Hypothetical #1:               When Aunt Minerva died, she had no husband or children, but did have a valid Will, which was probated.  Her living descendants were her niece, Angela, her nephews, Barry and Charles.  They were over the age of 18 years old at the time of Aunt Minerva’s death.  When Aunt Minerva died, Angela had two children, Donald and Evelyn.  If Aunt Minerva’s Will stated that all of her estate was to be distributed to her then living descendants, per stirpes, then her niece, Angela, and her nephews, Barry and Charles each would receive a 1/3 share of her estate.  Angela’s children, Donald and Evelyn, would not receive anything from the estate.  Pursuant to Florida Statute 731.201(9), a lineal descendant or descendants mean “a person in any generational level down the applicable individual’s descending line.”  Adopted children come within the definition of lineal descendants.  The term “descendant” is synonymous with the terms “lineal descendant” and “issue”, but excludes collateral heirs.  Florida Statute 731.201.

Hypothetical #2:               In the event Aunt Minerva’s Will stated that all of her estate was to be distributed to her then living descendants, per stirpes, and at the time of Aunt Minerva’s demise her niece, Angela, had predeceased her, then Barry and Charles would each receive a 1/3 share of her estate, and Angela’s 1/3 share would be distributed to Donald and Evelyn, who would each receive a 1/6 share.  Florida Statute 732.103 and Florida Statute 732.104.

Hypothetical #3:               In the event Aunt Minerva’s Will stated that all of her estate was to be distributed to her then living descendants, per stirpes, and at the time of Aunt Minerva’s demise, Barry had predeceased Aunt Minerva and he left no surviving descendants, then Angela and Charles would each receive a one half share of Aunt Minerva’s estate, and Donald and Evelyn would not receive anything from the estate.  Florida Statute 732.103 and Florida Statute 732.104.

Hypothetical #4:               In the event Aunt Minerva’s Will stated that all of her estate was to be distributed to her then living descendants, per stirpes, and at the time of Aunt Minerva’s demise Barry, Charles and Evelyn were her only surviving descendants because Angel and Donald predeceased Aunt Minerva.  Then Barry and Charles would each receive a 1/3 share, and Evelyn would receive the 1/3 share that would have been left to her mother, Angela.  Florida Statute 732.103 and Florida Statute 732.104.

Hypothetical #5:               In the event Aunt Minerva’s Will stated that all of her estate was to be distributed to her then living descendants, per capita to her niece, Angela, and her nephews, Barry and Charles, who were over the age of 18 years old at the time of Aunt Minerva’s death, then the three beneficiaries would share a 1/3 distribution of her estate.  “Per capita” means taking by total number of individuals.  All of the living members in the group of beneficiaries listed in the Will would receive an equal share.  However, if one of the members of the identified group of beneficiaries had predeceased Aunt Minerva, then no share is created for the predeceased beneficiary, and the two remaining beneficiaries would inherit half of Aunt Minerva’s estate.

“Per stirpes” is more commonly used in Will language because it provides for any heirs of any beneficiaries that predeceased the grantor to receive the predeceased beneficiaries’ share of the estate.  In the event you plan to use “per capita” language in a Will, they you will need to be sure your estate planning addresses any generation skipping shares of the estate that may be created by this type of distribution.  If the grantor leaves shares of his or her estate naming specific grandchildren and/or great grandchildren as beneficiaries through per capita language in the Will, and the testator’s children survive him or her, the generation skipping transfer tax may be triggered on the grandchildren’s or great grandchildren’s share of the estate.  I.R.C. Sections 2612, 2613 and 2652.

It is extremely important to discuss your estate planning documents and the specific language to be added to any of your estate planning documents with your estate planning attorney to void any unnecessary tax consequences on your beneficiaries inheritance and to avoid unintentionally leaving out any of your desired beneficiaries in your estate planning documents.

We often come across cases in which a Will or a Trust leaves assets equally to all of the Decedent’s children. However, at the time of death, most of the Decedent’s assets are held in joint accounts with only one of the children named as a joint owner, thereby entitling only one child to the entire account as the remaining joint owner and avoiding the equal distribution that the parent planned through his or her Will and/or Trust.

