother] had the legal obligation to make such an inquiry. . . . The testimony of Jack Rosenberg indicated his firm had responsive documentation. During the course of the argument on the motion for directed verdict, counsel for the daughters placed substantial reliance on this lapse by defense counsel to ask the trial court to either re-open the case to allow more evidence on the element of damages, or, alternatively, grant a new trial as a sanction against [the stepmother] and her counsel for abuse of discovery. The trial court denied relief.

* * * * *

[T]he precise identification of each asset at issue was known to counsel for the daughters well before trial. If a prima facie case of the value of these assets could have been proven through the records or testimony of the decedent's accountants, it follows the assets also could have been valued by experts retained by the daughters. Unless knowingly waived or excused by the daughters themselves, counsel's obligation to the daughters in this case included an independent obligation to be prepared to present a prima facie case on the value of the daughters' damage claim at trial. The actions of defense counsel, even if a violation of a legal or ethical obligation existed, were not the “but for” cause of the daughters' failure to present a prima facie case to the jury.

Lesson learned?

According to the 3d DCA, the "but for" cause of the plaintiffs' loss in this case wasn't their stepmother's stonewalling, "even if a violation of a legal or ethical obligation existed," it was their own failure to retain their own independent expert to prove damages. Bottom line, when all is said and done it's up to you to win your case. If your opponent doesn't make this easy for you, don't expect your judge to come to your rescue. Repeat after me, improvise, adapt and overcome . . . improvise, adapt and overcome . . . improvise, adapt and overcome . . . improvise, adapt and overcome . . .

3d DCA: Florida's new Power of Attorney statutory regime makes its appellate court debut . . . the reviews are good

Juan Antunez — Wed, 04 Jan 2012 21:31:57 -0500

Rosenkrantz v. Feit, --- So.3d ----, 2011 WL 6183525 (Fla. 3d DCA Dec 14, 2011)

As I reported here, on October 1, 2011 Florida overhauled its power of attorney (POA) statutory regime based in large part on the Uniform Power of Attorney Act. The new statute was supposed to clarify some of the ambiguities inherent to the old statute. Based on the 3d DCA's observations in this case, the new statute appears to be delivering on this front.

Less ambiguity = greater certainty for anyone seeking legal advice about POA's and what their rights, duties or obligations as an attorney-in-fact may be. Win, lose or draw, certainty in the law is always a good thing.

Case Study:

In this case an elderly mother executed a POA naming her two children as her co-attorneys-in-fact. As long as everyone does their part, naming two children in your POA as co-attorneys-in-fact is OK and done all the time. Unfortunately, in this case one of the siblings (Sister) believed her brother was improperly blocking her attempts to account for their mother’s assets. What to do? Given the ambiguities inherent to the old statute, the answer was unclear. Bottom line, Sister was compelled to invest valuable time and money into filing a declaratory judgment action just to figure out who was supposed to do what under her mother's POA. On appeal, the legal issue was whether a declaratory judgment action was appropriate in this case. The 3d DCA said yes. The 3d DCA then went out of its way to point out how the ambiguities giving rise to Sister's declaratory judgment action in the first place have now been largely resolved by our new POA statutory regime. Less ambiguity = greater certainty = less time and money wasted on declaratory judgment actions. That's a good thing.

Here's an excerpt from the 3d DCA's opinion:

Gertrude Feit executed a Durable Power of Attorney when she began having memory loss. Gertrude named her daughter, Rosenkrantz, and her son, James Feit, as attorneys-in-fact to oversee her financial affairs. Gertrude and James live in Miami–Dade County, Florida. Rosenkrantz, who lives in New York, alleges that her brother refuses fully to account for their mother's assets, and objects to her efforts to obtain information directly from the financial institutions. Rosenkrantz contends that James' actions impair her ability to carry out her responsibilities as a co-attorney-in-fact, and she is in doubt as to her rights under the power of attorney.

*****

Rosenkrantz thus sought declaratory relief to determine: 1) the extent to which she can, as a co-attorney-in-fact, act without the concurrence of a co-attorney who may be acting in derogation of his fiduciary duty; and 2) whether she, as one co-attorney, is entitled to an accounting from the other co-attorney. If the allegations are proven as pled, it is clear that Rosenkrantz acted properly and prudently in seeking to fulfill her fiduciary role.FN2 . . .

FN2. It should be noted that the Florida Legislature addressed these very issues in its 2011 revisions to Chapter 709. Among the several significant changes, the new statutory scheme provides:

— A principal may designate two or more persons to act as co-agents, and unless the power of attorney otherwise provides, each co-agent may exercise its authority independently. § 709.2111(1), Fla. Stat. (2011).

— If a power of attorney requires that two or more persons act together as co-agents, one or more of the agents may delegate to a co-agent the authority to conduct banking transactions pursuant to the power of attorney. § 709.2111(6).

— An agent may be required by a co-agent to disclose receipts, disbursements, or transactions conducted on behalf of the principal. § 709.2114(6).

— An agent (including a co-agent) may petition a court to construe or enforce a power of attorney, review the agent's conduct, terminate the agent's authority, remove the agent, and grant other appropriate relief. § 709.2116(1).

— An agent's exercise of power may be challenged in a proceeding brought on behalf of the principal on the grounds that the exercise of the power was affected by a conflict of interest. § 709.2116(4).

1st DCA: Great expectations: what property rights does a child have in a parent's future intestate estate?

Juan Antunez — Tue, 03 Jan 2012 18:50:43 -0500

Layne v. Layne, --- So.3d ----, 2011 WL 5560563 (Fla. 1st DCA Nov 16, 2011)

What "rights" do I have in an inheritance from my parents? Under Florida law, generally speaking the answer is none. At most I might expect or hope to one day maybe inherit a share of dad's estate, but an "expectancy" isn't a property right. These basic property-law and inheritance principles are at the heart of this case.

Case Study:

In this case "Son" owned a townhouse 50/50 with his "Dad" and Dad's wife at the time. A few years later, Son deeded his 1/2 share in the townhouse to Dad and Dad's now ex-wife, resulting in Dad and ex-wife each owning a 1/2 interest in the whole property as tenants in common. Dad dies intestate, survived by two heirs: Son and his sister. Son claims 1/2 of dad's intestate estate, including a share of Dad's interest in the townhouse. Ex-wife cries foul, saying Son shouldn't get any part of the townhouse. Why? According to ex-wife when Son deeded his share of the townhouse to Dad, he also deeded away his 1/2 share of Dad's future intestate estate (which included the townhouse). Sound crazy? Well, the trial court actually bought this argument and ruled against Son.

On appeal the 1st DCA reversed the trial court's ruling based in large part on the basic principles outlined above. Sometimes even the savviest judge can get the basics wrong. That's why opinions like this one are helpful, especially for practicing probate lawyers. The following is an excerpt from the 1st DCA’s linked-to opinion:

The court's order states that Appellant's quitclaim deed operated to “convey all of his interest” in the townhouse; thus, he is not entitled to any portion of the property that would otherwise pass to him as a beneficiary of his father's estate. Any right Appellant has to take an interest in the property as a beneficiary did not, however, exist at the time Appellant executed the quitclaim deed. A quitclaim deed conveys only that interest in a property held by the grantor at the time of the conveyance. See, e.g., Blitch v. Sapp, 142 Fla. 166, 194 So. 328, 330 (1940) (holding “a ‘quit-claim’ deed yields only such interest in land as the grantor had at the time of the making of such deed.”). In other words, “[t]he possibility that a person will inherit property from an ancestor is but an expectancy and not an interest in property. While a descendant may expect or hope to inherit, neither a present nor future interest in property actually exists in the absence of a conveyance.” Diaz v. Rood, 851 So.2d 843, 845 (Fla. 2d DCA 2003); see also § 732.101(2), Fla. Stat. (“The decedent's death is the event that vests the heirs' right to the decedent's intestate property.”).

We recognize that the court in Diaz also held that it is possible to convey an expectancy. 851 So.2d at 845. In that case, however, the assignment in question made it clear that the grantor was doing just that; here, the quitclaim deed conveyed only Appellant's interest in the townhouse as it existed at the time of the conveyance. It did not expressly convey any future right to the property Appellant may acquire by virtue of an expectancy, such as a will or via intestacy.

4th DCA: What is the "cy pres" doctrine, and why should Florida charities care?

Juan Antunez — Mon, 19 Dec 2011 12:13:18 -0500

SPCA Wildlife Care Center v. Abraham, --- So.3d ----, 2011 WL 6183491 (Fla 4th DCA Dec 14, 2011)

We all know charities are struggling to stay afloat these days, which means they're asserting themselves in court to a degree unheard of a generation ago (a topic of frequent discussion on this blog, click here). In the linked-to case above several charities, including the SPCA Wildlife Care Center (a Broward County animal shelter affiliated with the Humane Society), found themselves unexpectedly pushed into a corner by a probate court's insistence on adjudicating an issue no one asked it to rule on (lesson learned: always expect the unexpected when setting foot in a courtroom).

The question before the 4th DCA in the linked-to case above was whether a person's vaguely worded testamentary gift to charity can be enforced even if the named charity doesn't exist or the testatrix's charitable intent isn't worded as specifically as usually required for testamentary bequests. The trial court said NO. On appeal, the 4th DCA said YES, siding with the charity and reversing the trial court's decision based on the "cy-près" doctrine.

"Cy-près" Doctrine:

"Cy-près" is an old Norman French term meaning "as near as possible" or "as near as may be." When the original objective of the settlor or the testator becomes impossible, impracticable, or illegal to perform, the cy-près doctrine allows a court to amend the terms of a charitable trust as closely as possible to the original intention of the testator or settlor to prevent the trust from failing. For example, in Jackson v. Phillips, (1867) 96 Mass. 539, the testator bequeathed to trustees money to be used to "create a public sentiment that will put an end to negro slavery in this country." After slavery was abolished by the Thirteenth Amendment to the United States Constitution, the funds were applied cy-près to the "use of necessitous persons of African descent in the city of Boston and its vicinity."

