Often with estates, a conflict develops between beneficiaries and the Personal Representative that leads to litigation.  This litigation can be the result of a delay in administration of the estate, distribution of assets, or differences in personality.  Recently a client hired our law firm to seek to remove a Personal Representative who had incurred very substantial fees for travelling around the country to repeatedly check on the decedent’s assets, which was an expense the client felt was unjustified.

Florida Statutes list causes for which a Personal Representative may be removed.  One of these causes include “holding or acquiring conflicting or adverse interest against the estate that will or may interfere with the administration of the estate as a whole.”  However, a dispute between the beneficiaries of an estate by itself in insufficient grounds to refuse to appoint a personal representative if otherwise qualified.  That holding, however, came in a case where two sisters filed competing petitions for administration of their mother’s estate.  One of the sisters had been appointed Personal Representative by will; the two sisters had a very adversarial relationship.  The Appellate Court reversed the trial court’s appointment of a neutral third party, preferring to give the testator’s selection deference in the absence of exceptional circumstances.     

While the Court in most circumstances will appoint the Personal Representative selected in the last will and testament, the court does not make the protesting beneficiary wait until a detriment is suffered if he can make his showing prior to the appointment.  Ironically, my client did not object to the appointment of the Personal Representative, however he did not anticipate the Personal Representative being so wasteful of the estate assets.

If you are the beneficiary of an estate and object to the appointment of the named Personal Representative, or to the conduct of the Personal Representative after appointment, it is imperative to consult a Florida probate litigation attorney to ensure your interests are not potentially diminished or squandered.

A potential client said, “you’re the lawyer who busts trusts.”  Busting a Florida trust was her non-lawyer way of describing trust termination/modification.  Florida law has three major trust code sections that allow a person to “bust a trust” (trust modification is the term lawyers use) in the event certain events or conditions occur.

For example, 736.04113 of the Florida Trust Code provides for judicial modification of irrevocable trusts when modification is not inconsistent with settlor’s purpose.

Some of the grounds that will allow judicial modification of an irrevocable trust include:

(1) Upon the 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:

(a) The purposes of the trust have been fulfilled or have become illegal, impossible, wasteful, or impracticable to fulfill;

(b) 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

(c) A material purpose of the trust no longer exists.

(2) In modifying a trust under this section, a court may:

(a) Amend or change the terms of the trust, including terms governing distribution of the trust income or principal or terms governing administration of the trust;

(b) Terminate the trust in whole or in part;

(c) Direct or permit the trustee to do acts that are not authorized or that are prohibited by the terms of the trust; or

(d) Prohibit the trustee from performing acts that are permitted or required by the terms of the trust.

As you can see, the bolded section above allows for a trust to be terminated in whole or in part.  So can Florida lawyers bust a trust?  The answer is clearly yes.

Florida Court Suggests Withdrawals from Revocable Trust Principal During Settlor’s Live Can Be Viewed as Revocation of Trust and Subject to Challenge After Death by Remainder Beneficiaries

 ”When things change very rapidly, we have a fiduciary responsibility to review what are the circumstances.”

–Jozef Strauss

Florida is home to many elderly persons with dementia who are vulnerable to financial exploitation by others.  Unfortunately, the elderly who are susceptible to undue influence are often victimized by their own family members.   All too often, the safeguards that were presumably put in place through estate planning documents are thwarted by unbridled greed.  Sometimes, even the placement of trust by the elderly in a national financial institution will not immunize the elderly from abuses.

A recent Florida appellate opinion details a family scenario frequently encountered by Florida probate lawyers who practice in the field of inheritance disputes involving wills, guardianships, estates and trusts.  Siegel v. Novak –So.3d–, 36 Fla.L.Weekly D2329 (Fla. 4^th DCA October 19, 2011) involves a dispute between the children of Dorothy H. Rautbord (“Mrs. Rautbord”).   Several years ago, Mrs. Rautbord created a will and trust that generally provided that she could use her assets during her life as needed and upon her death, the assets were to be shared among her children and grandchildren.   Specifically, the trust contained a provision that during Mrs. Rautbord’s life, the trustee (a corporate trustee) should manage the trust property for the benefit of Mrs. Rautbord, and “at any time…apply so much or all of the net income and principal [of the Trust property] as the Trustee, in its sole discretion, shall deem appropriate or advisable for the support, maintenance, health, comfort or general welfare of [Mrs. Rautbord]. 