Unfortunately, the account title tends to control, despite the understanding that the child receiving the account as joint owner had been placed on the account for convenience purposes only to help mom or dad pay bills, as needed; not to receive all of the assets upon their death. Parents believe their children would never cut out their siblings but this is sadly not always the case.

In a recent case, a sister, named on all of her father’s accounts as a joint owner with the consent of her father and brothers who expected their sister to share equally with them, decided to keep all of dad’s remaining assets at the time of his death. Sister claimed ownership of all of the accounts because dad allegedly wanted her to have the accounts for the care she provided him during his lifetime. In fact, she had already begun withdrawing large sums of money from the accounts shortly before Dad’s death, knowing her brothers were expecting to share equally though Dad’s estate planning documents which again clearly provided each child was to be equal beneficiaries in his Estate.  Sister claimed father had gifted these accounts to her during his life time as an inter vivos gift

The required elements needed to prove an inter vivos gift are the following: (1) the donor must perform some act constituting the actual or symbolic delivery of the subject matter of the gift. (2) the donor must possess the intent to give; and (3) the donee must accept the gift.

The burden of proving an inter vivos gift is on the party who asserts the claim, in this case, sister.  Sister must show by explicit and convincing evidence that the decedent intended to make a present gift and unmistakably intended to relinquish permanently the ownership of the subject gift.  Only that understanding and absolute abnegation of power will make the alleged gift enforceable.  If the judicial mind is left in doubt or uncertainty as to exactly what the status of the transaction was, sister must be deemed to have failed in the discharge of her burden and the claim of gift must be rejected.  Courts also impose an additional element upon the donee, namely, that the donee must prove that the donor relinquished “ownership and dominion over the subject matter of the gift.”  

Sister and the father enjoyed a relationship in which confidence is naturally inspired or reasonably exists.  Sister gained an advantage due to that confidence and has the burden of proving that no undue influence was used to gain that advantage.  The purpose of this burden of proof is to afford the decedent protection against his voluntary actions, the import of which he may not have fully understood.  In explaining the reason for the presumption of undue influence, the purpose is not so much to afford protection to the donor against the consequences of undue influence exercised over him by his daughter, as it is to afford the decedent protection against the consequences of voluntary action on his part, induced by the existence of the relationship between them, the effect of which upon his own interests the decedent he may have only partially understood or appreciated.    

It was argued that the joint accounts were put into joint tenancies with sister solely as a matter of convenience, and not with the intention that they bypass the decedent’s will and pass by way of survivorship to sister only.  With respect to the principle of “undue influence,” in recognizing its liberal application in inter vivos transfers, the presumption of undue influence is raised more easily than in cases involving Wills.  All that is needed is a confidential relationship. 

Even with the joint account registration, sister must prove the requisite “explicit and convincing evidence” that the decedent “intended to make a present gift and unmistakably intended to relinquish permanently the ownership” of his accounts and as noted above, recognize as an additional element, the relinquishment by the donor “of ownership and dominion over the subject matter of the gift.”   

Was such relinquishment rendered impossible by law, since sister, despite being a joint tenant, was not a legal owner of the accounts?  The joint accounts were legally owned entirely by the decedent during his lifetime because he contributed all the money deposited into them. A joint account belongs, during the lifetime of all parties, to the parties in proportion to the net contributions by each to the sums on deposit.  In the absence of proof of net contributions, the account belongs in equal shares to all parties having present right of withdrawal.

Here, of course, sister never made any contributions of her own earned income into any of the decedent’s accounts.  At the time sister was made a joint tenant for purposes of convenience, she was not a legal owner of any of the accounts; nor was she a legal owner of these accounts at the time of the decedent’s death, since she had contributed nothing to them of her own money. 

Consequently, because sister could not offer evidence that the decedent unmistakably intended to relinquish permanently the ownership of the accounts, these accounts properly pass through the decedent’s last will and testament, and not by way of inter vivos gifts to sister.  This conclusion is supported by the above-expressed principle that, if the judicial mind is left in doubt or uncertainty as to exactly what the status of the transaction was, sister must be deemed to have failed in the discharge of her burden and the claim of gift should be rejected.

