“My problem lies in reconciling my gross habits with my net income.”  ~ Errol Flynn

A trust is a fiduciary arrangement that allows a third party (“Trustee”) to hold assets on behalf of a beneficiary or multiple beneficiaries. Trusts can be written in many ways and can specify exactly how and when the assets pass to the beneficiaries.  Trusts provide several benefits, including avoidance of probate and minimization of estate and generation-skipping transfer taxes, but perhaps one of the most important functions trusts serve is to protect beneficiaries from their own improvident spending habits and from creditors.  One of the most common provisions in a trust document is a “spendthrift” provision.  Everyone knows a spendthrift – someone who, like Errol Flynn, spends more money than he or she has – but a Settlor (the person creating the trust) can add provisions to the trust document that protect a beneficiary from reckless spending.  ”Spendthrift Trusts are created with the intention of providing a fund for the maintenance of another, and at the same time securing it against his own improvidence or incapacity for self-protection.”  Miller v. Kresser, 34 So.3d 172 (Fla. 4th DCA 2010).  The Miller court noted that “a valid spendthrift provision prevents a beneficiary from transferring his or her interest in the trust as well as prevents creditors or assignees of the beneficiary from reaching any of he trust funds until they are dispersed to the beneficiary.”  Id.

A recent decision by the Fifth District Court of Appeals illustrates the protection provided by a spendthrift provision.  In the recently-decided Zlatkiss v. All America Team Concepts, LLC, 38 Fla. L. Weekly D1194 (Fla. 5th DCA June 7, 2013), Robert and Linda Zlatkiss made a $350,000 loan to Louis Steinmetz, who signed a personal guarantee on the representation that he was the beneficiary of a $6,850,000 trust, which was true.  Steinmetz defaulted on the loan and the Zlatkisses sued Steinmetz and Wells Fargo (the trustee); however, it turned out that Steinmetz’s trust is a spendthrift trust, which prevents the trustee from making distributions if the distributions would be available to creditors.  ”When Steinmetz failed to repay the loan, trustee Wells Fargo refused to make trust distributions to cover the debt owed to the Zlatkisses.” Id.  The court noted that “spendthrift provisions have long been recognized as valid in Florida” and Florida Statutes 736.0501-.0507 provide for the enforcement of spendthrift trusts.  Id.  Thus, the Zlatkisses were unsuccessful in their attempt to have the trust repay Steinmetz’s debt to them.  The end of the Zlatkiss-Steinmetz story sounds patently unfair, but Mr. Steinmetz is going to find himself in the frustrating position of being the beneficiary of a multimillion dollar trust that will not distribute any money to him as long as the judgment validly exists.  So, the Zlatkisses can get a judgment against Steinmetz and as long as that judgment is out there Wells Fargo will not make any distribution to Mr. Steinmetz because once it does that distribution can be attached by the Zlatkisses.  The only ones who win are Wells Fargo (because it continues to serve as trustee and to collect trustee’s fees) and Wells Fargo’s attorneys (because they get paid by the trust).

There are many morals to this story: 1) if you are loaning money to someone who claims an interest in a trust, ask an attorney to read the trust first to make sure the funds in it are available to satisfy the loan in the event of a default; 2) if you have assets and are leaving them to beneficiaries, consider putting them in a trust with spendthrift provisions to protect those beneficiaries from themselves; 3) if you are a trustee and dealing with a spendthrift beneficiary, be very careful about the distributions made to that beneficiary so that the terms of the trust are not violated; and 4) if you are the beneficiary of a spendthrift trust and think you can borrow with abandon because no one can get at your trust money, think again because the trustee – in order to comply with the terms of the trust – may have to shut off your spigot, too.

If you have a question about a spendthrift trust, please call the attorneys at Adrian Philip Thomas, P.A. for a free consultation.

Trusts are created for a variety of reasons.  Whether it is for tax and creditor protection or because the beneficiary is still a minor, there may be myriad reasons for their preparation.  Nevertheless, the initial purpose behind the execution of a trust may get lost or become impractical as time passes or the circumstances that were present at the time of its execution are no longer present or have changed making judicial modification of trusts necessary.

