Let’s say your father passed away with $200,000 in his estate and you are the only heir.  If your father had owed money on the date of his death, the estate would be obligated to satisfy that creditor prior to you obtaining your inheritance.  Florida law provides that a devise (distribution) owed to a beneficiary is subject to charges for debts, expenses, and taxes.  In our example, if the creditor claim was for $100,000, it would be paid first, and you would then inherit the $100,000 remaining in the estate. 

However, what if your father only had $90,000 on the date of his death, yet still had the $100,000 creditor?  Unfortunately, your father’s estate would be insolvent and your inheritance may be completely wiped out. 

Now suppose that the person who owes the estate is a child who convinced his father to make a quick change to his last will and testament specifically forgiving the debt that is owed by the son to the decedent.  What if the only funds in an estate available for distribution to the other children are to come from the child who owe money to the estate but whose obligation is now forgiven?

Prior to April of this year, no Florida court had addressed the issue of whether the release and forgiveness of an obligation (debt) in a will operates to defeat the payment of obligations and expenses of an estate.  In other words, are debt forgiveness clauses in wills enforceable?  The court in Lauristen v. Wallace—So.3d.—2011, WL 1195873 (Fla. 5^th DCA Apr 01, 2011), addressed the issue when the will of a father had a provision that forgave the debt of his son.  However, the only estate asset was this debt owed to the decedent; the estate was otherwise insolvent and could not pay for other debts and expenses.  The court held that a decedent can release a debt owed to the decedent through a will only to the extent that the decedent’s estate is solvent to pay all debts and administrative costs of the estate.  Therefore, such clauses may not be enforceable when the estate lacks the funds to pay its debts and expenses but may be enforceable if debts and expenses are paid but still leaving nothing to disburse to the beneficiaries. 

 You must always be wary of the solvency of the estate when making decisions on strategy and how expenses and distributions are to be made from the estate.  Florida courts have made yet another distinction between solvent and insolvent estates and all parties, especially the personal representative, must be aware of these distinctions.

CAN A PERSONAL REPRESENTATIVE OF AN ESTATE BE REMOVED?

Pursuant to Florida Statute 733.302, any person who is over the age of 18 years old, and is a resident of Florida at the time of death of the person whose estate is to be administered is qualified to act as personal representative in Florida.

You may receive a copy of the Notice of Administration of an estate, which will indicate who is the acting Personal Representative of that estate.  Pursuant to Florida Statue 733.212, a copy of the notice of administration should be served on the following persons who are known to the personal representative:  the decedent’s surviving spouse, beneficiaries, the trustee of any trust and each qualified beneficiary of the trust, persons who may be entitled to exempt property, and interested persons.  Florida Statute 731.201(23) defines an interested person as “any person who may reasonably be expected to be affected by the outcome of the particular proceeding involved.  Under Florida Statute 731.201(2), a beneficiary means an heir at law in an intestate estate (estate without a Will) and devisee in a testate estate (estate with a Will).

In the event you receive a Notice of Administration, and believe that the person who was named as Personal Representative is not qualified to hold that position, it is possible to have a personal representative removed and a successor personal representative appointed. 

Florida Statute 733.504 states that a personal representative may be removed and letters revoked for any of the following causes, and the removal shall be in addition to any penalties prescribed by law:

(1) Adjudication that the personal representative is incapacitated.

(2) Physical or mental incapacity rendering the personal representative incapable of the discharge of his or her duties.

(3) Failure to comply with any order of the court, unless the order has been superseded on appeal.

(4) Failure to account for the sale of property or to produce and exhibit the assets of the estate when so required.

(5) Wasting or maladministration of the estate.

(6) Failure to give bond or security for any purpose.

(7) Conviction of a felony.

(8) Insolvency of, or the appointment of a receiver or liquidator for, any corporate personal representative.

(9) Holding or acquiring conflicting or adverse interests against the estate that will or may interfere with the administration of the estate as a whole. This cause of removal shall not apply to the surviving spouse because of the exercise of the right to the elective share, family allowance, or exemptions, as provided elsewhere in this code.