When Frank died in 1999, he was married to Myrtle and had two adopted children from a previous marriage.  Myrtle had four children, none of which was ever adopted by Frank.  Frank created two trusts, a family trust and a marital trust.   Myrtle was the sole income beneficiary of the trusts during her lifetime, and upon her death, the marital trust was to pour over into the family trust.  The marital trust provided that upon Myrtle’s death, the trust’s remaining principal would pour over into the family trust and be distributed in accordance with the terms of the family trust.  The family trust provided that upon Myrtle’s death, the trust assets were to be divided “into as many equal shares as there are children of mine then living and deceased children of mine leaving issue then surviving.” 

Frank defined “children” in his will as including both his adopted children and Myrtle’s children.   Several years after Frank’s death, Myrtle, using a limited power of appointment in the family trust, executed a document that attempted to grant all of the principal and income of the family trust, then in existence or later coming into the trust, to her four (4) natural children.   The limited power of appointment in Frank’s Trust allowed Myrtle to direct the assets of the family trust to and among my then living lineal descendants.  The trustees then were alleged to have commenced distributing certain trust assets to Myrtle’s children and denied Frank’s adopted children access to trust records. 

Frank’s adopted children sued Myrtle for breach of fiduciary duty and for an accounting.  They argued that Myrtle’s attempt to disinherit them was ineffective because of the limited power of appointment could only be executed in favor of Frank’s “lineal descendants.” 

The court said that “lineal descendant” or “descendent” as interpreted by Florida inheritance law is defined to mean “a person in any generational level down the applicable individual’s descending line.”  Adopted children come within the definition of lineal descendants. 

“A technical term used in a trust instrument should be accorded its legal definition unless obviously used by the settlor in a different sense.  Here, we believe that Frank‘s will did not reflect an intent to expand the definition of lineal descendants to include step children.  Therefore, Myrtle’s purported exercise of the limited power of appointment in favor of her natural children was invalid.”

Definitions in Trust agreements can be boilerplate with little to no discussion between the Settlor and Attorney of the impact of these depositions.  Many times these issues become obvious only after death and when it is too late.

Under the Florida Probate Code, when a person’s spouse dies, the surviving spouse has the right to take an elective share pursuant to Florida Statute § 732.201.  An elective share is essentially Florida’s way of insuring that some money or property is left to the surviving husband or wife. The elective share estate includes not only probate assets but many assets which are designed to pass outside the probate estate.  Pursuant to Fla. Stat. § 732.2065, the elective share is equal to 30% of the elective estate.  A significant amount of litigation occurs regarding the elective share. 

For example, a problem arises when a surviving spouse seeks to establish the value of the elective share and then obtain contribution from direct recipients/beneficiaries of the decedent.  I recently encountered a scenario where a decedent, in a second marriage with adult children, left her IRA to her three children.  After death, the surviving spouse petitioned to determine the amount of elective share and sought contribution against the three children who were the recipients of the IRA.  The only assets of the decedent were the IRA and a half interest in a home she owned with her husband.  The children all resided outside of Florida and had received their IRA distributions directly from an out-of-state financial institution.  This petition of the surviving spouse was served upon the three children and the financial institution.  An interesting question arose as to whether Florida courts obtain jurisdiction over a non-resident, direct recipient who is not otherwise interested in the estate.  The issue comes down to one of personal jurisdiction. 

To obtain personal jurisdiction over non-resident defendants and actions involving estates, Florida Rule of Civil Procedure 1.070(h) requires that the lawsuit contain sufficient allegations to assert jurisdiction under Florida’s long-arm statute. This maybe done either by utilizing the language of Florida Statute § 48.193 without pleading supporting facts, or by alleging specific facts demonstrating that defendants’ actions fit within one or more of the subsections of Florida Statute § 48.193.  When a non-resident does not submit to the jurisdiction of the Florida probate court and receives contribution directly from an out-of-state financial institution, a conflict arises between Florida Statute § 732.201 and constitutionally-mandated sufficient minimum contacts to satisfy due process requirements.  In the matter I handled, the Motion to Quash/Dismiss for Lack of Jurisdiction was granted. 

Despite the statute written and passed by the Florida legislature, Florida Probate Rule 5.360 fails to address the jurisdictional problems in the new contribution requirement.  While conceivable that the personal representative of the decedent may be forced to bring lawsuits in each of the states where a direct recipient resides, often times that is simply impractical.  This is an issue the Florida legislature will hopefully address in its next session.