Although unstated in the link-to 4th DCA opinion, the "cy-près" doctrine has been codified in Florida as part of our Trust Code at F.S. 736.0413. This provision is loosely based on section 413 of the Uniform Trust Code.

Case Study:

In the linked-to case above the decedent, Mary Ericson, executed a will that created a trust for the life-time benefit of her close friend, Emma Brown. Upon Ms. Brown's death, the trust's remaining assets were to be distributed to the "International Wildlife Society.” This is all fine, except there's no such thing as the "International Wildlife Society.” So does the charitable bequest fail?

According to Ms. Brown, “it was the intent of the decedent, Mary Ericson, to have the trust assets distributed to a local Broward County, Florida benevolent animal organization which would attempt to aid and care for animals and not consider destruction of animals except as a last resort.” Ms. Brown further attested that the decedent “often spoke of the Humane Society [of] Broward County.”

When the trust was brought before the court for clarification, several charities were notified and given an opportunity to file responses. One of these charities, the SPCA Wildlife Care Center, filed a response asserting that the assets of the testamentary trust should be distributed to it based on the cy-près doctrine. For some unexplained reason the trial court took it upon itself to simply rule the trust's residuary bequest was vague, and thus "failed". In other words, NO charity gets anything. What?! That logic may apply to non-charitable bequests, but not to charities. That's what the cy pres doctrine is all about; fixing vague charitable bequests. Fortunately, the 4th DCA "got it," reversing the trial court's order based on the following analysis.

The cy pres doctrine is the principle that equity will [a] make specific a general charitable intent of a settlor, and will, [b] when an original specific intent becomes impossible or impracticable to fulfill, substitute another plan of administration which is believed to approach the original scheme as closely as possible. Christian Herald Ass'n v. First Nat'l Bank of Tampa, 40 So.2d 563, 568 (Fla .1949). The doctrine is often applied where the named beneficiary is a corporation or institution that has ceased to exist at the time of the testator's death. See, e.g., Lewis v. Gaillard, 61 Fla. 819, 842–43, 56 So. 281, 288 (1911) (applying the cy pres doctrine and holding that the Florida State College for Women was entitled to receive income from the testator's estate, even though the testator's will named the college's predecessor institution, West Florida Seminary, as the beneficiary); Christian Herald, 40 So.2d at 568 (holding where testator devised property to dissolved charitable corporation, the successor in interest of the dissolved corporation became entitled to such property under the cy pres doctrine). Florida courts have held that “the misnomer of a devisee will not cause the devise to fail where the identity of the devisee can be identified with certainty.” Humana, Inc. v. Estate of Scheying, 483 So.2d 113, 114 (Fla. 2d DCA 1986). The cy pres doctrine, however, does not apply when the provisions of the will can be carried out, such as where the will provides an alternative that can be performed. See Jewish Guild for the Blind v. First Nat'l Bank in St. Petersburg, 226 So.2d 414, 416 (Fla. 2d DCA 1969); see also Sheldon v. Powell, 99 Fla. 782, 794, 128 So. 258, 263 (1930).

In the present case, the trial court erred in sua sponte determining that the residue of the testamentary trust would pass by intestacy instead of to a charitable organization for the benefit of animals. The hearing was not scheduled as an evidentiary hearing, and the only extrinsic evidence in the record on the issue of the decedent's testamentary intent consists of the affidavits of the income beneficiary and the attorney who prepared the will. Those would suggest that the court could fashion an alternative plan to effectuate the intent of the testator, where the testator's intent to provide for a charitable bequest to animals, and not to benefit any relatives or other parties, was express. Thus, there was not any evidentiary support for the trial court's conclusion that the residuary clause in Article Six, Paragraph C, of the will should fail.

From the language of the will and the affidavits in the record, it appears that the decedent had a general charitable intent for the residue of her testamentary trust to pass to a charitable organization for the benefit of animals. Even if it cannot be determined which organization the testator had in mind, the interested parties should have the opportunity to present evidence to demonstrate that the cy pres doctrine should apply and permit distribution to a claimant or claimants which can fulfill the original intent of the bequest as closely as possible. Based on the foregoing, we reverse and remand for an evidentiary hearing.

4th DCA: Does an interest in a revocable trust vest when the trust is created or when the testator dies?

Juan Antunez — Mon, 12 Dec 2011 20:15:24 -0500

Darian v. Weymouth, --- So.3d ----, 2011 WL 5554786 (Fla. 4th DCA Nov 16, 2011)

James Hughes and Martha Mayfield were married in 1999. They both had children from prior marriages. Prior to getting married, they entered into a prenuptial agreement. The terms of that prenuptial agreement may or may not have addressed testamentary gifts. The 4th DCA doesn't tell us. Anyway, Mr. Hughes subsequently executed a revocable trust that richly provided for Mrs. Hughes. According to the 4th DCA:

Upon his death, Martha would receive the family home in Florida, the country home in North Carolina, a sum of one million dollars, the contents of the residences, and various other items of personal property.

The couple was tragically murdered on September 3, 2004 by Thomas Kleingartner, Mrs. Hughes's adopted son from a prior marriage. Both died as a result of gunshot wounds to the head. Click here, here and here for more on this terrible crime and the ensuing criminal trial.

Because the coroner was unable to determine which spouse predeceased the other, pursuant to F.S. 732.601(1) the probate court deemed their deaths to be simultaneous and entered an order to that effect in the probate of Mr. Hughes' estate. Accordingly, Mr. Hughes' property was to be disposed of as if he survived Mrs. Hughes.

The order of death wouldn't have mattered in this case if F.S. 736.1106(2) had applied (the antilapse statute applicable to Florida trusts). Under that statute, Mrs. Hughes' heirs would have inherited her share of Mr. Hughes' estate, regardless of who survived who. However, this particular trust fell between the cracks of Florida's current and prior antilapse statute, thus the much harsher common law rule applied.

First, we note that the common law controls this case. Section 736.1106(2), Florida Statutes, Florida's antilapse statute, applies only to trusts which became irrevocable on or after July 1, 2009. Section 737.6035(2)(c), Florida Statutes, Florida's previous antilapse statute, applied only to trusts executed on or after June 12, 2003. The James E. Hughes Living Trust was executed in August of 2000 and became irrevocable in September of 2004. Thus, neither statute controls.

At common law, lapse occurs when the beneficiary or the devisee under the trust predeceases the grantor, invalidating the gift. The gift would instead revert to the residuary estate or be granted under the law of intestate succession. Bottom line, Mrs. Hughes' heirs get nothing under the common law rule.

Mrs. Hughes heirs tried to salvage their claim to Mr. Hughes' estate by claiming that her share of Mr. Hughes' revocable trust had somehow vested at the time Mr. Hughes executed the document. There was a lot of money at stake here, so you can see why Mrs. Hughes' heirs would take a shot at making this argument . . . and at the trial court level it actually worked!? Not surprisingly, the 4th DCA saw things differently and reversed, again leaving Mrs. Hughes' heirs with nothing.

In Florida, the creation of a living trust, standing alone, is not an event which vests the interests provided by a trust agreement. Travis et. Al. v. Ashton et al., 156 Fla. 529, 23 So.2d 725, 727 (Fla.1945) (holding that beneficiary of trust deed who predeceased grantors did not receive a vested interest at time of trust creation. Where element of futurity was annexed to substance of gift rather than enjoyment of it, vesting was suspended and the gift was “contingent .”); Brundage v. Bank of Am., 996 So.2d 877, 882 (Fla. 4th DCA 2008) (stating that the settlor of a revocable trust, of which he is the sole beneficiary until death, may change or revoke the trust at any time); Fla. Nat'l. Bank of Palm Beach Cty. v. Genova, 460 So.2d 895, 897 (Fla.1984) (stating that beneficiaries of revocable living trust do not come into possession of trust property until the death of the settlor, and even then their interest is contingent upon the settlor not exercising the power to revoke). A beneficiary's interest in a trust vests upon the death of the settlor. Sorrels v. McNally, 89 Fla. 457, 105 So. 106, 107 (Fla.1925).

In this case, no sufficient event existed to vest Mrs. Hughes' interest in the Trust prior to her husband's death. In Travis, the Florida Supreme Court held that an intended beneficiary's interest is suspended during the life of the grantor. 23 So.2d at 726. The intended beneficiary's interest lapses should the beneficiary predecease the grantor. Id. Mr. Hughes was the sole trustee and beneficiary under the Trust during his life. Mrs. Hughes was among the contingent residual beneficiaries whose interest came into creation only upon the death of Mr. Hughes and who were entitled to distribution of the then remaining corpus of the trust. Because it was judicially determined that Mrs. Hughes predeceased her husband, her interest in the Trust lapsed upon her death.

Lesson learned?

When a couple dies in a car accident or due to some other tragic event, it can be very difficult, perhaps impossible, to determine who died first, since they both died within moments of each other. It usually doesn't matter. In this case, it mattered big time for Mrs. Hughes' heirs. If they knew then what they know now, Mrs. Hughes' heirs might have pushed the coroner a little harder to make a call on who died first, or maybe hired their own independent expert to make the determination. Coroner and medical examiner offices have been especially hard hit by budget cuts; you don't have to accept their conclusions as gospel [click here]. In hindsight, the 2004 coroner's report in this case, which was probably viewed as a non-event at the time, was outcome determinative. No one said practicing law was easy.

Fla SC: New appellate rule for probate & guardianship proceedings

Juan Antunez — Sun, 11 Dec 2011 18:41:27 -0500

In re Amendments to Florida Rules of Appellate Procedure, No. SC11-192 (Fla. Nov. 3, 2011)

A subcommittee of the Probate and Trust Litigation Committee has been looking at ways to add greater certainty to the question of when a probate/guardianship order is or is not appealable since 2007. That effort has finally borne fruit in the form of the Florida Supreme Court's new Florida Rule of Appellate Procedure 9.170, which goes into effect on January 1, 2012 (see linked-to opinion above).