Several years later, Ms. Rautbord developed severe dementia.  A power of attorney was signed by Mrs. Rautbord in favor of one of her children.  Using the power of attorney, Ms. Rautbord’s child then made withdraws of over $3.3 million from the Trust during Mrs. Rautbord’s life.  The corporate trustee approved all of the withdraws, even though it recognized that “Mrs. Rautbord [was] in her nineties [and] quite frail [.]”  The corporate trustee concluded that the withdrawals and distributions of trust principal were “questionable” but decided to “ratify” the principal distributions.  These approvals were contrary to the practice of the predecessor trustee, who refused to make distributions as gifts because Mrs. Rautbord had been taken advantage of because of her generosity.

After Mrs. Rautbord died and her other children (“the brothers”) discovered the $3.3 million dollars in withdrawals of trust principal, the corporate trustee sought court approval of its conduct in approving the principal distributions.  Two of Mrs. Rautbord’s children (“the brothers”) claimed that the corporate trustee’s and the other child’s (who had the power of attorney) conduct was inappropriate and inconsistent with the terms of the trust.  According to the brothers challenging the conduct, the language of Mrs. Rautbord’s trust instrument did not permit the large withdrawals, which were equivalent to a revocation of trust, which was permitted only upon the existence of certain circumstances.  The trial court told the brothers that they did not have standing to contest any distributions made prior to their mother’s death.  The court reasoned that before Mrs. Rautbord’s death, the trust was revocable, so that the brothers had “no present interest in the trust during the time that the decedent was alive.”  The decision was appealed and the Fourth District Court of Appeals reversed and remanded the case holding that the brothers were entitled to their day in court.  Siegel v. Novak (“Siegel I”) 920 So.2d 89 (Fla. 4^th DCA 2006).

After the appellate court’s decision, the corporate trustee again requested the trial court’s judicial endorsement of its decision to ratify the $3.3 million of “questionable” withdrawals and principal distributions from the trust.  Once again, the trial court found that the brothers did not have standing the challenge certain distributions made prior to Mrs. Rautbord’s death.  However, on appeal, the Fourth District said that

“the trial court and parties did not interpret Siegel I  correctly.  Our opinion in Siegel I determined that the Siegels did have standing to challenge the trustee’s actions, because they had a direct interest in the corpus of the trust after their mother’s death.”

The Court stated that “the trial court incorrectly treated the question of whether the withdrawals were appropriate and authorized as a question of standing.”  The Court of appeals examined the trust language and emphasized the fact that Mrs. Rautbord reserved to herself the power to revoke the trust.  The brothers argued that the withdrawals of principal were in fact revocations of the trust, and that the trial court’s ruling on standing prevented the issue from being litigated.

The appellate court agreed with the brother’s argument.  In its analysis the Fourth District Court of Appeals looked at the language of the trust and analogized the facts of the Siegel case to another case where it was held:

“In creating a trust, the settlor was not merely designating trustees as conduits through whom a gift could be made to the daughter whenever it would be to her advantage.  The trust represented a plan of the settlor that included not only the beneficiary Margaret, but also remaindermen.  In adding a flexible provision for the invasion of principal for the “best interest” of the beneficiary, the settlor was not injecting a facile means for destroying the trust. “

* * *

By limiting the invasion of principal to those instances where it will be for the “best interest” of the beneficiary, the settlor was, in effect, restricting the power of the trustees, and imposing duty on them to limit such invasion for such objects and purposes as, in their judgment, would be beneficial to the cestui que trust.”