            The Personal Representative of an Estate must promptly publish a Notice to Creditors pursuant to Florida Statute 733.2121.  The Notice should contain the following:

1)    The name of the decedent;

2)    The file number of the estate;

3)    The designation and address of the Court in which the case has been filed;

4)    The name and address of the Personal Representative of the Estate;

5)    The name and address of the Personal Representative’s attorney; and

6)    The date of the first publication. 

             The notice must include a statement that creditors have only those periods of time established in Florida Statutes 733.702 and 733.710 to file their claims against the estate.

             Pursuant to Florida Statute 733.2121(2), the Notice to Creditors must be published once a week for two consecutive weeks, in a newspaper published in the county where the Estate is being administered, or if there is no newspaper published in that county, in a newspaper of general circulation in that county in Florida.

             Pursuant to Florida Statute 733.2121(3)(a), the Personal Representative of the Estate must make a diligent search to determine the name and addresses of creditors of the decedent, even if the claims are not yet due (unmatured, contingent or unliquidated).  Notifying the Post Office that delivered mail to the decedent to forward the decedent’s mail to the Personal Representative is helpful in determining the names and addresses of some of the decedent’s creditors, as the Personal Representative may then receive billing statements, credit card statements, and bank statements belonging to the decedent.  Prompt notice must be sent to known creditors (whose are creditors of the decedent known to the Personal Representative that do not require extensive searches to locate) and a copy of the Notice to Creditors should be sent to them directly.  Pursuant to Florida Statute 733.2121(3)(a), a written notice is not required to be sent to any creditor who has already filed a claim against the estate, or whose claim has been paid in full, or whose claim is listed in a Personal Representative’s timely filed Proof of Claim.

             If the decedent was 55 years of age or older at the time of death, the Personal Representative must also send a copy of the Notice of Creditors to the Agency for Health Care Administration within three (3) months after the first publication of the Notice to Creditors, unless the Agency for Health Care Administration has already filed a Statement of Claim against the Estate pursuant to Florida Statute 733.2121(3)(d).

             If the Florida Department of Revenue has not previously received a copy of the Notice to Creditors, then sending them a copy of the Inventory filed in the Estate shall be considered the same as service of a copy of the Notice to Creditors pursuant to Florida Statute 733.2121(3)(e).

             Proof of Publication of the Notice to Creditors provided by the newspaper must be filed with the Court within 45 days of the date of the first publication.

             Within four (4) months after the Notice to Creditors is first published, the Personal Representative must file a Verified Statement with the Court, stating that they performed a diligent search for the names and addresses of all of the decedent’s creditors who may have a claim against the Estate, provide a list of names and addresses of the known creditors, and indicate whether the creditor was served with the Notice of Creditors or otherwise received the information contained in the Notice.

             It is imperative that the proper procedure is followed in the preparation and publication of the Notice to Creditors, the preparation and filing of the Proof of Publication and the preparation and filing of the Verified Statement of the Personal Representative, and these documents should be prepared by a competent probate attorney retained by the Personal Representative of the Estate to insure that the applicable Florida Statutes have been followed.

In a recent Florida Second DCA case, Burgess v. Prince, 25 So.3d 705 (Fla. 2^nd DCA 2010), the Court determined that a Trustee of a family trust, who was also a Trust beneficiary, was entitled to compensation for her management of Trust assets, despite the fact that the trust instrument provided that a beneficiary of the Trust could not receive compensation for serving as Trustee.  The trial court removed the Trustee and ordered that she may not be compensated for managing a business, which was a trust asset, and all compensation she received would be charged against her distributive share of the Trust.  See Id.  On appeal, the Appellate Court upheld the removal without discussion but reversed a part of the final judgment which ruled the Trustee could not be compensated for managing the business which was a trust asset.  Although the trust instrument provided that a Trustee who is also a beneficiary shall serve as Trustee without compensation, the Appellate Court found that the Trustee received compensation from the trust for operating the business, rather than as compensation as Trustee.  In ruling, the Appellate Court relied on language in the trust instrument which plainly stated that the Trustee can employee various individuals, including any Trustee, if such employment was deemed necessary or desirable and to be paid reasonable compensation for their services.  In addition, the trust instrument had language which allowed a Trustee to employee any beneficiary or individual fiduciary in any capacity.