(10) Revocation of the probate of the decedent’s will that authorized or designated the appointment of the personal representative.

(11) Removal of domicile from Florida, if domicile was a requirement of initial appointment.

(12) The personal representative would not now be entitled to appointment.

Also, it is important to note that pursuant to Florida Statute 733.303, a person is not qualified to act as a personal representative if the person:

(a)  Has been convicted of a felony;

(b)  Is mentally or physically unable to perform the duties; and

(c)  Is under the age of 18 years.

The personal representative has specific fiduciary duties and obligations to the beneficiaries of an estate.  If a beneficiary believes that there has been mismanagement, self-dealing, divided loyalties, conflict of interest, or a breach of fiduciary duty by the personal representative of an estate, it is imperative that the beneficiary retain skilled and competent counsel to discuss their rights as the beneficiary of an estate to ensure that the beneficiary receives the appropriate distributions and to ensure that the personal representative is performing all of their fiduciary duties according to the Florida Statutes.  If the personal representative has breached their fiduciary duties, then competent counsel could have the personal representative removed, and request that the Court appoint a successor personal representative.

What is Probate Litigation?

In Florida, probate litigation is one of the most hotly-contested areas of the law; here, surviving family members use the judicial system to correct an array of injustices. Probate is the legal process by which a person’s debts are paid and assets owned by the decedent are distributed upon death. Probate litigation frequently arises in the context of a Will contest.  When a decedent has created a Last Will and Testament and it is offered for probate, Florida law grants creditors and heirs various rights, privileges and limitations that must be strictly followed.

Usually, Florida probate litigation is first considered by a client when they receive a Notice of Administration alerting them that an objection to the probate proceedings must be commenced within a certain period of time or be forever barred. Probate litigation is the broad concept of challenging the contents of the Last Will and Testament; a provision of the Last Will and Testament; the appointment of an executor (Florida law refers to an Executor or Executrix as a Personal Representative); or the entire document itself. The facts of each dispute will define the exact cause of action (e.g., Lack of Mental Capacity, Undue Influence, Duress, Intentional Interference with an Expectancy, and/or Improper Signing of the Will) that needs to be prosecuted or defended. However, one should never rely on a promise to “even out” the estate or “take care of it” soon if served with a Notice of Administration. Once, the very limited time period (usually 20 days) passes, any promises, representations or guaranteed to settle any estate dispute or disagreement are worthless and unenforceable unless an attorney has entered into an official settlement agreement.

New tricks for an old dog?

As the seminal case of In re Estate of Carpenter, 253 So. 2d 697 (Fla. 1971), turns 40 years old, a review of the holding is warranted to see if whether it is withstanding the test of time.  To prove undue influence in Florida, a will or trust contestant must show that the decedent was unduly influenced by 1) a substantial beneficiary under the contested document 2) and that beneficiary had a confidential relationship with the decedent and 3) actively procured the will or trust.  Often in undue influence actions, the first and second items are stipulated to, as it is appropriate that a substantial beneficiary may have a confidential relationship with a decedent.

While not exhaustive, the Florida Supreme Court provided seven criteria in In re Estate of Carpenter, 253 So. 2d 697 (Fla. 1971) in determining undue influence:

1) presence of the beneficiary at the execution of the will/trust;

2) presence of that beneficiary on occasions when the testator expressed a desire to make the will/trust;

3) recommendation by the beneficiary of an attorney to draw the will/trust;

4) knowledge by the beneficiary of the contents of the will/trust prior to its execution;

5) giving of instructions on preparation of the will by the beneficiary to the attorney drawing the will;

6) securing of witnesses to the will by the beneficiary; and

7) physical possession of the will by the beneficiary after its execution.

Although, active procurement is a necessary element in proving undue influence one needs to look beyond the Carpenter factors because Carpenter was decided 40 years ago and over the last 40 years people have come up with creative and subtle ways of perfecting the undue influence scheme.