In contemplation of such changing of circumstances, the Florida legislature enacted Fla. Stat. §736.04113 which allows a trustee or a qualified beneficiary to petition the court for an order to modify or terminate a trust in the event that settlor’s purpose behind executing the trust is no longer being satisfied.    The statute states, in relevant part, as follows:

(1)    Upon application of a trustee of the trust or any qualified beneficiary, a court at any time may modify the terms of a trust that is not then revocable in the manner provided in subsection (2), if:

1. The purposes of the trust have been fulfilled or have become illegal, impossible, wasteful, or impracticable to fulfill;
2. Because of circumstances not anticipated by the settlor, compliance with the terms of the trust would defeat or substantially impair the accomplishment of a material purpose of the trust; or
3. A material purpose of the trust no longer exists.

The courts have extensive leeway and discretion to modify, terminate, direct or permit some action if they believe that that such action is required and necessary under Fla. Stat. §736.04113.  Although the settlor’s purpose and intent behind executing a trust is paramount and will always be taken into consideration, the legislature understood that circumstances change and judicial modification of a trust may be necessary and appropriate.  If the settlor is no longer able to make changes to his or her trust then the court may be used to amend or terminate the trust.

If you have a question about judicial modification of a trust in Florida, call the attorneys at Adrian Philip Thomas, P.A. for a free consultation.

What happens when the Decedent’s original Last Will & Testament cannot be found?

It is well-settled under Florida law that when an original will that is known to have existed cannot be located after the death of the decedent, the presumption is that the testator destroyed the will with the intent to revoke it. In re: Estate of Parker, 382 So.2d 652 (Fla. 1980). Often, a family member will have a copy of the Will and will offer it for probate and ask the probate court to admit the Will as if it were an original.  Then, the proponent of the lost will (the person offering the copy for probate) has the burden of introducing competent, substantial evidence to overcome the presumption that the will was destroyed by the testator. Lonergan v. Estate of Budahazi, 669 So. 2d 1062 (Fla. 5th DCA 1996).

The Parker court said that the first step in overcoming the presumption of revocation is by the establishment and admission to probate of the lost or destroyed Will pursuant to Florida Statute §733.207, which states:

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

It is fairly easy for a witness to recall the execution of a Will, but what does “specific content” mean?  The Fifth District Court of Appeal recently decided Brennan v. Honsberger, 101 So.3d 415 (Fla. 5^th DCA 2012) on the issue of establishing a lost Will.  In Brennan there were two Wills at issue: one signed in 2001 leaving the decedent’s estate to his four children in unequal shares and a second executed in 2002 leaving a home in Canada to a friend with all other assets to decedent’s brother.  The decedent died in 2007 and the Petition for Administration sought to admit the 2001 Will.  The decedent’s friend, who stood to receive the house under the 2002 Will, filed an objection to the 2001 Will and a Petition to Establish a Lost Will.  Ultimately, the 2002 Will was not admitted because the witnesses, who testified that they witnessed the signing of the Will, had no knowledge of its content and therefore failed to satisfy the statutory requirement that the witnesses testify as to the specific content of the Will.

If you have a question about a lost or destroyed will, call the attorneys at Adrian Philip Thomas, P.A. for a free consultation.

“The way to gain a good reputation is to endeavor to be what you desire to appear.”  ~ Socrates

The lawyers at Adrian Philip Thomas, P.A. strive to be competent and passionate advocates for their clients while maintaining high levels of professional courtesy and ethical conduct.  For twenty years, we have been serving the needs of clients with probate administration and estate litigation disputes throughout the State of Florida.  We are proud to have earned the gracious thanks of many clients over the years.

Dear Adrian, Oh happy days!  I could not have found finer legal representation.  I will be eternally grateful to you.  Thank you so much.  You took on a complicated case over multiple jurisdictions made overly complex so I could never prevail.  Your staff, your firm, absolutely everyone attended to me with the utmost courtesy, skill and promptness.  Thank you, Adrian, for fighting so hard for me.  Warmest regards, E.S.

To read more of the client thank you notes sent to attorneys at the firm, please click here.