This ruling appears to allow a Trustee, who is also a beneficiary, to hire themselves to administer assets of a trust, held as part of a business owned by the trust under the guise of owning a business or providing a service other than trust administration.  By paying herself as a employee of the trust, she avoids the specific instructions that a Trustee, who is also a beneficiary, not be compensated for their role as Trustee.  Oftentimes, parents will appoint one of their adult children to administer and manage a trust after their death to provide for the equal benefit of all of their children.  In a scenario such as this, grantors are advised by estate planning attorneys to include language in a trust which indicates such the beneficiary/trustee is not to receive compensation for their serving as Trustee.  The thought process is to allow all beneficiaries to remain equal beneficiaries of the trust assets while at the same time avoiding a more expensive corporate or professional Trustee’s involvement.  However, based upon the recent finding in Burgess, these beneficiary/trustees now have a potential loophole that allows them to receive an unequal, greater distribution of trust assets by claiming that additional compensation paid to them was for a service other than trust administration. 

Unfortunately, parents believe their children will always get along and treat each other fairly after their passing, and as a result of this thinking, often cut corners when it comes to their estate planning. They fail to include provisions which will reduce or eliminate unforeseen litigation among their children and family, the intended beneficiaries of their estates.  Apparently, even when parents attempt to properly plan for equal distribution to their children, they now must consider whether a child will try to skirt the no trustee fee issue by pretending they are not trustees but employees.  Remember, while I did not have the luxury of reading this particular trust, one can presume that the section the trustee/beneficiary hired herself under was a boilerplate provision buried deep in the documents that was discussed by no one and ignored by all.

 Beneficiaries experiencing an overcompensated sibling charged with the responsibility of managing the trust money, should question any compensation paid to the trustee to make sure they are not improperly obtaining a larger piece of the pie. A defense must be presented to support a finding by the Court, that the types of services performed, and for which compensation is sought, are actually trust administration services for which the Trustee should not be paid in excess of that which is contained in the Trust instrument or allowed of trustees for similar administrative responsibilities.

The following is based on real events, only the names have been changed to protect the guilty. 

Jane Settlor created her revocable trust in 2005, naming herself as the initial trustee and sole income beneficiary during her lifetime, and upon her death, the remainder of the trust estate is to be divided amongst numerous individuals (some family, some not), charities and a charitable foundation that she created.  The drafting attorney, John Lawyer, is also the nominated successor trustee and the CEO of Mrs. Smith’s charitable foundation.

A couple years after executing her trust, Jane Settlor pulled out her estate planning documents to re-review her estate plan.  Upon reviewing her revocable trust, and to her surprise, she noticed that many of the residuary beneficiaries of her trust were people that she hardly knew at all, and should not have been included as beneficiaries of her trust.  Mrs. Settlor immediately began crossing out names and devises, and interlineated (in her own handwriting) new names and devises.  Next to each interlineated change, Mrs. Settlor handwrote her initials and the date.  She then made some handwritten notes on the front page of the trust instrument, which read as follows:  “Mr. Lawyer, I read my trust today, and I couldn’t believe what I saw.  There were people named who I hardly even know.  I was so sick at the time I signed the trust, that I didn’t even know what was being presented to me for my signature!!!” 

Mrs. Settlor then phoned Mr. Lawyer and instructed him to draft a trust amendment incorporating the changes she interlineated on her copy of the trust instrument.  However, her health began to rapidly decline and Mrs. Settlor passed away before getting an opportunity to execute her new trust amendment. 

One of Mrs. Settlor’s family members sued Mr. Lawyer as successor trustee, seeking to reform the trust based upon a unilateral drafting mistake.  The lawsuit alleged that Mrs. Settlor’s true testamentary intent is evidenced by her handwritten interlineations and notes contained on the trust instrument, and that the interlineations and notes are direct evidence of a unilateral drafting mistake.  Mr. Lawyer responded with a Motion to Dismiss, arguing that pursuant to Fla. Stat. §736.0403, the provisions of a revocable trust that dispose of trust property on or after the death of the settlor, must be executed with the same formalities as a will in this State. 