To understand why this new rule was adopted and the problem it is supposed to address, you'll want to read an extremely thorough 38-page white paper [click here] produced by the Bar committee working on this project. Here's an excerpt:

By way of background, prior to the 1996 amendment to the Florida Rules of Appellate procedure, Rule 5.100 of the Florida Probate Rules governed when an order in a probate or guardianship case was appealable. Rule 5.100 provided in part that “all orders and judgments of the Court determining rights of any party in any particular proceeding in the administration of the estate of a decedent or ward shall be deemed final, and may, as a matter of right, be appealed to the appropriate district court of appeal.” The problem was, and really still is, that it is not clear exactly what qualifies as a final order and the case law does little to refine or define what finality is.

. . . . .

Thus, the 3d DCA noted in its decision in Delgado v. The Estate of Garriaga, 870 So.2d 912, 914 n.5 (Fla. 3d DCA 2004),

Perhaps there should be further study of this problem with a view toward developing a rule further defining what constitutes a final order in a probate appeal. It appears wasteful to allow piecemeal appeals, one before and the other after the adversary action.

. . . . .

One approach to resolving this problem is to supplement the existing appellate rule with a non-exclusive list of types of probate and guardianship orders that would be included as orders that “determine a right or obligation of an interested person.” These “types” of orders would be identified by what they do rather than what they are called.

In new Appellate Rule 9.170 the Florida Supreme Court adopted the idea of including a non-exclusive list of types of probate and guardianship orders that would be deemed per se final, appealable orders "determining a right or obligation of an interested person.” The list is 24-orders long. Here's the relevant portion of the new rule, as set forth in the linked-to opinion above:

Orders that finally determine a right or obligation include, but are not limited to, orders that:

determine a petition or motion to revoke letters of administration or letters of guardianship;

determine a petition or motion to revoke probate of a will;

determine a petition for probate of a lost or destroyed will;

grant or deny a petition for administration pursuant to section 733.2123, Florida Statutes;

grant heirship, succession, entitlement, or determine the persons to whom distribution should be made;

remove or refuse to remove a fiduciary;

refuse to appoint a personal representative or guardian;

determine a petition or motion to determine incapacity or to remove rights of an alleged incapacitated person or ward;

determine a motion or petition to restore capacity or rights of a ward;

determine a petition to approve the settlement of minors’ claims;

determine apportionment or contribution of estate taxes;

determine an estate’s interest in any property;

determine exempt property, family allowance, or the homestead status of real property;

authorize or confirm a sale of real or personal property by a personal representative;

make distributions to any beneficiary;

determine amount and order contribution in satisfaction of elective share;

determine a motion or petition for enlargement of time to file a claim against an estate;

determine a motion or petition to strike an objection to a claim against an estate;

determine a motion or petition to extend the time to file an objection to a claim against an estate;

determine a motion or petition to enlarge the time to file an independent action on a claim filed against an estate;

settle an account of a personal representative, guardian, or other fiduciary;

discharge a fiduciary or the fiduciary’s surety;

award attorneys’ fees or costs; or

approve a settlement agreement on any of the matters listed above in (1)–(23) or authorizing a compromise pursuant to section 733.708, Florida Statutes.

Steve Akers: Protective Claim for Refund Procedures for Section 2053 Claims, Rev. Proc. 2011-48

Juan Antunez — Mon, 05 Dec 2011 10:40:00 -0500

Steve Akers of Bessemer Trust is one of the best speakers you'll ever have the pleasure of running into as a trusts and estates lawyer. As a former private practice T&E lawyer himself, he knows what's important for those of us in the trenches. Which is why I was especially interested in his recent write up of Rev. Proc. 2011-48 (the new IRS guidance for preserving § 2053 estate tax deductions that are uncertain and have yet to be paid) poetically entitled Protective Claim for Refund Procedures for Section 2053 Claims.

If an estate is both subject to the estate tax and litigation, a key issue everyone needs to stay focused on from day one is ensuring all applicable tax deductions under IRC § 2053 are preserved. For example, IRC § 2053 tax deductions include attorney's fees and costs (usually a big sticking point in T&E litigation). Maximizing IRC § 2053 tax deductions creates win-win opportunities by mining the tax code for new funds with which to settle disputes.

In 2009 I wrote here about the new IRS reg's governing estate tax deductions under IRC § 2053. Generally speaking, under these reg's a § 2053 deduction cannot be taken unless it's actually been paid; potential or un-matured claims aren't deductible. But what if a legitimately deductible § 2053 expense/claim won't mature, and thus isn't payable, until after the deadline for filing refund claims under IRC § 6511(a) (i.e., the later of three years after the estate tax return was filed or two years after the payment of tax)? In those cases a "protective" claim for refund needs to be filed to preserve the estate's right to claim a tax refund. When the original § 2053 reg's were issued the IRS said it would issue guidance on how to file protective refund claims. Two years later, we've received that guidance in the form of Rev. Proc. 2011-48.

T&E litigators need to be familiar with Rev. Proc. 2011-48. Especially when you're dealing with large estates, contested proceedings can drag on for years, easily flying by the § 6511(a) limitations period. To get you started, the following is an excerpt from Steve Akers' Protective Claim for Refund Procedures for Section 2053 Claims:

Revenue Procedure 2011-48, released on October 14, 2011, is critically important for estates with uncertain claims or expenses that cannot be deducted at the time the estate tax return is filed. Unless the procedures in this Revenue Procedure are followed, there will be no ability to deduct claims or expenses that are actually paid or resolved after the period of limitations on federal estate tax refunds has expired. Satisfying all of the detailed requirements in the Revenue Procedure is important for various reasons, including the ability to correct insufficient identification of claims and to limit the IRS from being able to review the entire estate tax return after the period of limitations on refunds has expired.

. . . . .

Summary of Procedures Under Rev. Proc. 2011-48

1. Time Period For Filing Protective Claim. The protective claim for refund may be filed at any time within the period of limitations for filing a claim for refund under §6511(a) (i.e., the later of three years after the return was filed or two years after the payment of tax). Rev. Proc. 2011-48, § 4.01.

. . . . .

5. Identification of the Claim or Expense; Ancillary Expenses. Each claim or expense for which a protective claim for refund is made must be clearly identified with “an explanation of the reasons and contingencies delaying the actual payment to be made in satisfaction of the claim or expense.” Rev. Proc. 2011-48, § 4.05(1). For contested matters, the protective claim must identify the contested matter and potential liability by including the name of the claimant, the basis of the claim, “the extent or amount of the liability claimed,” and a brief statement of the status of the contested matter. (A copy of relevant court pleadings generally will be sufficient to identify the claim.) Rev. Proc. 2011-48, § 4.04(3).

There is no necessity that the protective claim “state a particular dollar amount.” The 2009 § 2053 regulation confirms that even though the “specific dollar amount” issue is not addressed in the Revenue Procedure. Treas. Reg. § 20.2053-1(d)(5). This is a very important consideration in crafting the protective claim because a request for a specific high dollar amount of deduction would likely be a “smoking gun” in the underlying litigation about the contingent claim.

Ancillary expenses (such as attorneys’ fees, court costs, appraisal fees, and accounting fees) “related to resolving, defending, or satisfying the identified claim or expense” are automatically included as part of the claim for refund without the need for separate identification of these ancillary expenses. Rev. Proc. 2011-48, § 4.04(2).

CCA 200848045, provides a general overview of protective claims. While Rev. Proc. 2011-48 does not specifically refer to this Chief Council Advice, it may nevertheless assist in understanding the type of information that the IRS is seeking in identifying claims. CCA 200848045 says that Reg. § 301.6402-2 does not require that a particular dollar amount be asserted but the claim must “identify and describe the contingencies affecting the claim.” This requirement “is interpreted liberally by the Service. So long as the claim is sufficiently clear and definite [to] apprise us of the essential nature of the claim, it will be accepted as having met the requirement.” (This is important because providing too much detail about what makes the claim contingent may give the other side in the litigation insight into the taxpayer’s perceived weaknesses in its case.)

. . . . .

10. Limited Scope of Review. Rev. Proc. 2011-48 confirms that “generally the Service will limit its review of the Form 706 to the deduction under section 2053 that was the subject of the protective claim.” Rev. Proc. 2011-48, § 5.01, referencing Notice 2009-84. However, very importantly, the limited review described in Notice 2009-84 and in § 5.01 does not apply to “[a] taxpayer that chooses not to follow or fails to comply with the procedures set forth in this revenue procedure.” Rev. Proc. 2011-48, § 3.

The explicit reference to Notice 2009-84 is important, because that Notice provides insight into why the IRS inserted the word “generally” in the sentence about limiting the scope of review. The Supreme Court has held that the IRS can examine each item on a return to offset the amount a refund claim, even after the period of limitations on assessment has run. Lewis v. Reynolds, 284 U.S. 281, 283 (1932). However, the IRS in Notice 2009-84 agreed that it would limit the review of protective claims for refund to preserve the ability to claim a deduction under §2053 “to the evidence relating to the deduction under section 2053,” and not exercise its authority to examine each item on the return to offset a refund claim. This limitation does not apply if the IRS is considering a claim for refund not based on a protective claim regarding a deduction under §2053 in the same estate. Also, the Notice says the limitation applies “only if the protective claim for refund ripens after the expiration of the period of limitations on assessment and does not apply if there is evidence of fraud, malfeasance, collusion, concealment, or misrepresentation of a material fact.” The Revenue Procedure is not as explicit but makes a passing reference to this requirement about the refund ripening after the period of limitations has run. It says the limited scope of review applies when determining “whether there is an overpayment of tax based on a timely-filed section 2053 protective claim for refund that becomes ready for consideration after the expiration of the period of limitation on assessment ...” (Accordingly, there may be an advantage in not having resolved the underlying lawsuit regarding the claim against the estate until after the period on additional assessments has run — to the extent that there may be items on other parts of the estate tax return that the IRS might question if it could.)