Important also in the Fourth District’s analysis was their holding that the withdrawals of trust principal were the equivalent of a partial revocation of the trust.  The Court turned to the Commonwealth of Pennsylvania and adopted that court’s reasoning:

“We are not prepared to recognize a distinction between settlor’s right to withdraw principal from the trust and his right to revoke the trust in whole or in part.  Both cause an amendment or partial revocation, and with the same legal effect.   For example:  If  settlor placed $100,000 in an inter vivos trust, with all the reservations hereinbefore discussed, and subsequently concluded to reduce the trust to $50,000, there would seem to be no difference in principle if settlor by written instrument revoked or modified the trust by reducing it by one-half, or exercised his right to withdraw one half from the operation of the trust.”  A determination of whether these withdrawals of principal constitute partial revocations of the trust should await the full development of the evidentiary record on each transaction.” 

Unfortunately, the court did not discuss the application of Fla.Stat. §736.0603, which provides that while a trust is revocable, the duties of the trustee are owed exclusively to the settlor.   However, the Court did remand the case to the trial court again with directions to hold an evidentiary hearing and the brothers must be given the opportunity to present evidence to support their claims of breach of fiduciary duty by both the corporate trustee and their sister.

Probate Attorney-Palm Beach County, Florida

The lawyers of Adrian Philip Thomas, P.A. represent clients throughout the State of Florida, including Palm Beach County, Florida.  Palm Beach County, Florida is the largest county in the state of Florida in total area and third in population. As of 2010, the county’s estimated population was 1,320,134.  Palm Beach County is one of three counties comprising the South Florida metropolitan area. Its largest city and county seat is West Palm Beach.  Boca Raton is the second largest, having a population approaching 90,000 and Boynton Beach is the third largest city, with a population nearing 70,000 residents.

With a large retirement population and wealthy coastal towns such as Palm Beach, Jupiter, Manalapan, and Boca Raton all within the Palm Beach County limits, it is Florida’s wealthiest county which makes it a haven for exploitation of the elderly, undue influence and fraudulent last will and testament cases. 

If you are looking for a Palm Beach County, Florida probate litigation attorney, call Adrian Philip Thomas, P.A. at 1-800-249-8125

Marriage and Homestead in the Florida Probate Process

What if my deceased spouse and I were not living together at the time he or she passed away?  Do I still have Florida homestead protection from creditors?

I recently had a case where this issue arose.  Although these questions may appear to be ripe for further problems and complex factual disputes regarding the quality and status of the marriage, Florida statutes and courts have made this issue fairly clear.  If you are married at the time of your spouse’s death, you may invoke your surviving spousal rights for homestead protection on your deceased spouse’s home.  Florida does not recognize separations or any other problems that may have existed during the marriage in making a determination of homestead status.  In Florida, you are either married, or you are not.  As they say, “you cannot be a little bit pregnant.”

A surviving spouse’s homestead rights stem from the Florida Constitution, specifically, Article X, section 4, which states in relevant part:

(a)    There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien thereon, except for the payment of taxes and assessments thereon, obligations contracted for the purchase, improvement or repair thereof, or obligations contracted for house, field or other labor performed on the realty, the following property owned by a natural person:

(1) a homestead, … if located within a municipality, to the extent of one-half acre of contiguous land, upon which the exemption shall be limited to the residence of the owner or the owner’s family;

(b) These exemptions shall inure to the surviving spouse or heirs of the owner.

(c) The homestead shall not be subject to devise if the owner is survived by spouse or minor child, except the homestead may be devised to the owner’s spouse if there be no minor child….

The court in In re Colwell, 196 F.3d 1225 (Fla. 4^th DCA, 2009) addressed the homestead statute.  In this case, the spouses had been separated for over three years and had even gone to the point of acquiring separate residences.  Nevertheless, the court held that each spouse could claim separate homestead exemptions even though they were separated and lived in separate homes.  As a result, the creditors of the deceased spouse that had filed claims against the estate could not seek relief against the homestead real property.    

Florida courts go to great lengths to protect the surviving spouse, specifically during probate and estate proceedings. The loss of a loved-one can be an extremely difficult process; it will be in your best interest to consult with an attorney (for legal and streamlining purposes) to unclutter the details of the Florida Probate code.