It is well-settled law in Florida that the testamentary aspects of a revocable trust must be executed with the same formalities as a last will and testament in this State.  See Fla. Stat. §736.0403 and §732.502.  It is equally settled in Florida that un-witnessed interlineations in an original will are to be ignored, and the will probated as though the interlineations were not present.  See Lowy v. Roberts, 453 So. 2d 886, Fla. 3d DCA 1984); and In re Estate of Shifflet, 170 So. 2d 96 (Fla. 3d DCA 1964).  However, the question naturally begs itself:  Is there some other mechanism by which to breathe new life into the interlineated changes that are otherwise unenforceable?

Section 736.0415 Florida Statutes allows courts to “reform the terms of a trust, even if unambiguous, to conform the terms to the settlor’s intent if it is proved by clear and convincing evidence that both the accomplishment of the settlor’s intent and the terms of the trust were affected by a mistake of fact or law, whether in expression or inducement.”  The Statute also permits the courts to consider relevant extrinsic evidence “even though the evidence contradicts an apparent plain meaning of the trust instrument.”  See also, Robinson v. Robinson, 720 So. 2d 540 (Fla. 4^th DCA 1998), rev.den. 729 So. 2d 391 (Fla. 1999); and Estate of Huls, 732 So. 2d 1206, 1207 (Fla. 2d DCA 1999).  Hence, based upon the current status of Florida law, it appears that it is possible to breathe life into Mrs. Settlor’s handwritten interlineated changes, not by declaring the interlineations or the unexecuted trust amendment as valid, but by utilizing both together as evidence that the original trust instrument contained a unilateral drafting mistake which prevented Mrs. Settlor’s true testamentary intent from being expressed.  Stated simply, the original trust instrument can arguably be reformed to comport with Mrs. Settlor’s true testamentary intent evidenced by her own handwritten changes and notes.  

Estate litigation and trust disputes come in all shapes and sizes.  A recurring theme in will and trust contests is what the deceased person intended.  Most times the intention is argued through witness testimony.  It’s rare to have the words of the deceased person for the estate lawyers to use in a case, but when you do it sure is helpful.

Litigation presents lots of surprises and traps for the unwary.  The consequences of failing to follow a seemingly-routine procedure can sometimes lead to horrific consequences. 

An example of one of the plain and simple rules of litigation is that if a party dies and the claim is not thereby extinguished, the court may order substitution of the proper parties. The motion for substitution may be made by any party or by the successors or representatives of the deceased party.  The motion must be made within 90 days or the action shall be dismissed as to the deceased party. The purpose of this rule is to facilitate the rights of persons having lawful claims against estates being preserved, so that otherwise meritorious actions will not be lost

When counsel files a suggestion of death, opposing counsel should (a) contact opposing counsel for information regarding the date and place of death, and such information as opposing counsel may have regarding whether an estate has been opened, or (b) propound discovery directed at obtaining the same information, or (c) both.  Generally, if the decedent’s estate has been opened, then the personal representative should be substituted in place of the decedent; however, if no estate has been opened, then another appropriate representative, such as a guardian ad litem, will need to be substituted.  Failure to substitute the proper representative or guardian nullifies subsequent proceedings.

Florida inheritance lawyers that handle probate estates and inheritance lawsuits were reminded this week of the consequences of failing to follow the rule in Schaefler v. Deych 2010 WL 2292936 (Fla.4^th DCA June 9, 2010).  This case involved plaintiffs who alleged they were injured after Mr. Levinsohn drove his car into Plaintiff while she was walking her bicycle across the street.  The case was set for jury trial on the trial court’s docket, however, just a few weeks before trial, the defendant Mr. Levinsohn died. Unaware of the defendant’s death, defense counsel filed a motion in limine to exclude argument at trial on any inferences of negligence based on the defendant’s anticipated absence at trial, due to his terminal cancer. As soon as he learned that the defendant died, he notified the court and plaintiffs’ counsel. Defense counsel filed a suggestion of death, however, instead of seeking to abate the proceedings until the decedent’s Estate could be substituted as a party at trial, defense counsel continued to defend the case.  A jury returned a verdict after trial for over $1.6 million and final judgment was entered against deceased defendant, Mr. Levinsohn.

Later, everyone learned that several weeks before trial, the Estate of Robert Levinsohn was opened in New York and represented by counsel there.   Plaintiff then filed a Motion to Substitute the Personal Representative of the Estate of Robert Levinsohn as a Party. Defense counsel filed a after the suggestion of death was filed.   Plaintiffs countered by arguing that the defendants were merely trying to get avoid the judgment because the jury hit them with a large verdict.