Don't Miss George Clooney in The Descendants, Made to Order for Trust Buffs

Juan Antunez — Wed, 30 Nov 2011 10:35:08 -0500

Celebrities are great for the trusts and estates field. They focus popular attention by bringing to life in dramatic fashion the abstract principles T&E lawyers deal with every day. The latest celebrity to step up to the plate for the T&E world is George Clooney in “The Descendants.”

T&E lawyers can go on ad nauseam about the legal and financial challenges faced by trustees balancing the interests of current and future trust beneficiaries, and we can kill whole forests writing about the legal and financial tools available to trustees [I've done my part, click here, and here], but how do you explain the sometime metaphysical challenges faced by trustees who don't just want to get the job done, they want to "do the right thing." For that, we need good drama. Enter George Clooney in “The Descendants.”

In this blog post Scott Martin of The Trust Advisor Blog provides an excellent write up of Clooney's latest role from a T&E perspective. Here's an excerpt:

Every multi-generational trust is a balancing act between the living and the dead, with the trustee in the precarious position of having to weigh the wishes of vanished grantors against the priorities of their heirs.

The new film “The Descendants,” by the director of “About Schmidt” and “Sideways,” frames that balancing act against the lush landscape of Kauai, where the fictional King family have lived for decades on acreage held in trust.

The land is not only their home but their birthright, so when the heirs decide to sell the property to generate income, the trustee (played brilliantly by George Clooney) has to do plenty of soul searching.

As a beneficiary and heir of the grantors himself, his position is almost impossibly complicated. He is torn between succumbing to the pressure of the cash strapped beneficiaries and the original intent of the family to preserve the land for generations to come.

He gets a lot of things wrong along the way — nobody said playing referee for a fractious family is easy, especially when there are billions of dollars at stake and the heirs are your cousins.

But at the end, he does the best he can, and Payne (who co-wrote the screenplay from a book by Kaui Hart Hemmings) even gives him a little peace after the hard decisions have played out.

Ripped from the headlines

In fact, the situation he has to face reflects the real-life decisions the trustees made a few years ago on behalf of the beneficiaries of Hawaii’s billion-dollar Campbell Estate.

The 107-year-old Campbell Estate was required to dissolve in January of 2007, twenty years after the last death of the direct descendants who had been alive at the time of the trust’s creation.

Some of the heirs took large cash payouts, according to an account in the Honolulu Advertiser — now the Honolulu Star Advertiser — while others chose instead to roll their interests into a new national real estate entity, the San Francisco-based James Campbell Co. LLC.

In its new corporate identity, the former estate had to distribute its estate tax liabilities as well as its assets to the beneficiaries.

But where the acreage in “The Descendants” ends up sold off to outside developers, the Campbell family still controls several thousand acres of their family legacy in Hawaii, as well as an empire of projects on the mainland

Other details are drawn from the story of other family trusts in Hawaii that have faced this same situation in the last few years.

For example, when the film refers to how “Matt King,” played by Clooney, is a descendant of a Hawaiian princess, who was a member of the powerful Kamehameha dynasty, and a mainland banker, the lineage is fictional.

But the story is reminiscent of the foundation of what was formerly known as the Bishop Estate, created by Charles Reed Bishop, a banker who married the Hawaiian princess Bernice Pauahi.

3d DCA: If a foreign national doesn't qualify for the homestead tax exemption, is he also automatically disqualified from claiming homestead creditor protection?

Juan Antunez — Mon, 28 Nov 2011 08:13:01 -0500

Grisolia v. Pfeffer, --- So.3d ----, 2011 WL 5864806 (Fla. 3d DCA Nov 23, 2011)

The key to understanding this case is recognizing that one word: "homestead;" is used in three very different ways in Florida's constitution:

Article X, §4(a) and (b) for creditor protection
Article X, §4(c) for devise and descent
Article VII, §6 for taxation

The same home can qualify as "homestead" under one constitutional homestead clause, while at the same time failing to qualify as "homestead" under another constitutional homestead clause. For example, for public policy reasons Florida's homestead tax exemption (Article VII, §6) is "strictly construed." In other words, when in doubt, courts must rule against homeowners claiming this tax benefit. By contrast, Florida's homestead creditor protection (Article X, §4(a) and (b)) is "liberally construed." When in doubt, courts must rule in favor of homeowners claiming this asset-protection benefit.

Courts get into trouble when they rely on a line of homestead case-law authority developed to address one facet of homestead law (e.g., taxes), to decide a case involving another facet of homestead law (e.g., creditor protection). That's what happened in the linked-to case above.

Case Study:

In the linked-to case above the decedent was a foreign national (Venezuelan) who moved to Florida in 2005 after his US-born son was almost kidnapped in Venezuela. In 2006 the decedent purchased an apartment in Florida, which he resided in with his family. In 2007 the decedent was loaned $500,000. In 2009 the decedent died intestate while still residing with his family in his Florida apartment. When the decedent's creditors tried to enforce their debt against his estate, his wife claimed the homestead creditor protection to shield the family's apartment from their claims.

A foreign national does not qualify for the homestead tax exemption unless he's a permanent US resident (i.e., Greencard holder), which the decedent wasn't. The trial court ruled against the family on the homestead creditor protection issue based in large part on the fact that the decedent never claimed, nor did he ever qualify for, the homestead tax exemption. Wrong answer, says the 3d DCA. Just because your "homestead" does not qualify for the tax exemption does not mean it fails to qualify for creditor protection.

In Florida, “courts have consistently held that the protections afforded by the ‘homestead exemption in article X, section 4 must be liberally construed.’“ Taylor v. Maness, 941 So.2d 559, 562 (Fla. 3d DCA 2006) (citation omitted). Furthermore, the homestead exemption jurisprudence of Florida courts “has long been guided by a policy favoring the liberal construction of the exemption: ‘Organic and statutory provisions relating to homestead exemptions should be liberally construed in the interest of the family home.’“ Taylor, 941 So.2d at 562 (citations omitted). Accordingly, the Florida homestead exemption from forced sale “is liberally construed for the benefit of those it was designed to protect.” Taylor, 941 So.2d at 562 (quoting Law v. Law, 738 So.2d 522, 524 (Fla. 4th DCA 1999)).

. . . . . .

Appellees cite to several bankruptcy cases where a debtor, because of his immigration status, could not formulate the requisite intent to make his property his permanent residence. These cases ignore that eligibility for the homestead exemption depends on the intent of the homesteader rather than that of the U.S. Citizenship and Immigration Services. See Cooke, 412 So.2d at 341.

. . . . . .

Other cases cited by Appellees are inapposite as they involve Florida's homestead exemption from taxation that is now set forth in article VII, section 6 of the Florida Constitution (“Tax Exemption”), rather than the homestead exemption from forced sale found in article X, section 4. For example, in Juarrero v. McNayr, 157 So.2d 79 (1963), the Florida Supreme Court held that a citizen and former resident of a foreign country, who is in the United States solely on the authority of a temporary visa, “has no assurance that he can continue to reside in good faith for any fixed period of time in this country ... [and, therefore] does not have the legal ability to determine for himself his future status and does not have the ability legally to convert a temporary residence into a permanent home.” Id. at 81. Likewise, in DeQuervain v. Desguin, 927 So.2d 232 (Fla. 2d DCA 2006), the court found that homeowners who held only temporary visas “could not form the requisite intent to become permanent residents for purposes of the [Tax Exemption].” Id. at 233. However, the Second District also clarified that “because the [Tax Exemption] provides relief from an ad valorem tax, we must construe the statute strictly against [the homeowners].” Id. (citing Capital City Country Club, Inc. v. Tucker, 613 So.2d 448, 452 (1993)). The strict construction applicable to the Tax Exemption stands in contrast to the liberal construction of the homestead exemption from forced sale at issue here. See Taylor, 941 So.2d at 562; Law, 738 So.2d at 524.

Similarly, at the evidentiary hearing the Appellees raised the fact that the Decedent had never claimed a Tax Exemption on the Property. They further argue on appeal that a person in the United States under a temporary visa cannot meet the requirement of permanent residence or home, and therefore, cannot claim the Tax Exemption. Fla. Admin Code R. 12D–7.007 (2002). We note that the portion of the Florida Administrative Code to which they cite applies to the Tax Exemption and not to the homestead exemption from forced sale at issue here. The probate court referenced in the order on appeal that “[i]n fact, the Decedent never claimed a [Tax Exemption] according to the Miami–Dade County Tax Rolls.” As we have previously stated, “[f]ailure to claim the [Tax Exemption] is not evidence that property is not, in fact, homestead.” Taylor, 941 So.2d at 563 (citing Pierrepoint v. Humphreys, 413 So.2d 140, 143 (Fla. 5th DCA 1982)). Clearly, “the homestead exemption from forced sale is different from the [Tax Exemption].” Taylor, 941 So.2d at 563 (citing S. Walls, Inc. v. Stilwell Corp., 810 So.2d 566, 569 (Fla. 5th DCA 2002)).

Under the specific facts of the this case, because the Decedent's American-born Son resided in the Property since its purchase, the Decedent and Widow had a visa which gave them the legal right to reside in Florida, and were actively pursuing permanent residence status prior to the Decedent's death, we find that the Decedent demonstrated the requisite intent to make the Property his family's permanent residence. Based upon the foregoing, we reverse the probate court's order denying the petition for declaration of homestead exemption.

4th DCA: If a lawyer improperly writes himself into his client's will, is the bequest automatically void as a matter of law?