Florida Trust Litigation – Personal Jurisdiction

It is not uncommon in South Florida for individuals to be beneficiaries of Florida trusts that have a trustee located in a state other than Florida.  There is no rule that the trustee of a Florida trust must be a Florida resident, or even have a presence in Florida.  However, prior to the enactment of the Florida Trust Code there was no specific provision of the Florida Statutes which conferred personal jurisdiction over parties who were not within the geographical boundaries of Florida.  Instead jurisdiction was obtained on out of state trustees and beneficiaries under the general long-arm statutes found in chapter 48.  This lead to substantial litigation in the form of Motions to Dismiss for Lack of Personal Jurisdiction.    

In trust litigation (as in all lawsuits), it is necessary for the Court to have personal jurisdiction over the trustee(s) and beneficiaries.  Otherwise, the Court is unable to hear and remedy wrongs that have been committed.  By enacting the Florida Trust Code (and specifically section 736.0202), the legislature included a long-arm statute specifically tailored to trust litigation matters.  Under Florida Statute 736.0202, with respect to a trust having its principal place of administration in Florida, a trustee submits to the jurisdiction of Florida courts either by accepting the trusteeship or by moving the principal place of administration to this state; the beneficiaries are subject to the jurisdiction of Florida courts with respect to any matter involving the trust; and recipients who accept a distribution from a trust submit personally to the jurisdiction of Florida courts regarding any matter involving the distribution.

This addition to Florida law is very important in trust litigation as it expressly confers jurisdiction upon out of state trustees of Florida trusts.  This helps protect both the grantor’s intent and the rights of a beneficiary, and allows a court to hear and adjudicate controversies regarding trusts.

Florida Elder Abuse Attorney

An elder abuse attorney in Florida can mean many different things.  An elder abuse lawyer can refer to an elderly person being harmed in a nursing home or an elder abuse lawyer can mean a probate lawyer who is hired after or before death to correct an injustice done to an elderly citizen.  Our law firm receives inquires asking us to represent relatives who believed their love ones were financially exploited and they refer to this financial abuse as elder abuse.  Probate disputes perhaps always involve an old person being taken advantage of – the issue is whether a skilled probate lawyer can get the evidence to prove the financial exploitation.

THE POWERS AND LIMITATIONS OF POWERS OF ATTORNEY, AND CHANGES TO FLORIDA STATUTE 709

AS OF OCTOBER 1, 2011:  PART I.

 Nearly all men can stand adversity, but if you want to test a man’s character, give him power.  Abraham Lincoln

Recent legislation has conformed Florida’s Power of Attorney Statute 709 to the Uniform Power of Attorney Act, with certain modifications, in an attempt to achieve greater consistency among the 50 states and Washington D.C.  On May 4, 2011, the Florida legislature passed Senate Bill 670, on June 21, 2011 the Florida Power of Attorney Act was signed into law by Governor Scott, and it became effective October 1, 2011.  Florida Statute 709 applies to powers created by individuals (with four exceptions), and does not apply to powers created by entities or corporations.  Florida Statute 709 applies to all Powers of Attorney used in Florida and governed by Florida law.  Florida Statute 709.01-709.11 has now become Florida Statute 709.2101-709.2402.

When a Powers of Attorney was executed before October 1, 2011 which conferred rights to an agent (or attorney-in-fact), those rights acquired under the Power of Attorney predating October 1, 2011 will continue to apply, as follows:  Florida Statute 709.2402(3) states, “[w]ith respect to a power of attorney existing on October 1, 2011, this part does not invalidate such power of attorney and it shall remain in effect.  If a right was acquired under any other law before October 1, 2011, that law continues to apply to the right even if it has been repealed or superseded.”

Under Florida Statue 709.2104, in order for a Power of Attorney to be durable, it must contain the words:  “This durable power of attorney is not terminated by subsequent incapacity of the principal except as provided in chapter 709, Florida Statutes,” or similar language specifically indicating the principal’s intent that the authority conferred is exercisable notwithstanding the principal’s subsequent incapacity.