What’s the Big Deal?

On October 14, 2008, the Estate of Robert Levinsohn in New York filed a motion to intervene and to join in the motions filed by defense counsel for New Trial also arguing that the case should not have proceeded to trial without substitution of the Estate as the defendant. Plaintiffs opposed the post-trial motions, asserting that the deceased defendant, through his insurance company, was seeking “another bite of the apple” and that substitution was just a perfunctory matter. 

Due Process

The Estate argued that the procedures that culminated in entry of the final judgment against the Estate violated its due process rights. The inheritance lawyers for the probate estate showed that the trial court never obtained jurisdiction over the New York Estate and the Estate was given no notice and opportunity to appear in the proceedings.

The Fourth District Court of Appeals agreed with the probate litigation attorneys and reversed the trial court and ordered a new trial wherein the estate could properly participate and defend.  Hats off to the court for upholding the federal and state constitutional guarantees of due process.  It is an important lesson to learn that these fundamental rights sometimes survive the death of the person to whom they are intended to protect.

Florida law does not preclude the establishment of death by direct or circumstantial evidence prior to 5-years.

A petition for this determination shall be filed in the county in Florida where the decedent maintained his or her domicile or in any county of this state if the decedent was not a resident of Florida at the time his or her absence commenced.  Florida Statute Section 382.012 sets forth the requirements for a court of competent jurisdiction to find that a death has occurred when there is no body recovered and order the issuance of a “presumptive death certificate.”

Many people utilize revocable trusts in an effort to avoid probate.  Often, the primary asset of a revocable trust is real estate.  The person who signs the trust (Settlor) customarily chooses the individual(s) to serve as a successor trustee upon the Settlor’s death or incapacity.

Once the Settlor dies and a successor trustee accepts the position, a set of laws mandates the trustee’s conduct under Florida law.  These laws are found in Chapter 736 of the Florida Statutes, also known as the Florida Trust Code.  In particular, sections 736.0801 (duty to administer trust), 736.0802 (duty of loyalty) 736.0803 (impartiality), and 736.0804 (prudent administration) are triggered.  The Florida Trust Code was modified substantially in recent years and the current version took effect on July 1, 2007.    

Regardless of whether the trust is essentially comprised of real estate, the trustee must follow the terms of the trust pursuant to Fla. Stat. section 736.0801.  When real estate is owned by the trust, the Settlor may desire for the property to be sold and the proceeds distributed to the individual beneficiaries after his or her death.  In fact, pursuant to Florida Statute section 736.0817 (distribution on termination), the trustee shall proceed expeditiously to distribute the trust property to the persons entitled upon the occurrence of an event terminating or partially terminating a trust.        

Litigation often arises when the real estate in the trust is not sold as quickly as the beneficiaries would prefer.   Similarly, litigation also arises when the real estate is sold prior to a sudden increase in the value of said property or most often at a price that beneficiaries think is too low.

When is the trustee liable for dumping real estate at a fire sale?  What options are available to the frustrated beneficiaries who sit month after month with little to no effort being made to sell real estate? What happens when the trustee refuses to sell the property for what he believes is fair market value?

Florida Statute section 736.0804 provides that “[a] trustee shall administer the trust as a prudent person would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust.”   Thus, a trustee is responsible for the real estate in the trust, which may or not be occupied, rented, leased, or otherwise income producing.  It is the trustee’s duty to ensure income is collected and taxes paid timely and make a real effort to list the real estate with a competent broker and aggressively get educated about the real estate market and adjust the listing price accordingly. 

A trustee must dutifully follow F.S. section 736.0804, exercising “reasonable care, skill and caution.”  If the land is for sale, and the trust mandates sale as soon as practicable after the Settlor’s death, the trustee should endeavor to keep abreast of the comparable values for similar land, and price the property accordingly.  If a trustee is relying upon appraisals that are several years old or – worse – the tax roll value and is setting the asking price based upon same, a beneficiary would be well served to seek removal of that trustee.   Regardless, the Florida Trust Code provides beneficiaries recourse in situations where the trustee of a trust is not being diligent in his duties.