Juan Antunez — Mon, 21 Nov 2011 18:21:04 -0500

Agee v. Brown, --- So.3d ----, 2011 WL 5554833 (Fla. 4th DCA Nov 16, 2011)

At the heart of this case is Florida Bar ethics Rule 4-1.8(c), which prohibits Florida lawyers from soliciting “substantial” gifts from their clients (“lunch on me” is OK) or drafting wills, trusts, deeds, etc. for their clients effectuating any such gift.

The common law rule in Florida is that gifts made to lawyers in violation of Rule 4-1.8(c) aren’t per se void, but they do trigger a rebuttable presumption of undue influence by the lawyer. If the lawyer can’t overcome this evidentiary hurdle, the gift is void. How do I know this? Because a couple of years ago I read what I consider to be one of the most thoughtful and scholarly probate-court orders I’ve ever come across in my career. The order, authored by Pinellas Circuit Judge Lauren Laughlin and later affirmed on a “PCA” basis by the 2d DCA in Carey v. Rocke, 18 So.3d 1266 (Fla. 2d DCA October 23, 2009), does a fantastic job of dissecting the intersection of Florida law and professional ethics in a will contest involving a possible Rule 4-1.8(c) violation. Judge Laughlin's order should be required reading for anyone involved in a case where a will contest involves a possible Rule 4-1.8(c) violation. Click here for a copy of Judge Laughlin's order and click here for my write up of the case.

Case Study:

At issue in the linked-to case above was a will and deed drafted by a lawyer in violation of Rule 4-1.8(c). The trial court ruled the will, and by implication the deed, were per se void as contrary to public policy. Not surprisingly, the 4th DCA reversed. Here’s the crux of their analysis:

Jon and Susan Agee appeal the trial court's order dismissing their petition to revoke probate of the last will of Herbert G. Birck based on a lack of standing. The trial court had found that the prior will upon which the Agees based their standing was void as contrary to public policy because Mr. Agee, in violation of the Rules Regulating The Florida Bar, had drafted that earlier will in which he and his wife were left a substantial bequest. The Florida Probate Code, however, does not provide for such an automatic exclusion. Because we conclude that the Agees have standing under a prior will to petition for the revocation of the decedent's last will, we reverse and remand for further proceedings.

. . .

In support of his position that a bequest to a drafting attorney must be deemed void as contrary to public policy, Brown argues that “[p]ublic policy demands protection of the public and the instilling of confidence in the legal profession.” The best way to protect the public from unethical attorneys in the drafting of wills, however, is entirely within the province of the Florida Legislature. The current statutory framework, contrary to Brown's implication, does contain some protections. See, e.g., § 732.5165, Fla. Stat. (2009) (“A will is void if the execution is procured by fraud, duress, mistake, or undue influence.”); § 733.107(2), Fla. Stat. (2009) (“The presumption of undue influence implements public policy against abuse of fiduciary or confidential relationships and is therefore a presumption shifting the burden of proof....”).

. . .

To the extent that the trial court agreed . . . that the deed drafted by Mr. Agee which transferred the remainder interest in an enhanced life estate to him and his wife was void as against public policy, we note that, just as with devises, the fact that Mr. Agee drafted the deed does not make the deed void per se, but rather raises a rebuttable presumption of undue influence. See Fogel v. Swann, 523 So.2d 1227, 1229 (Fla. 3d DCA 1988).

Lesson learned?

What this case and the 2d DCA's Carey case demonstrate is that there's a right way and a wrong way for clients to make substantial gifts to their lawyers. The wrong way opens the door for litigation and possibly frustrating a client's legitimate testamentary wishes. The right way makes sure the client isn't the victim of undue influence, and just as importantly, makes it much less likely the estate will find itself embroiled in costly litigation. So what's the right way? The Commentary to Rule 4-1.8(c) provides the following road map:

A lawyer may accept a gift from a client, if the transaction meets general standards of fairness and if the lawyer does not prepare the instrument bestowing the gift. For example, a simple gift such as a present given at a holiday or as a token of appreciation is permitted. If a client offers the lawyer a more substantial gift, subdivision (c) does not prohibit the lawyer from accepting it, although such a gift may be voidable by the client under the doctrine of undue influence, which treats client gifts as presumptively fraudulent. If effectuation of a substantial gift requires preparing a legal instrument such as a will or conveyance, however, the client should have the detached advice that another lawyer can provide and the lawyer should advise the client to seek advice of independent counsel. Subdivision (c) recognizes an exception where the client is related by blood or marriage to the donee or the gift is not substantial.

R. Regulating Fla. Bar 4-1.8, Comment
“Gifts to Lawyers.”

In terms of providing guidance for clients who for whatever reason legitimately want to write their lawyers into their wills, California has actually codified (and perhaps beefed up) the litigation-shield contained in the Commentary to our ethics Rule 4-1.8(c) by including it in its probate code. See Cal. Prob.C. §§21350-21356. For a comprehensive list of cases across the country dealing with some version of Rule 4-1.8(c), see ACTEC's Commentary on MRPC 1.8.

Bottom line, client gifts to lawyers are not illegal, but they are freighted with all sorts of baggage and litigation risks. Florida law and our ethics rules provide solid guidance for effectuating these gifts the right way. Sadly, these suggestions were apparently not followed in this case.

What is Florida's "nonademption" statute, and why should I care?

Juan Antunez — Sun, 13 Nov 2011 11:21:29 -0500

Melican v. Parker, 289 Ga. 420 (May 31, 2011)

There are all sorts of reasons for why probate practice is interesting. Consider, for example, that even the simplest one-page will is governed by a complex body of law, developed over centuries, that appears nowhere within the four corners of the document, yet can have dramatic consequences. In Florida, this body of law, known as “rules of construction” (i.e., rules that apply when the will is silent, but which can be varied by the terms of the will), has been largely codified in Part VI of chapter 732 of Florida's Probate Code.

The rule of construction at issue in the linked-to case is Florida's "nonademption" statute (F.S.732.606).

Ademption is a common law rule of construction used to determine what happens when a specific item of property gifted under a will is no longer in the testator's estate at the time of his death. In those cases the specific gift is considered "adeemed," and the gift fails. For example, if testator "X" signs a will specifically devising his condominium located in Marco Island to "Y," but later sells the Marco Island condominium and buys a replacement condominium for him and Y to enjoy in the Florida Keys, Y gets nothing: the will said Marco Island condo', not condo' in the Keys.

The ademption rule was simple, but often ended up disinheriting people in a way that seemed unfair and contrary to what testators would have wanted. The more modern view, reflected in section 2‑606 of the Uniform Probate Code, reverses the common law rule in certain cases.

For example, does Y get anything if X signed a sales contract to sell the Marco Island condominium before his death, but the sale didn't close until after he died? That's what happened in the linked-to Georgia Supreme Court case applying Florida law. Under the common law rule, Y gets nothing. Applying the UPC's modern view, Florida's nonademption statute completely changes this outcome: Y may not get the condominium, but when the deal closes, she gets the cash. Here's why:

Pursuant to Fla. Stat. § 732.606(2)(a) (the “nonademption statute”), “[a] specific devisee has the right to the remaining specifically devised property and ... [a]ny balance of the purchase price owing from a purchaser to the testator at death because of sale of the property.” Therefore, where, as here, a balance is owed to a testator from the sale of his or her real property located in Florida, the proceeds from this sale are due to the specific devisee who would have otherwise inherited the real property under the will. Id. See also Ott v. Ott, 418 So.2d 460, 462 (Fla.App.1982) (“The original intent of the [nonademption statute] ... was to prevent ademption in all cases involving sale ... of specifically devised assets when the testator's death occurred before the proceeds of the sale ... had been paid to the testator”) (citation and punctuation omitted; emphasis supplied). Accordingly, Melican, as the specific devisee of the Florida condominium under Strother's Will, was entitled to the proceeds from the sale of the condominium after Strother's death, as these proceeds had not yet been paid to Strother before he died. Fla. Stat. § 732.606(2)(a).

4th DCA: Does a post-nuptial agreement trump a pre-existing will?

Juan Antunez — Sun, 06 Nov 2011 18:53:44 -0500

Steffens v. Evans, --- So.3d ----, 2011 WL 4577938 (Fla. 4th DCA Oct 05, 2011)

In 2002 Mr. Steffens writes his wife into his will. Things get rocky, and in 2007 the couple enters into a post-nuptial agreement that contains a waiver of all inheritance rights. Mr. Steffens dies in 2009 and the issue becomes whether his 2007 post-nup' trumps his 2002 will. The trial court and the 4th DCA both say YES. Here's why:

Tracking the language in section 732.702(1), the Post–Nuptial Agreement refers to the parties waiving “all rights” several times:

Each party freely and voluntarily irrevocably waives all rights in the earnings, property and estate of the other as well as any right to alimony, support or any other monetary relief in the event of a dissolution of marriage or death, except as specifically provided herein.

....

4.1 Except as is otherwise specifically provided in this Agreement, each party waives, relinquishes and releases all right, title and interest in and to any and all of the other party's separate property (See Section 5) to which each party may otherwise be entitled as the spouse of the other party, widow or widower, heir at law, next of kin or distributee, upon or by virtue of a termination of the marriage of the parties by death, divorce, dissolution of marriage, annulment or otherwise....

....

4.2 The waiver contained herein is to be broadly construed pursuant to Section 732.702, Florida Statutes.

(emphasis added.) Accordingly, as Jeffrey's 2002 will was executed before the parties' 2007 Post–Nuptial Agreement, the Post–Nuptial Agreement waived any benefits that would have passed to Andrea under the 2002 will.

The Third District reached a similar result in Hulsh v. Hulsh, 431 So.2d 658 (Fla. 3d DCA 1983). In Hulsh, the court examined whether the language of a post-will antenuptial agreement between the decedent and the widow was effective to waive the widow's right to take under the will. Hulsh, 431 So.2d at 660.