For a Power of Attorney to be valid if executed after October 1, 2011, the agent (or attorney-in-fact) named in the Power of Attorney must be 18 years of age or older or a financial institution that has trust powers, has a place of business in this state, and is authorized to conduct trust business in this state.  Not just any financial institution will be permitted to take power as an agent after October 1, 2011.  The financial institution must meet the criteria as set forth in Florida Statute 709.2109(1).

What happens if the Power of Attorney was executed prior to October 1, 2011, but the agent named was a financial institution that does not meet the specific criteria as set forth in Florida Statute 709.2109(1)?  The Power of Attorney is valid if its execution complied with the law of Florida at the time of its execution pursuant to Florida Statute 709.2106(2).

Also, for the Power of Attorney to be valid if executed after October 1, 2011, it must be signed by the principal and also by two subscribing witnesses before a notary public pursuant to Florida Statute 709.2105(2).

What happens if the Power of Attorney was executed in another state which does not comply with the execution requirements in Florida?  Pursuant to Florida Statute 709.2106(3), a Power of Attorney executed in another state which does not comply with the execution requirements in Florida will be valid in Florida as long as it complied with the execution requirements of the state of execution at the time it was executed.

The new law now states that a photocopy of a Power of Attorney or an electronically transmitted copy of an original Power of Attorney has the same effect as the original pursuant to Florida Statute 709.2106(5).  This change in the law may create problems as an unscrupulous person may attempt to alter the Power of Attorney, then photocopy or electronically transmit the altered version in an attempt to utilize the powers conferred in the altered version of the Power of Attorney.  If you believe a person named as the agent or attorney in fact of a Power of Attorney is breaching their fiduciary duty, self-dealing, squandering assets, not investing the principal’s assets prudently, or utilizing an altered Power of Attorney, it is imperative that you promptly contact a skilled and competent attorney so that the appropriate action can be taken, including but not limited to the commencement of litigation against the person abusing the power of attorney.

Quite frequently, as an inheritance lawyer who handles lawsuits with last will and testaments and codicils, I am asked questions regarding Florida inheritance disputes and the procedures for proving a lost or destroyed will. 

To establish and probate a lost or destroyed will, the specific content of the will must be proved by the testimony of two disinterested witnesses or, if a correct copy is provided, it must be proved by one disinterested witness.  In one court case involving a Florida inheritance fight, a lawyer provided a copy of the missing will to the court and presented a disinterested witness who testified that it was a correct copy.  Even though there was conflicting testimony by the other witness (who stood to gain if the will was rejected) that the will was later revoked by the decedent, the Court still found the lost or destroyed will could be admitted to probate. 

These types of cases involve a lawyer’s command over the substantive provisions of the Florida Probate Code and an understanding of the rules regarding will and trust contests in Florida.

The Trustee’s Duty to Inform and Account

The trustee is the person with legal title to trust assets; however, the trust beneficiaries are the true owners of the trust assets.  The trustee has a legal duty to inform and to account to the beneficiaries and the trust beneficiaries are entitled to inspect all documents and papers relating to the trust. The existence of a legal duty is important because it gives beneficiaries rights and remedies and exposes a trustee to liability for breach of those duties. 

In Florida, the trustee’s duty to inform and to account is found in the Florida Statutes (Florida Trust Code) at §736.0813, which states that the trustee shall keep the qualified beneficiaries of the trust reasonably informed of the trust and its administration.  This duty includes notifying the beneficiaries of the trustee’s name and address, notifying the beneficiaries of an irrevocable trust that the trust exists and that they have certain rights, providing a copy of the trust instrument upon request, providing a trust accounting (F.S. §736.08135), and disclosing assets and liabilities.

All too often, this office is contacted by beneficiaries who have no idea what is going on with the administration of a trust and the trustee refuses to provide the information requested, even after a demand for an accounting has been filed with the courts.  Sometimes it is because there is a contentious relationship and the trustee is being spiteful, but sometimes it is because the trustee is trying to hide misappropriation or mishandling of trust assets.  If you are the beneficiary of a trust and have not received full disclosure from the trustee, you should contact a skilled trust attorney to protect your rights and to compel a trustee to perform his or her duties.