In addition to kind words from our clients, Adrian Thomas is “Superb” rated by AVVO and AV-rated by Martindale-Hubbell, which is a testament to the fact that a lawyer’s peers rank him or her at the highest level of professional excellence.

 Remedies Available in Florida Courts

Tortious interference with an inheritance is a relatively new but widely recognized tort that is currently accepted in Florida and half of the United States.  Many other states have reported cases from their state Supreme Court or appellate level addressing the tort, but declining to determine whether it is recognized.  Clearly, the trend is moving toward national acceptance and recognition of the tort.

The importance of availability of the tort cannot be understated.  It serves many purposes, especially in Florida, where elderly and vulnerable adults are preyed upon by unscrupulous persons seeking to financially exploit Florida’s elderly citizens.    The tort provides a remedy in the form of money, a civil remedy, to a person who believes that another has wrongfully interfered with an inheritance.  The remedy is awarded by the civil court, not the probate court, and the money award is paid by the person who interfered with the inheritance, not the estate.

In Florida, as inheritance dispute lawyers, we see that the tort provides a remedy to a variety of wronged persons who would otherwise be left without a remedy without the tort, while the person who has committed the wrong and interfered with the inheritance can act with impunity.  Sometimes, these wrongdoers are financial institutions and banks who have committed the tort for their own selfish financial gain.  These institutions wield a powerful weapon in the form of unlimited litigation budget to contest any challenge to the institution’s unlawful conduct.  However, because Florida recognizes the tort of interference with an inheritance, wrongfully excluded beneficiaries who have been victimized by a person or bank’s bad conduct, may present their case to a jury, a group of other Florida citizens, who are well equipped with common sense to recognize a case of tortious interference when evidence demonstrates that an elderly or vulnerable person has been taken advantage of.

The availability of a civil jury trial in these cases serves many useful functions, including the ability of the jury to award punitive damages and to deter similar conduct by banks and other unscrupulous persons.    Equitable remedies such as a constructive trust, restitution, or the mere voiding of an invalid trust amendment procured by fraud, offer no deterrent at all to the tortious conduct frequently encountered in the probate context

The primary function of jury trials and tort liability is to deter certain kinds of conduct by imposing liability when that conduct causes harm. The idea of deterrence is not so much that an individual, having been held liable for a tort, would thereafter conduct himself better, it is rather the idea that all persons, recognizing potential tort liability, would tend to avoid conduct that could lead to tort liability.  Prosser and Keaton on Torts, 5^th Edition.   Many commentators and judges have observed the need for a civil jury trial in circumstances where a person or a bank has wrongfully interfered with a lifetime or testamentary gift a donor intended an aggrieved person to receive.  As one commentator has observed, the need for application of tort liability is especially critical when the available equitable remedies offer no deterrent at all to the tortious conduct (i.e, where the tortfeasor, after judgment, is simply returned to the same place he was prior to his tortious conduct):  “For example, assume a testator-parent wishes to divide the estate equally between a son and a daughter, but the son tortuously induces the parent to make a will much more favorable to him.  Perhaps this will also names the son as executor.  Should his sister bring a will contest, the estate will pay the costs of defending the will, and we can assume the son will defend the will vigorously. Should the sister succeed in her contest, and have the will struck down, the tortfeasor will still collect his one-half share by intestacy or a prior will-the same inheritance he would have received had he never committed the tort (albeit reduced by half the cost of the defense, if he, as executor, elects to mount one).” See, Diane J. Klein, the Disappointed Heir’s Revenge, Southern Sytle:  Tortious Interference with Expectation of Inheritance—A Survey with Analysis of State Approaches in the Fifth and Eleventh Circuits,  55 Baylor L. Rev. 769 (2008).

“The trust of the innocent is the liar’s most useful tool.”  Stephen King

Our firm is contacted by many trust beneficiaries who have never received a trust accounting, and they are not aware of the fiduciary duties the Trustee of the trust has to the trust beneficiaries.  Often, the trust beneficiaries place faith and trust in the Trustee to administer the Trust in accordance with the law and what is morally correct.  They are surprised to find that the Trustee of a Trust has specific fiduciary duties to all of the beneficiaries of the trust, which include, but are not limited to the following:

1)     Under Florida law, a trustee has a duty to administer the trust in good faith, in accordance with the terms and purposes of the trust, and in the interests of the beneficiaries pursuant to Fla. Stat. § 736.0801.