For example, if you just stuck to Carpenter in evaluating a potential undue influence case in Florida, if the alleged wrongdoer was not present for the execution of the will/trust nor took possession after its execution, an exclusive reliance upon the Carpenter factors may lead one to the incorrect conclusion that undue influence is not provable.  What if a sibling told lies to their surviving parents about his sister’s behavior, over the telephone, then visited for several days –is that some evidence of undue influence?   If documents were then amended once that sibling returned home, but prior to the death of the parents, would it be possible to use that conduct to help prove undue influence?

If a wrongdoer isolates someone that can be an important factor regarding the issue of undue influence.  Although Carpenter does not address isolation and undue influence, newer cases do.  In the days Carpenter was decided, isolating someone required physical presence.  In today’s technologically advanced society, isolation may be directed from another state.  Ask yourself the following  questions: Was the parent given access to the outside world?  Who selected the parent’s caregiver?  Did the wrongdoer disparage family members?  What do the telephone records and email demonstrate?

The point is if you are faced with a scenario in Florida where common sense tells you someone has committed undue influence, the fact that the conduct of the undue influencer doesn’t fit neatly into Carpenter doesn’t mean undue influence doesn’t exist.  One needs to investigate additional areas of conduct beyond the Carpenter factors because much of the traditional conduct of taking parents to the lawyer, selecting witnesses, etc., is being replaced by other nefarious conduct that is just as troubling.

What does it mean to have lack of mental capacity or lack of testamentary capacity?

Lack of Mental Capacity or Lack of Testamentary Capacity claims are based on the testator’s lack of mental capacity and are the most common types of testamentary challenges. Testamentary capacity typically requires that a testator has sufficient mental acuity to understand (a) the amount and nature of his or her property, (b) the family members and loved ones who would ordinarily receive such property by Last Will and Testament, and (c) how his or her Last Will and Testament disposes of such property. Simply because an individual has a form of mental illness or disease does not mean that he or she automatically lacks the requisite mental capacity to make a Last Will and Testament. Competency to execute a Last Will and Testament generally means that the Testator understood the nature and extent of his assets and knew the natural objects of his bounty (his family). While it may seem that the Testator (the person who signed the Last Will and Testament) was incompetent or that the Last Will and Testament was the product of fraud, undue influence or overreaching.  Lack of Mental Capacity or incompetence is typically proven by medical records, irrational conduct of the Decedent, and the testimony of those who observed the Decedent at the time the Last Will and Testament was executed.

What is “undue influence?”

Undue Influence claims challenge whether the testator made the Last Will and Testament freely and without being coerced by someone. An undue influence lawsuit relates to whether the decedent made his or her Last Will and Testament without being coerced by another person or persons. For example, a family member, friend, long-time employee, or acquaintance might pressure a frail, elderly person to leave most or all of his or her assets to that person while excluding children, relatives and others who should receive the inheritance. Undue influence occurs when a person is compelled to perform an act (signing of a Last Will and Testament) as a result of improper pressure exerted upon him or her.

Florida enacts legislation allowing challenges to “deathbed marriages.” 

It used to be that you could marry someone only moments before death and be vested with all the same rights and benefits as a spouse of 50 years.  Florida wised up to this type of predatory behavior and enacted Florida Statute §732.805, which became effective on October 1, 2010. 

The statute allows an interested party to challenge a surviving spouse’s rights by alleging that the marriage was procured by fraud, duress or undue influence.  The burden is on the challenger to establish, by a preponderance of the evidence, that the marriage was procured by fraud, duress, or undue influence.  The cause of action cannot be brought until the death of the person believed to have been coerced into marriage and is only available for four (4) years from date of death.  It will be interesting to revisit this blog after causes of action have been litigated under this statute.

Florida Statute Section 732.805

Spousal rights procured by fraud, duress, or undue influence.