...

Ultimately, relying on section 732.702(1), the court determined that it had “no difficulty in deciding that the language of the antenuptial agreement was sufficient to waive Marcella's rights to take under the provisions of Sheldon Hulsh's will.” Id. at 662 (footnote omitted). Similarly, we find that the language of the Post–Nuptial Agreement waived Andrea's rights to take under the provisions of Jeffrey's will.

The issue I found most interesting was how the court dealt with a "voluntary gifts" clause in the post-nuptial agreement permitting either spouse to make gifts to the other after the post-nup', and stating that those gifts would not be subject to the waivers contained in the post-nup. This is a common clause found in most marital agreements of any sophistication.

["voluntary gifts" clause]

Notwithstanding the terms of this Agreement, either party shall have the right to voluntarily transfer or convey to the other party any property or interest therein, whether Separate Property or other property, which may be lawfully conveyed or transferred during his or her lifetime, or by will or otherwise upon death. Neither party intends by this Agreement to limit or restrict in any way the right and power of the other to receive any such voluntary transfer or conveyance. Such gifts shall not constitute an amendment to or other change in this Agreement, regardless of the extent or frequency of such gifts. Any gifts given by one party to the other hereafter shall constitute the receiving party's separate property.

So if I write you into my will in 2002 but don't die until 2009, when did I make a gift? In 2002 or 2009? For tax and property law purposes, the law is clear: no gift until 2009. That same logic apparently doesn't extend to marital agreements. According to the 4th DCA, the gift was made in 2002 not 2009, thus the 2007 post-nup' clearly voids it.

Thus, [the post-nuptial agreement] unambiguously refers to transfers of property after the 2007 Post–Nuptial Agreement and would not reserve Andrea's beneficiary rights under the 2002 will.

I'm not sure this logic adds up. If I were on the 4th DCA, I would have framed my analysis of the "voluntary gifts" clause in contract-construction terms. Did the post-nup' cover pre-existing wills or not? That how the Florida Supreme Court recently held courts are supposed to deal with beneficiary-designation forms benefiting ex-spouses. See Crawford v. Barker, --- So.3d ----, 2011 WL 2224808 (Fla. Jun 09, 2011), which I wrote about here. Instead, the 4th DCA hung its hat on "Andrea's beneficiary rights under the 2002 will." What rights? She didn't have any "rights" until 2009?

Lesson Learned?

Until a Florida court says otherwise, the rule seems to be that a general waiver contained in a marital agreement is good enough to void a pre-existing will, even if the marital agreement says nothing specific about the pre-existing will.

If your legal practice involves drafting marital agreements, you'll want to make sure your "voluntary gifts" clause specifically addressed pre-existing wills, trusts, etc. If the couple intends to void a pre-existing will, you'll want to explicitly say so. If that's not their intent, you'll want to say that too. Either way, specifically addressing the issue will hopefully spare all sides from the expense and stress inherent to the litigation the parties in this case lived through.

4th DCA: Do the remainder beneficiaries of a revocable trust have standing to sue?

Juan Antunez — Mon, 31 Oct 2011 19:55:42 -0500

Siegel v. JP Morgan Chase Bank, --- So.3d ----, 2011 WL 4949794 (Fla. 4th DCA Oct 19, 2011)

This is the third 4th DCA appellate opinion arising out of this one case (see here, here). This time around the issue of standing was front and center. The remainder beneficiaries of a revocable trust are suing JP Morgan Chase, who served as trustee of the trust prior to the settlor's death. The crucial facts from a trust administration point of view were the following:

Rautbord appointed JP Morgan Chase Bank as her trustee in 1995 . . . . At some point after the execution of the 1995 amendment, Rautbord developed severe dementia.

Because the settlor was incapacitated, she lacked the requisite mental capacity to knowingly consent to JP Morgan Chase's actions as trustee of her revocable trust. This lack of knowing, competent consent is what opened the door to the remainder beneficiaries' lawsuit against the bank after the settlor died. Here's how the 4th DCA explained the law in New York that allowed the remainder beneficiaries to sue JP Morgan Chase. As reflected here in a similar 4th DCA case involving Bank of America, the result would likely be the same under Florida law.

In Siegel I, Judge Gross detailed New York law and concluded that the brothers did have standing to challenge the trust distributions. Specifically, the opinion held:

[U]nder New York law, after the death of the settlor, the beneficiaries of a revocable trust have standing to challenge pre-death withdrawals from the trust which [1] are outside of the purposes authorized by the trust and which [2] were not approved or ratified by the settlor personally or through a method contemplated through the trust instrument. By outside the purposes of the trust we mean any expenditures that were not “appropriate or advisable for the support, maintenance, health, comfort or general welfare of” Mrs. Rautbord.

Id. at 95–96 (emphasis in original). Explaining this holding, Judge Gross relied on New York law, which governs the trust:

The court in Estate of Morse, 177 Misc.2d 43, 676 N.Y.S.2d 407, 409 (N.Y.Sur.1998), described the broad reach of New York's concept of standing:

In that light, it has been noted that “anyone who would be deprived of property in the broad sense of the word ... is authorized to appear and be heard upon the subject” of whether a will that would thus affect him adversely should be admitted to probate ( Matter of Davis, 182 N.Y. [468, 472, 75 N.E. 530 (N.Y.1905) ] ). Accordingly, standing to object to probate does not require an interest that is “absolute”; a contingent interest will be enough ( see Matter of Silverman, 91 Misc.2d 125, 397 N.Y.S.2d 319). In other words, the uncertainty of an interest should not preclude its holder from seeking to protect it, i.e., she should have standing to object to a propounded instrument that makes the possibility of benefit even more remote or eliminates such possibility entirely.

Id. at 95–96. Judge Gross noted, “With an interest in the corpus of the trust after the death of their mother, the Siegels have standing to challenge the disbursements; they have alleged a concrete and immediate injury, caused by Novak and the Bank, which could be redressed by the circuit court. Without this remedy, wrongdoing concealed from a settlor during her lifetime would be rewarded.” Id. at 96 (emphasis added).

The mentally incapacitated settlor of a revocable trust can never knowingly "approve or ratify" any actions. No informed consent = potential future lawsuits for trustee.

Need informed consent from incapacitated trust settlor? Think court-appointed guardian . . .

When you serve as trustee of a revocable trust, your risk exposure is considerably less because under F.S. 736.0603(1), as long as the settlor is alive he or she is the only person you owe any fiduciary duties to. However, the lack of exposure to claims by remainder beneficiaries of a revocable trust is premised on the settlor's ability to give informed consent to your actions. If the settlor is mentally incapacitated . . . EVERYTHING CHANGES!

So what can you do if you're the trustee of a revocable trust whose settlor is mentally incapacitated? Well, one option is to simply resign. Saying "yes" to service as trustee of a revocable trust while the settlor is healthy is a world away from saying "yes" to service as trustee of the revocable trust of an incapacitated settlor. If you're not going to resign, then you need to think about how you're going to get informed consent for your actions as trustee. The goal is to make sure that perhaps years in the future, after the settlor has died and the remainder beneficiaries are examining - in hindsight - every move you ever made as trustee, no one can ever claim "wrongdoing [was] concealed from [the] settlor during her lifetime."

The best (perhaps only) way to ensure the trustee has the informed consent of an incapacitated settlor is to petition for the appointment of a guardian and then account/report to that guardian (until the settlor dies, accounting/reporting to the revocable trust's remainder beneficiaries may violate your duty of confidentiality to the settlor).

Once you have a court-appointed guardian, you've put in place the foundation for legally binding informed consent (thus foreclosing future lawsuits by disgruntled remainder beneficiaries). Building on that foundation, any trust accounting you serve on the settlor's guardian that is subsequently approved of by court order in which all "interested persons" have been served (i.e., make sure you serve all of the revocable trust's remainder beneficiaries in the context of the guardianship proceeding), will then legally bind the settlor and all remainder beneficiaries. Presto! No future lawsuits. If JP Morgan Chase had coupled these protective measures with a trust-accounting "limitations notice" triggering the shortened 6-month statute of limitations period for all items fully disclosed in each respective accounting/report [see F.S. 736.1008(2)], my guess is that any real (or even arguable) wrongdoing would have been caught early, corrected to the court's satisfaction, and the beneficiaries of this trust would have been spared close to a decade of costly litigation after the settlor's death.

Join me in December at upcoming NBI seminar: "Estate Administration Procedures: Why Each Step Is Important"

Juan Antunez — Fri, 28 Oct 2011 14:30:42 -0500

In December I'm scheduled to teach a one-hour segment on probate & trust litigation at an upcoming NBI seminar entitled "Estate Administration Procedures: Why Each Step Is Important." Click here for more information about the seminar and the other speakers. The dates and locations for the seminar are:

Miami, FL - December 6, 2011
Fort Lauderdale, FL - December 7, 2011
West Palm Beach, FL - December 8, 2011 (I won't teach this day)

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

4th DCA: Are "discharge clauses" in contingency fee agreements for probate litigation ethics violations that are per se unenforceable?

Juan Antunez — Mon, 24 Oct 2011 11:11:19 -0500

Guy Bennett Rubin, P.A. v. Guettler, --- So.3d ----, 2011 WL 4577670 (Fla. 4th DCA Oct 05, 2011)

The Florida Bar ethics rules governing contingent fee agreements are found in Rule 4-1.5(f). Other than in divorce and criminal-defense cases [Rule 4-1.5(f)(3)], contingent fees are acceptable in any form of litigation, including contested probate and trust proceedings.

There's not a lot of Florida case law out there addressing contingent fees in probate cases. So the linked-to opinion above should be of special interest to any probate litigator taking cases on a contingency fee basis. What this case makes painfully clear is that Florida law shifts 100% of the risk of NOT getting paid in contingency cases to lawyers who are prematurely discharged by their clients, even if the discharge is without cause and the fee agreement contains a fallback hourly-fee payment clause (a “discharge clause”).