2)    The Trustee owes the trust beneficiaries a duty of loyalty to administer the Trust “solely in the interests of the beneficiaries” pursuant to Fla. Stat. § 736.0802.

3)    The Trustee owes the trust beneficiaries a duty to “act impartially in administering the trust property, giving due regard to the beneficiaries’ respective interests” pursuant to Fla. Stat. § 736.0803.

4)    Under Florida law, a trustee shall administer the trust as a prudent person would, by considering the purposes, terms, distribution requirements and other circumstances of the trust, and shall exercise reasonable care, skill and caution.  Fla. Stat. § 736.0804.

5)    Under Fla. Stat. §736.0809, the trustee should take reasonable steps to protect the trust property and assets. 

6)    Under Fla. Stat. § 736.0806, a trustee who has special skills or expertise, or is named trustee in reliance on the trustee’s representation that the trustee has special skills or expertise, shall use those special skills or expertise.

7)    The Trustee owes a duty to keep the beneficiaries of the trust reasonably informed about all monies, funds, assets and personal property that came into his possession as Trustee, and which were distributed, as well as to account for all assets, income, expenses, gains or losses of the Trust pursuant to Fla. Stat. §§ 736.0810, 736.0813 and 736.08135.

8)    The Trustee has a duty to provide the trust beneficiaries with relevant information about the assets and liabilities of the Trust and the particulars relating to the administration of the Trust pursuant to Fla. Stat. § 736.0813(1)(e ).

9)    The Trustee has a duty to enforce claims, to defend actions, to preserve Trust property, and to exercise reasonable care and skill in administration of the Trust pursuant to Fla. Stat. §§ 736.0811 and 736.0816.

10) The Trustee has a duty to take reasonable steps to take control of and protect the trust property pursuant to Fla. Stat. § 736.0809.

11)   The Trustee has a duty to inform each of the trust beneficiaries and account for the assets and liabilities of the trust and for the particulars relating to the trust administration in a trust accounting at least on an annual basis and on the termination of the trust or on change of the Trustee pursuant to Fla. Stat. §§ 736.0813 and 736.08135.

Because the Trust document may include language that specifically states that a trust accounting is to be prepared by the Trustee and given to the trust beneficiaries at certain intervals, and Florida Law also states that the trustee must provide the trust beneficiaries with a trust accounting at least annually, a trust beneficiary should seek competent counsel to review the actual Trust document, in order to ensure that the trust beneficiary is receiving the appropriate trust accountings and information pursuant to the Florida Statutes and possibly the language of the Trust document. 

“A Trustee is held to stricter morals than that of the marketplace; not honesty alone, but the punctilio of an honor the most sensitive, is the standard of behavior.”  Searcy, Denney, Scarola, Barnhart & Shipley, P.A. vs. Scheller, 629 So.2d 947 (Fla. 4^th DCA 1993) citing to Meinhard v. Salmon, 249 N.Y. 458, 464, 164 N.E. 545, 546 (1928).  Also, see Fla. Stat. § 736.0806.  The trustee must be impartial when dealing with conflicting equitable interests of beneficiaries; therefore, a trustee must deal impartially with trust beneficiaries, treat them even-handedly, and act in the best interest of the trust as a whole.  Friedman v. Friedman, 844 So.2d 789 (Fla. 4^th DCA 2003); Morse v. Stanley, 732 F.2d 1139, 1145 (2d Cir. 1984), Fla. Stat. § 736.0803.

If the Trustee has breached any of their fiduciary duties to the trust beneficiaries, they could be held accountable individually for these breaches of trust through intentional conduct, negligent conduct, or reckless indifference conduct.  Harding v. Rosoff, 951 So.2d 912 (Fla. 4^th DCA 2007).  It is imperative that prompt action is taken to retain a competent attorney for their review of the Trust document and estate planning documents to determine if the necessary grounds exist to file an action in a timely manner against a trustee for any breaches of trust committed by the Trustee of the trust.  