—

(1) A surviving spouse who is found to have procured a marriage to the decedent by fraud, duress, or undue influence is not entitled to any of the following rights or benefits that inure solely by virtue of the marriage or the person’s status as surviving spouse of the decedent unless the decedent and the surviving spouse voluntarily cohabited as husband and wife with full knowledge of the facts constituting the fraud, duress, or undue influence or both spouses otherwise subsequently ratified the marriage:

(a) Any rights or benefits under the Florida Probate Code, including, but not limited to, entitlement to elective share or family allowance; preference in appointment as personal representative; inheritance by intestacy, homestead, or exempt property; or inheritance as a pretermitted spouse.

(b) Any rights or benefits under a bond, life insurance policy, or other contractual arrangement if the decedent is the principal obligee or the person upon whose life the policy is issued, unless the surviving spouse is provided for by name, whether or not designated as the spouse, in the bond, life insurance policy, or other contractual arrangement.

(c) Any rights or benefits under a will, trust, or power of appointment, unless the surviving spouse is provided for by name, whether or not designated as the spouse, in the will, trust, or power of appointment.

(d) Any immunity from the presumption of undue influence that a surviving spouse may have under state law.

(2) Any of the rights or benefits listed in paragraphs (1)(a)-(c) which would have passed solely by virtue of the marriage to a surviving spouse who is found to have procured the marriage by fraud, duress, or undue influence shall pass as if the spouse had predeceased the decedent.

(3) A challenge to a surviving spouse’s rights under this section may be maintained as a defense, objection, or cause of action by any interested person after the death of the decedent in any proceeding in which the fact of marriage may be directly or indirectly material.

(4) The contestant has the burden of establishing, by a preponderance of the evidence, that the marriage was procured by fraud, duress, or undue influence. If ratification of the marriage is raised as a defense, the surviving spouse has the burden of establishing, by a preponderance of the evidence, the subsequent ratification by both spouses.

(5) In all actions brought under this section, the court shall award taxable costs as in chancery actions, including attorney’s fees. When awarding taxable costs and attorney’s fees, the court may direct payment from a party’s interest, if any, in the estate, or enter a judgment that may be satisfied from other property of the party, or both.

(6) An insurance company, financial institution, or other obligor making payment according to the terms of its policy or obligation is not liable by reason of this section unless, before payment, it received written notice of a claim pursuant to this section.

(a) The notice required by this subsection must be in writing and must be accomplished in a manner reasonably suitable under the circumstances and likely to result in receipt of the notice. Permissible methods of notice include first-class mail, personal delivery, delivery to the person’s last known place of residence or place of business, or a properly directed facsimile or other electronic message.

(b) To be effective, notice to a financial institution or insurance company must contain the name, address, and the taxpayer identification number, or the account or policy number, of the principal obligee or person whose life is insured and shall be directed to an officer or a manager of the financial institution or insurance company in this state. If the financial institution or insurance company has no offices in this state, the notice shall be directed to the principal office of the financial institution or insurance company.

(c) Notice shall be effective when given, except that notice to a financial institution or insurance company is not effective until 5 business days after being given.

(7) The rights and remedies granted in this section are in addition to any other rights or remedies a person may have at law or equity.

(8) Unless sooner barred by adjudication, estoppel, or a provision of the Florida Probate Code or Florida Probate Rules, an interested person is barred from bringing an action under this section unless the action is commenced within 4 years after the decedent’s date of death. A cause of action under this section accrues on the decedent’s date of death.

Are step-children considered “lineal descendants” of the decedent?

A Florida appellate court recently held that the term “lineal descendants” does NOT include stepchildren.  Timmons v. Ingrahm, 36 So.3d 861 (Fla.Dist.Ct.App.2010).

In the Timmons case, the decedent’s Will defined the term “children” to include the decedent’s adopted children and the children of his spouse, whom he had never adopted.  The Will went on to create two trusts – a marital trust and a family trust.  The surviving spouse had the right to withdraw principal from the marital trust (subject to some limitations) during her lifetime and upon her death all of the trust property was to be added to the family trust and distributed to the decedent’s children (as defined above).  Unfortunately, the decedent also gave his spouse a limited power of appointment over the family trust allowing her to appoint the trust property to the decedent’s “living lineal descendants.”  Naturally, she appointed it all to her children and not surprisingly the decedent’s children had a problem with that decision! 