Case Study:

In the linked-to case above the law firm took this probate case on a contingency fee basis. The firm was then fired without cause and the litigation apparently abandoned by the client before any recovery was obtained. The law firm asked the trial court for an order compelling payment for work done prior to the discharge under the following discharge clause contained in its fee agreement.

["Discharge Clause"]

In the event I discharge the firm prior to resolution by judgment or settlement, or if I elect to no longer pursue the Anticipated Claims as identified herein-below, I agree to immediately thereafter pay LAW FIRM accrued hourly legal fees based upon the hourly rates as follows:

Services of Guy Bennett Rubin $500/hr., all other attorneys $400/hr., all paralegals $150/hr., all legal assistants $100/hr. listed in paragraph 4 immediately above.

[Nature of Claims]

ANTICIPATED CLAIMS: Dispute and contest the last will and testament of Leo Guettler Jr. and/or revocable trust of Leo Guettler Jr.; defense of claims b y Edna L. Guettler, Inc. and dissolution or liquidation of my interest in Edna L. Guettler, Inc.

Trial court said NO, concluding that the discharge clause constituted a penalty provision in violation of ethics rule 4–1.5, and was thus NOT enforceable as a matter of law. The 4th DCA agreed:

“An attorney shall not enter into an agreement for, charge, or collect an illegal, prohibited, or clearly excessive fee or cost....” Rule 4–1.5(a), Rules Regulating the Florida Bar. A termination-of-services clause in a contingency-fee agreement, which provides for the client to pay the discharged law firm for all services rendered up through the date of termination at the prevailing hourly rate for firm members, if the client abandons or dismisses the claim, violates rule 4–1.5 on its face. The Fla. Bar v. Hollander, 607 So.2d 412, 414 (Fla.1992).

In The Florida Bar v. Doe, 550 So.2d 1111 (Fla.1989), the contingency-fee contract included a “discharge clause” which permitted the client to discharge Doe only after paying him the greater of $350 per hour for all the time spent on the case or forty percent of the greatest gross amount offered in settlement. At the disciplinary hearing, the referee found that while the contingent fee contract violated rule 4–1.5 on its face, there was no testimony offered that Doe's actions were ever in violation of the rules; consequently, the referee found that Doe was not guilty of any ethical violation warranting disciplinary proceedings. Id. at 1112. However, on review, the supreme court disagreed because “the contract itself shows an ethical violation.” Id. The court found that the discharge provision had the effect of intimidating the client into not exercising her right of discharge and penalized the client for exercising this right. Id. at 1113. The court concluded that “[a]n attorney cannot exact a penalty for a right of discharge. To do so is contrary to our statement of policy in Rosenberg ....” Id. See also The Fla. Bar v. Spann, 682 So.2d 1070, 1072–73 (Fla.1996) (finding that a contingency-fee agreement that provided for payment based on a specified hourly rate upon termination by the client constitutes a penalty clause in violation of rule 4–1.5 because the client would be forced to pay the attorney upon discharge even where the contingency had never been met).

***************

Even if the Agreement is unenforceable as a matter of law, Rubin argues that he should have been permitted to proceed on the theory of quantum meruit as pled in Count III of his complaint. “A Florida Bar member who has entered into an improper fee agreement is nonetheless entitled to receive the reasonable value of his or her services on the equitable basis of quantum meruit.” Patterson v. Law Office of Lauri J. Goldstein, P.A., 980 So.2d 1234, 1236, n. 1 (Fla. 4th DCA 2008) (citing Chandris, S.A. v. Yanakakis, 668 So.2d 180, 186, n. 4 (Fla.1995)). However, an action for quantum meruit “arises only upon the successful occurrence of the contingency. If the client fails in his recovery, the discharged attorney will similarly fail and recover nothing.” Rosenberg, 409 So.2d at 1022. Here, the trial court found that there was no evidence that the plaintiffs received anything as a result of the litigation. Instead, the Guettlers dismissed their claims against the estate and recovered nothing. Therefore, because the contingency did not occur, Rubin is not entitled to any quantum meruit recovery.

Lesson learned?

In Florida, if you agree to take a probate case on a contingency fee basis, you assume 100% of the risk of NOT getting paid for your work if your client decides to fire you and/or abandon the claim before the case is over, even if you've done nothing wrong. This risk may be worth taking, but Florida probate lawyers (who don't do contingency cases on a regular basis) need to know it exists. Adding insult to injury, not only might you not get paid, you might end up getting sanctioned by the Florida Bar if you include a discharge clause in your contingency fee agreement. It's telling that the 4th DCA cited to two such cases in its opinion (see above).

4th DCA: When can a probate judge assess the winning side's attorney's fees against a litigant for bad faith, wrongdoing or frivolousness?

Juan Antunez — Mon, 17 Oct 2011 10:01:58 -0500

Levin v. Levin, --- So.3d ----, 2011 WL 3477032 (Fla. 4th DCA Aug 10, 2011)

In both F.S. § 733.106(4) and F.S. § 733.6175(2), a probate judge is given the express statutory authority to determine from whose share of the estate attorneys fees incurred in wrongful, frivolous or bad faith litigation will be paid. This type of sanction against wrong doing is akin to a F.S. § 57.105 motion for fees, a comparison I previously wrote about here.

My experience has been that judges usually don't pull the trigger on this sort of sanction until things get really, really bad. By then, there's no doubt the wrongdoer is acting way out of bounds, and the court simply enters an order assessing the winning side's attorneys' fees against the losing side. What's wrong with this picture is that busy trial-court judges may be tempted to NOT include detailed findings of fact in their fee orders. Trial lawyers need to guard against this omission if they want to ensure their hard-fought-for fee orders stand up on appeal. The 3d DCA recently ruled that an attorney's fee order without supporting detailed findings is per se reversible error [click here].

In the linked-to opinion above the trial court's fee order was reversed NOT because the sanction wasn't warranted, but simply because the order failed to contain the requisite findings of bad faith, wrongdoing or frivolousness needed to make it stick on appeal.

In this probate case, appellant appeals a judgment assessing attorney's fees against her share of the estate as well as an order taxing costs against her. The trial court did not make the requisite finding of any bad faith, wrongdoing, or frivolousness before awarding fees against appellant's share of the estate. See Geary v. Butzel Long, P.C., 13 So.3d 149 (Fla. 4th DCA 2009); In re Estate of Lane, 562 So.2d 352 (Fla. 4th DCA 1990). Accordingly, we reverse and remand for the trial court to determine, either from the record or after an evidentiary hearing, whether appellant engaged in any bad faith, wrongdoing, or frivolousness in the pursuit of her claim.

New legislation clarifies when Rule 1.525's 30-day deadline for attorney's fee motions apply to contested probate, guardianship and trust proceedings

Juan Antunez — Sun, 16 Oct 2011 09:33:08 -0500

If, when and how Civ. Pro. Rule 1.525, the rule setting a 30-day post-judgment deadline for filing attorney's fee motions in civil litigation, applies to contested probate, guardianship and trust proceedings, is an important question. The last thing any lawyer wants to do is blow a deadline for claiming fees on behalf of his client. Here’s what the rule says:

Any party seeking a judgment taxing costs, attorneys’ fees, or both shall serve a motion no later than 30 days after filing of the judgment, including a judgment of dismissal, or the service of a notice of voluntary dismissal.

Florida appellate courts have upheld application of Rule 1.525's 30-day deadline to all adversary probate and guardianship proceedings (there's never been any question that Rule 1.525 does NOT apply to NON-adversary probate/ guardianship proceedings), and arguably to all trust proceedings. See Price v. Austin, 43 So.3d 789 (Fla. 1st DCA 2010) (adversary guardianship proceeding, click here); Hays v. Lawrence, 1 So.3d 1176 (Fla. 5th DCA 2009) (adversary probate proceeding, click here); Donkersloot v. Donkersloot, 993 So.2d 126 (Fla. 2d DCA 2008) (trust litigation, click here).

However, a rule designed to apply in the general commercial litigation context didn't really work in the probate, guardianship and trust context, where fee petitions are appropriately filed all the time, not just after a final judgment is entered. To fix this glitch in 2011 legislative and rule changes were adopted completely eliminating Rule 1.525's 30-day deadline in the adversary probate and guardianship context, and limiting Rule 1.525's 30-day deadline to fee petitions filed in trust proceedings by anyone other than the trustee (e.g., a beneficiary suing the trustee for malfeasance).

[1] Rule 1.525 NOT Applicable to ANY Probate or Guardianship Proceeding:

In In re Amendments to Florida Probate Rules, --- So.3d ----, 2011 WL 4467595 (Fla. Sep 28, 2011), the Florida Supreme Court amended subdivision (d)(2) of Probate Rule 5.025 (the rule governing adversary probate and guardianship proceedings), completely eliminating Rule 1.525's application in the adversary probate and guardianship context as follows:

(2) After service of formal notice, the proceedings, as nearly as practicable, must be conducted similar to suits of a civil nature, including entry of defaults. The Florida Rules of Civil Procedure govern, except for rule 1.525.

[2] Rule 1.525 Applicable to ONLY Certain Contested Trust Proceedings:

In 2011 the Florida legislature adopted new subsection (6) to Fla. Stat. § 736.0201 specifically limiting Rule 1.525’s application to anyone other than the trustee (e.g., a beneficiary suing the trustee for malfeasance) as follows:

Fla. Stat. § 736.0201(6):

Rule 1.525, Florida Rules of Civil Procedure, shall apply to judicial proceedings concerning trusts, except that the following do not constitute taxation of costs or attorney’s fees even if the payment is for services rendered or costs incurred in a judicial proceeding:

(a) A trustee’s payment of compensation or reimbursement of costs to persons employed by the trustee from assets of the trust.