If you are a trustee who would like advice about serving as trustee or a beneficiary concerned about a trustee’s duties to you, please call the attorneys at Adrian Philip Thomas, P.A. for a free consultation.

In the Florida Probate Code, the legislature has taken into account the various attorney’s fees and costs incurred during an estate or trust proceeding, including when there are contested matters and allegations of breach of fiduciary duty.  No attorney can guarantee that your attorney’s fees will be paid from the other side; however, there are several statutes that allow a petitioner to seek such financial relief.

Fla. Stat. 733.106 states, in relevant part, as follows:

(1)   In all probate proceedings costs may be awarded in chancery actions

….

(3)   Any attorney who has rendered services to an estate may be awarded reasonable compensation from the estate.

(4)   When costs and attorney’s fees are to be paid from the estate, the court may direct from what part of the estate they shall be paid.

Fla. Stat. 733.609 states, in relevant part, as follows:

(1)    A personal representative’s fiduciary duty is the same as the fiduciary duty of a trustee of an express trust, and a personal representative is liable to interested persons for damage or loss resulting from breach of this duty.  In all actions for breach of fiduciary duty or challenging the exercise of or failure to exercise a personal representative’s power, the Court shall award taxable costs in chancery actions, including attorney’s fees.

(2)   When awarding taxable costs, including attorney’s fees, under this section, the court in its discretion may direct payment from a party’s interest, if any, in the estate or enter a judgment which may be satisfied from other property of the party, or both.

Using these statutes, a savvy probate litigator may be able to get the other party (or the other party’s beneficial interest) to pay for the attorney’s fees that you incurred in bringing a successful breach of fiduciary duty action in Court.

Client’s often call Adrian Philip Thomas, P.A. to ask “how do I contest a Will?”  There are specific grounds and legal reasons needed to challenge a Will in Florida and a skilled Florida probate lawyer can provide guidance.

First, the Will should be scrutinized to see if it was properly executed, witnessed and notarized.  In Florida, there are very specific laws regarding the formality of how a Will is signed.  It must be signed by the Testator and witnessed by two witnesses in the same room and the same time who actually witness the Testator executing the Will.  Each witness must sign in the presence of the other, and then the Will needs to be notarized.

Second, under Florida law, the Testator is required to have the appropriate mental capacity to sign the Will.  This would include the Testator understanding the nature and value of his assets, who should inherit those assets, and the legal effect of signing the Will.  A Will can be declared invalid if the Testator lacked the appropriate capacity to execute the Will.  In the case of Miami Rescue Mission, Inc. v. Roberts, 943 So.2d 274 (Fla. 3^rd DCA 2006), the decedent had executed a new will in 2005 while in the hospital with severe pain and under the influence of strong medications. The decedent’s physicians testified that the medications the decedent had been taking changed her personality, and a psychiatrist testified that the decedent was delusional.  The Court found that through testimony of a caretaker and physicians, the decedent was suffering from an insane delusion at the time the Will was executed, and therefore lacked testamentary capacity which invalidated the Will.  Id.  The Court further defined an insane delusion as a spontaneous conception and acceptance as fact of that which has no real existence except in imagination.  Id.  This case was unusual.  Generally, lack of capacity is established through medical records and testimony of caretakers and relatives.

Third, even if the Testator had capacity, he may have been influenced or coerced to sign the Will, which are grounds for setting the Will aside.  Nagging, threats and verbal abuse are not enough to prove undue influence.  The undue influencer would actually perform certain acts, such as contact the Testator’s attorney, tell the attorney what language is to be placed in the Will, pay for the Will to be drafted, accompany the Testator to the signing of the Will, hold the original Will in their possession, and isolate the Testator from family and friends.  The undue influencer could be a healthcare provider/aide who threatens to withhold care and treatment of the Testator unless the new Will is executed in his favor.  The case of In re Estate of Carpenter, 289 So.2d 410 (Fla. 4^th DCA 1974) is the most followed Florida case regarding undue influence standards.

