Second District Court of Appeals Finds Old Trust Code Inapplicable to Action Based on Undue Influence and Breach of Fiduciary Duty and Notes Distinction Between Concepts of Venue and Jurisdiction

Frequently, when representing trust beneficiaries or trustees, I encounter a defensive argument that Florida isn’t the proper venue for the trust litigation. Venue is the legal concept of the appropriate location for a lawsuit to be heard by a Court.

Venue is a concept distinct from jurisdiction, which focuses on the authority of a court to hear a particular case. Venue is concerned with the geographical location of the court where a lawsuit is commenced. However, unlike personal jurisdiction, there is no constitutional requirement for proper venue in order to have a valid judgment. (more…)

I’m always curious to see how remote the conclusion of a case involving application of a probate rule is to the legislative intent of the rule at the time of it becomes law. One such case recently surfaced in New England where the court’s application of a Rhode Island intestacy statute resulted in what may be considered an unjust and bizarre result.

In Fleet Nat’l Bank v. Hunt 944 A.2d 846 (R.I. 2008) the court faced the estate administration of Art Hadley, a self-made entrepreneur and successful New England businessman, who died in 1941; survived by his wife, Frances and his two children, Thomas and Sarah.

After Art Hadley’s death, Thomas married Betty, who had two children from prior relationships: Janet Hunt and Lucille Foster. A few years after Frances died, Thomas formally adopted Janet Hunt and Lucille Foster, both of whom were over eighteen years old. In 1993, Thomas died, having no biological children but survived by Betty and his two adopted daughters, Janet Hunt and Lucille Foster.

Art Hadley’s other child, Sarah, died childless and unmarried on January 3, 2002. Her death triggered the distribution of two Hadley trusts. At the time of her death, Art Hadley had no surviving children, or biological grandchildren, or biological issue. However, Thomas’s two adopted daughters, Janet Hunt and Lucille Foster, were living. (more…)

A Call For Help from the Probate Bar to the Psychology Clinicians

The dramatic increase of cases challenging the validity of wills based on the deficient mental capacity of the person making the will has been measured, verified, and commented on by many legal observers. The reason for the increase in probate litigation is subject to debate; however, I have found in my discussions with other trust and estate practitioners that most will agree the relevant factors causing the increase include the rapidly growing number of older persons with medical and psychiatric problems affecting their mental and cognitive ability; the tremendous transfer of wealth taking place between the World War II and baby boomer generations and the change in the traditional nuclear family. See Daniel Marson and Laurie Zebley, The Other Side of the Retirement Years: Cognitive Decline, Dementia, and Loss of Financial Capacity, 41 Ret.Plan. 30 (2001); Harold T. Nedd, Fighting Over the Care of Aging Parents: More Siblings Clashing Over Money and Control, USA Today, July 30, 1998, at 1A. (more…)

2008 Legislative Action Affecting Trusts and Estates

It was a busy summer in Tallahassee for our legislature. Below are summaries of some of the House and Senate Bills that were signed into law by Governor Crist affecting probate practitioners and litigators:

Fla.Stat. §736.0703 (2008 Fla.Laws 76).

The amendment to the Florida Trust Code, by virtue of a Council substitute for House Bill 435, became effective July 1, 2008, and clarifies the liability of a trustee who is required under the terms of the trust to follow the directions of another trustee. Specifically, the law now provides that “if the terms of a trust instrument provide for the appointment of more than one trustee but confer upon one or more of the trustees, to the exclusion of the others, the power to direct or prevent specified actions of the trustees, the excluded trustees shall act in accordance with the exercise of the power.” The amendment insulates the excluded trustee from liability, both individually and as a fiduciary, for complying with the exercise of the power by the empowered trustee, except in cases of willful misconduct on the part of the directed trustee of which the excluded trustee has actual knowledge. This insulation from liability remains regardless of what information might be available to the trustees. In fact, the excluded trustees are relieved of any obligation to review, inquire, investigate, or make recommendations or evaluations with respect to the exercise of the power. Further, the trustee or trustees having the power to direct or prevent actions of the trustees shall be liable to the beneficiaries with respect to the exercise of the power as if the excluded trustees were not in office and shall have the exclusive obligation to account to and to defend any action brought by the beneficiaries with respect to the exercise of the power.

Fla.Stat. §736.0802 and Payment of Trustees’ Attorneys Fees

This has been a hot topic in the probate bar for years and will likely continue to be an issue in light of the legislation enacted this summer. After the amendment to section 0802 of the Florida Trust Code, payment of costs or attorney’s fees incurred in any trust proceeding from the assets of the trust may be made by the trustee without the approval of any person and without court authorization, unless the court orders otherwise. If a claim or defense based upon breach of trust is made against a trustee in a proceeding, a party must obtain a court order to prohibit the trustee from paying costs or attorney’s fees from trust assets. To obtain an order prohibiting payment of costs or attorney’s fees from trust assets, a party must make a reasonable showing by evidence in the record or by proffering evidence that provides a reasonable basis for a court to conclude that there has been a breach of trust. The trustee may proffer evidence to rebut the evidence submitted by a party. The court in its discretion may defer ruling on the motion, pending discovery to be taken by the parties. If the court finds that there is a reasonable basis to conclude that there has been a breach of trust, unless the court finds good cause, the court shall enter an order prohibiting the payment of further attorney’s fees and costs from the assets of the trust and shall order attorney’s fees or costs previously paid from assets of the trust to be refunded.

This amendment also added a new notice requirement on trustees who wish to charge attorney’s fees from trust assets. With the amendment, the Trust Code now requires that if a claim or defense based upon a breach of trust is made against a trustee in a proceeding, the trustee shall provide written notice to each qualified beneficiary of the trust whose share of the trust may be affected by the payment of attorney’s fees and costs of the intention to pay costs or attorney’s fees incurred in the proceeding from the trust prior to making payment. The written notice shall inform each qualified beneficiary of the trust of the right to apply to the court for an order prohibiting the trustee from paying attorney’s fees or costs (discussed above) from trust assets.

Fla.Stat. §736.1008

This amendment to the Florida Trust Code creates limitations periods for actions against a trustee for breach of trust. Depending on the conduct of the trustee and the knowledge of the beneficiary, the limitations periods range from 10 to 40 years after the trust ends:

The ten and twenty year limitations apply to any action by a beneficiary where the beneficiary had actual knowledge of the existence of the trust and the beneficiary’s status as a beneficiary throughout the 10 or 20 year period.

The forty years limitation applies when a beneficiary shows by clear and convincing evidence that a trustee actively concealed facts supporting a cause of action.

Fourth District Court of Appeals Ruling Reminds Practitioners of Need for Rules Clarification

By Adrian P. Thomas

The appeal of a probate court decision can be tricky. The appellate process is full of land mines, and the probate court appellate procedure is no exception. One of the most common issues that needs to be immediately addressed by the practitioner is to determine whether the appeal is premature. This question can be very challenging in the probate context because the administration of an estate and/or trust is a series of events that can be viewed as both temporal and final at the same time.

What Probate Court Orders Can Be Appealed?

One of the first rules to learn is that appeals may not be taken from interlocutory orders entered in the probate process. The party who wishes to seek appellate review of an order by the probate court is required to await the entry of a final order or decree before seeking review of the allegedly erroneous interlocutory order. For example, an order setting aside and declaring letters of administration void ab initio is not an appealable order, nor is an order dismissing a petition in probate for construction of a will. (more…)