(b) A determination by the court directing from what part of the trust fees or costs shall be paid, unless the determination is made under s. 736.1004 in an action for breach of fiduciary duty or challenging the exercise of, or failure to exercise, a trustee’s powers.

For more on the analysis that went into the new trust-code provision limiting Rule 1.525's 30-day deadline to only certain trust proceedings, you'll want to read Florida House of Representative's Staff Analysis of CS/HB 325.

I was there when Venezuelans buried ex-President Carlos Andrés Pérez

Juan Antunez — Mon, 10 Oct 2011 21:05:14 -0500

This I believe: "Always go to the funeral." This philosophy took my co-counsel, Alex Gonzalez, and me to Caracas, Venezuela where we witnessed first hand the fruit of our labor in this high profile case: thousands of ordinary Venezuelans, jubilantly taking to the streets, welcoming home the remains of their ex-president, Carlos Andrés Pérez. Our clients, President Pérez's widow, Blanca de Pérez, and her children, beamed with pride and satisfaction as he was finally laid to rest in his native soil after months of heated litigation in Miami.

This was the final chapter in a case that had started for me with a phone call in Miami in late December 2010, and ended ten months later in October 2011, with President Pérez's burial in Venezuela.

The litigation was over President Pérez's place of burial: Miami vs. Venezuela. The legal issues at play were similar to those in the burial dispute involving Ana Nicole Smith's remains [see here, here]. I made my first public appearance in this case in early January 2011, when we obtained an emergency order halting President Pérez's burial in Miami over the objections of his wife and children in Venezuela (a copy of the order was posted here by the Miami Herald).

From the start, every court appearance in this case drew multiple reporters and camera crews, reporting the story both domestically and internationally, in English and Spanish [see, e.g., NYT coverage here, WSJ coverage here, El Universal coverage here, El Nuevo Herald coverage here, FOX News coverage here]. For a complete set of AP photographs of the case click here.

Given this level of media attention, the Chavez regime's decade-long grip on power in Venezuela and embrace of poisonous anti-democratic rhetoric, plus Miami's large exile community, the litigation inevitably took on troubling political overtones. Fortunately, in the end, justice prevailed and President Pérez was buried in Venezuela.

Here's an excerpt from a piece in the Miami Herald, Venezuelans mourn former president Perez, reporting on President Pérez's final burial in Venezuela:

CARACAS, Venezuela -- Thousands of Venezuelans attended a wake for former President Carlos Andres Perez on Wednesday amid tears and speeches a day after his remains arrived in his homeland and ended a a bitter family feud over his final resting place.

Politicians, relatives and supporters of Perez crowded around his closed casket at the headquarters of the Democratic Action party in downtown Caracas and sang the party's anthem.

"Rest in peace, president," said Caracas Mayor Antonio Ledezma, once a confidant of Perez.

The remains of Perez arrived in Venezuela nine months after his death in Miami at age 88 set off a feud between his wife, who wanted to bring the body home, and his mistress in the United States, who said Perez had vowed repeatedly never to return as long as political arch-nemesis Hugo Chavez was president.

The two sides finally reached a confidential settlement sending his body back to his homeland.

There's gotta be a better way.

The way burial disputes are currently adjudicated in Florida needs to change. As things stand now, in burial dispute cases Florida courts are permitted to accept unwritten, hearsay opinion testimony from anyone who shows up and says he's got something to say about what the decedent "would have wanted," if he'd gotten around to writing down his wishes. This approach opens the door to drawn out litigation over the decedent's burial "intent," invites abuse and inflames family discord in cases where there really are no winners.

There is a better way. Florida needs new legislation governing burial disputes adopting the same approach already applied to living will/end-of-life cases: if the decedent didn't leave written instructions as to his burial wishes, his next of kin, in the same order of priority applicable to living will/end-of-life cases (see F.S. 765.401), has sole authority to decide his place of burial. Period, end of story, no hearsay testimony, no opinion testimony, no exceptions, no drawn out trials. If that type of statute had been in place in 2010, all sides of the President Pérez burial case would have been spared the stress, grief and expense of months of heated litigation.

1st DCA: Does a will without a residuary clause = partial intestacy?

Juan Antunez — Sun, 02 Oct 2011 19:01:17 -0500

Basile v. Aldrich, --- So.3d ----, 2011 WL 3696309 (Fla. 1st DCA August 23, 2011)

At one time—under the Florida statute of wills of 1828, in force until the Revised Statutes took effect on June 13, 1892—a will was ineffective to devise Florida real estate that the testator had no interest in at the time the will was executed. Since June 13, 1892, however, a will containing a residuary clause has been effective to transfer after-acquired property. This rule is currently codified in F.S. 732.6005(2). Here's what the statute says; I've italicized the crucial text at the heart of the linked-to case above.

732.6005 Rules of construction and intention.—

(1) The intention of the testator as expressed in the will controls the legal effect of the testator’s dispositions. The rules of construction expressed in this part shall apply unless a contrary intention is indicated by the will.

(2) Subject to the foregoing, a will is construed to pass all property which the testator owns at death, including property acquired after the execution of the will.

Based on this statute the trial court in the linked-to case above ruled that a will devising certain specifically identified property to certain specifically named beneficiaries -- but containing no residuary clause -- resulted in the specific devisees taking everything. Wrong answer, says the 1st DCA.

The problem - a Will with NO residuary clause.

A residuary estate, in the law of wills, is any portion of the testator's estate that is not specifically devised to someone in the will, or any property that is part of such a specific devise that fails. It is also known as a residual estate or simply residue. The will may identify the taker of the residuary estate through a residuary clause or residuary bequest. The person identified in such a clause is called the residuary taker, residuary beneficiary, or residuary legatee. If no such clause is present, however, the residuary estate will pass to the testator's heirs by intestacy. That's what happened in this case.

Here's how the 1st DCA described the will at issue in this case:

On April 5, 2004, Ms. Aldrich wrote her will on an “E–Z Legal Form.” In Article III, entitled “Bequests,” just after the form's pre-printed language “direct[ing] that after payment of all my just debts, my property be bequeathed in the manner following,” she hand wrote instructions directing that all of the following “possessions listed” go to her sister, Mary Jane Eaton:

—House, contents, lot at 150 SW Garden Street, Keystone Heights FL 32656

—Fidelity Rollover IRA 162–583405 (800–544–6565)

—United Defense Life Insurance (800–247–2196)

—Automobile Chevy Tracker, 2CNBE 13c916952909

—All bank accounts at M & S Bank 2226448, 264679, 0900020314 (352–473–7275).

Ann also wrote: “If Mary Jane Eaton dies before I do, I leave all listed to James Michael Aldrich, 2250 S. Palmetto 114 S Daytona FL 32119.” Containing no other distributive provisions, the will was duly signed and witnessed.

Three years later, Ms. Eaton did die before Ann, becoming her benefactor instead of her beneficiary. Ms. Eaton left cash and land in Putnam County to Ms. Aldrich, who deposited the cash she inherited from Ms. Eaton in an account she opened for the purpose with Fidelity Investments. On October 9, 2009, Ann Dunn Aldrich herself passed away, never having revised her will to dispose of the inheritance she had received from her sister.

NO residuary clause = intestacy.

Whenever possible, courts will construe wills in a way that disposes of all of the testator's estate and avoids intestacy. The Florida Probate Code section that's supposed to make this all happen is F.S. 732.6005. When in doubt, this statute authorizes a court to interpret or "construe" an ambiguous will in a way that avoids intestacy. But if the will simply doesn't say what to do with the testator's residuary estate, the result is partial intestacy; F.S. 732.6005 does NOT authorize a court to fill a blank slate with its best guess as to what the decedent would have wanted. The trial court in this case failed to grasp that distinction. Wrong answer, says the 1st DCA. Here's why:

We hold that, where a will fails to dispose of all of a decedent's property (Ann's will has no residuary clause), “partial intestacy” results; and that property Ann owned at the time of her death not disposed of by her will passes to her heirs, in the manner prescribed by sections 732.101–.111, Florida Statutes (2009). Accordingly, we reverse and remand.

*****

Only subsection (1) of section 732.6005 applies to the dispute here: If discernible from the will, the testator's intent must be given effect, unless doing so would be illegal or otherwise contrary to public policy. . . . Subsection (2) of section 732.6005 does not apply because it is expressly “[s]ubject to” subsection (1), which provides: “The intention of the testator as expressed in the will controls the legal effect of the testator's dispositions.” § 732.6005(1), Fla. Stat. (2009). The language of Ann's will is unambiguous and its intent is clear.

Ms. Aldrich devised her house and lot in Keystone Heights, and bequeathed its contents, together with other personal property that the will identifies with painstaking specificity. Her will plainly evinces an intent to dispose of each particular item of property the will names. Equally plainly, the will manifests no intent to dispose of [her residuary estate], property the will does not allude to in any way.

*****

Synecdoche is a rhetorical device, not a judicial doctrine. “[I]f a will disposes of only one small specific item out of a large and valuable estate, it would be absurd to hold that the devisee of that one small item is entitled to the remainder of the estate.” Matter of Estate of Allen, 150 Mich.App. 413, 388 N.W.2d 705, 707 (1986). The same logic applies in the present case.

*****

A testator may choose to dispose of only a portion of his or her estate by will, allowing the balance to descend under the laws of intestate succession. . . . While the will does not dispose of all the property Ann Dunn Aldrich owned at her death, this circumstance is hardly unique to her or her estate and does not contravene any rule of law or public policy. Nor does the will reflect any mistake on her part.

*****

Section 732.6005(2) is, after all, a rule of construction. Rules of construction are to be resorted to only if the testator's intent cannot be ascertained from the will itself. . . . The presumption against partial intestacy is designed to resolve ambiguities where they exist. The presumption should not be applied to create ambiguities in a will where none would otherwise exist.