Also, Florida law holds that if a Will is procured by fraud, wherein the Testator is tricked into signing the Will, then the Will can be contested and could be deemed invalid.  Usually the testimony of the witnesses and notary to the Will are needed to prove what the Testator thought he or she was signing at the time the Will was executed.

If you would like to know “how do I contest a Will?” and would like to speak with a Florida probate lawyer, call Adrian Philip Thomas, P.a. toll free for a free initial consultation.

If an individual elects not to execute a Last Will and Testament, then Florida law makes provisions for distribution of his assets at death.  One area where this is of particular note is Florida’s Simultaneous Death Law, found in Florida Statute § 732.601.  The Simultaneous Death Law is triggered when two (or more) people die and there is insufficient evidence that that the persons have died other than simultaneously.  This is common in fatal accidents, where it is not readily known which individual died first.  This can be important when it comes to determining the ownership of joint accounts (passes to survivor but who was survivor?), determining the correct beneficiary of a life insurance policy, or who takes under a Last Will and Testament.

Under Florida Statute 732.601(1), “[w]hen title to property or its devolution depends on priority of death and there is insufficient evidence that the persons have died otherwise than simultaneously, the property of each person shall be disposed of as if that person survived.”  The statute also contemplates when two or more beneficiaries are designated to take successively by reason of survivorship, disposition of property held by joint tenants or tenants by the entirety, and insurance policies where the insured and beneficiary both die and there is insufficient evidence that they died otherwise than simultaneously.

The practical effect of Florida Statute 732.601 is that when two people die and their order of death can’t be readily determined, each person’s property will be treated as if they outlived the other.  In other words, if a mother has her son as primary beneficiary of a life insurance policy and her sister as the contingent beneficiary, and both mother and son perish in a plane crash with no evidence as to order of death, then the policy would be payable to the sister as contingent beneficiary.

As a probate attorney this distinction is very important, as contingent beneficiaries may have rights of which they are unaware due to the Simultaneous Death Law.  The language contained in a Last Will and Testament or Trust (or policy of insurance) can provide differently, but in the event of a Simultaneous Death it may be to your advantage to speak to a Florida probate attorney regarding the facts.

When there are concerns that a loved-one may have limited mental capacity, it may be appropriate to petition the Court for implementation of a guardianship.  However, courts view guardianships as a last resort, and they will not usually grant them if there is a sufficient less restrictive alternative to guardianship.  Examples of these less restrictive alternatives would be a power of attorney, a healthcare surrogate, and/or a trust.

Nevertheless, there are times when courts have to intervene and initiate a guardianship.  Once a petition to determine incapacity is filed, the court orders that three (3) examining committee members assess the alleged incapacitated person’s mental health and they provide recommendations to the court as to whether or not they believe that a guardianship should be initiated by the court.

However, there has been some recent case law that may shed some light as to how strictly the court should consider these examining committee reports.  In Rothman v Rothman, 93 So.3d 1052 (Fla. 4^th DCA 2012), a petition to determine incapacity was filed and the examining committee member performed their assessment of the alleged incapacitated person.  Two (2) of the three (3) committee members found there to be no incapacity, while the other recommended a limited guardianship.  Pursuant to Fla. Stat. 744.331(4), the alleged incapacitated person requested the dismissal of the petition because a majority of the committee members concluded that there is no incapacity.  The trial court found Fla. Stat. 744.331(4) to be unconstitutional and denied the dismissal of the petition.  This court order was later appealed, and the appellate court cited In re Keene, 343 So.2d 916 (Fla. 4^th DCA 1977), which held that Fla. Stat. 744.331(4) should be strictly construed by the court and, as a result, the appellate court found that the trial court had erred in not dismissing the petition.

A guardianship should be viewed as a last resort; however, there are restrictions that the court must consider in determining how to handle a proposed guardianship.  Although courts are given great deference in assessing most situations, there is a proper procedure that the court must follow in implementing a guardianship and it is reversible error for the court to disregard these rules.

If you are concerned for a loved-one’s mental health and his or her ability to handle their finances, it would be wise to contact a Florida guardianship attorney to assess the viability and appropriateness of initiating a guardianship.