There are probably two morals to this story.  The first moral is for drafting attorneys: give careful consideration to the language used in an instrument.  The definition clause will not necessarily be controlling.  The second moral is for the testator:  unless you are married to the one and only love of your life and all children are the product of that union, then don’t give a power of appointment.  Step relationships frequently fall apart after the death of the biological parent.

What is probate litigation? 

The word probate is an odd one, coming from the Latin word “probatus” which means “to prove.”  Originally, probate was the process to prove a Last Will and Testament of the decedent.  However, probate courts have expanded their jurisdiction to include guardianship and trust law, too.  So “probate litigation” encompasses guardianship, probate, and trust disputes

My firm has handled hundreds of probate litigation cases over the past ten years.  With that experience, we have learned that in a probate litigation case the facts are always the same in a general sense, but have infinite variety as to the particulars. There is always an elderly person, usually alone, and a predatory relative, friend, or caretaker who takes advantage of the loneliness and dependency of old age.

Probate litigation (remember that means estate, guardianship, and trust litigation) is a rapidly-developing area of the law in Florida. The large elderly population has created a hotbed for abuse and subsequent litigation. Because probate, guardianship, and trust work generally do not involve litigation, most lawyers who practice in those areas  are reluctant – and wisely so — to litigate an issue themselves. Litigation is full of pitfalls that make it a hazard for attorneys who do not concentrate their practices.  

Here are some of the “red flags” that indicate you may have a probate litigation issue:

• An elderly parent comes in with one of his children to prepare new estate planning documents that change the beneficial interests of all of his children;
• A child with substance abuse issues decides to file a Petition to Determine Incapacity against an elderly parent even though the parent has complete estate planning documents that should eliminate the need for guardianship;
• A decedent who was dying of cancer and on heavy medication signs a new will or a deed near the end of his or her life;
• A child contacts you to advise you that she just found out a parent died a few months ago, the estate has been administered, and she never received any disclosure;
• A client with estate planning documents dies and the estate has numerous joint bank accounts with only one of the decedent’s children or with a friend or caretaker;
• A widow or a widower marries near the end of life and, notwithstanding a premarital agreement, creates joint accounts with the new spouse thereby cutting out the children the premarital agreement was designed to protect.

CONVICTED KILLER TO COLLECT A FORTUNE FROM HIS VICTIM

An interesting case out of New York is making headlines.  It involves a young man, heroin addict who admitted to killing his mother-in-law after she caught him trying to steal jewelry from her Long Island home.  He subsequently entered a plea agreement for 25 years in jail, avoiding life in prison.  Prior to the victim’s murder, she had prepared a Will bequeathing all of her estate to her only daughter.  The daughter, married to the murderer, was never charged in the crime.  After the man was arrested for the murder in November 2009, he remained in jail during which time his wife, the victim’s daughter, died in February 2010, leaving everything in her Estate to her jailed husband.  The victim’s family is, needless to say, outraged and attempting to set aside the plea bargain made with the murderer unless he agrees to give up his victim’s remaining legacy.  See link to New York Post article dated January 3, 2011, “Murderer To Inherit Fortune – From Victim” by Kieran Crowley.

As previously discussed on this blog, Florida’s Slayer statute §732.802, prohibits a surviving person who unlawfully and intentionally kills or participates in procuring the death of a decedent from receiving any benefits under the decedent’s Will or through intestate succession, treating the decedent’s estate as if the killer had predeceased the decedent.  However, how would Florida’s Slayer statute apply under the circumstances as occurred in this recent New York case?  There does not appear to be a section under Florida’s Slayer statute which applies to this set of facts.  Certainly one could construe Florida Statute §732.802 as a blanket denial of any financial benefit to the killer, resulting from the death of the victim, whether directly and/or through any indirect means, including through a third party not involved in the murder such as the case in New York.

What is also an interesting issue about the case in New York is the article above suggest that the victim’s family appears to be seeking monetary gain through the potential threat of further criminal sanctions which may be construed as extortion and criminal in and of itself.