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Settlement Agreements and Mediation in Probate

Written by on Nov 5, 2008| Posted in: Probate Litigation

Third District Court of Appeals Upholds Terms of Settlement Agreement Between BeneficiariesThe sanctity of the signed settlement agreement was confirmed on October 29, 2008 when the Third District issued its opinion in Charles Brindle v. Richard W. Brindle, –So.2d–, 2008 WL 4722746; 33 Fla.L.Weekly D2528a (Fla.4th DCA October 29, 2008). Brindle originated in the form of two competing orders from the civil and probate benches in Monroe County. The first order adopted and approved a written settlement agreement by which the sons of the decedent, Dorothy Brindle, resolved a will contest among themselves and agreed to a global reallocation and distribution of all of their inheritance given to them under Dorothy’s will.

Fast forward two years, when the Personal Representative of Dorothy’s estate (who also signed the settlement agreement) discovered during the course of asset distribution that there were insufficient assets in the estate to pay the expenses. Monroe County Probate Judge Richard Payne decided to “reopen” the settlement agreement “for purposes of setting aside so much of the settlement agreement as is in conflict with this order” and ordered Dorothy’s sons to split the expenses of the estate as a matter of convenience.

The Third Circuit reversed the second order for at least two reasons:

1)  Other than the Personal Representative, the Probate Court doesn’t have personal jurisdiction over beneficiaries of a probate estate since they are not ordinarily parties to the proceeding. Since the Probate Court only has in rem jurisdiction over Dorothy’s sons, the beneficiaries, it couldn’t issue a personal award of estate expenses against Dorothy’s sons.

2)  The Probate Court didn’t have the authority to set aside the terms of the settlement agreement.

I am pleased at the Third Circuit’s protection of the Settlement Agreement. My practice consistently represents clients in pre trial mediations and we rely upon the sanctity and finality of these written agreements which are allowed by the Florida Probate Code §733.815:

“Private contracts among interested persons.–Subject to the rights of creditors and taxing authorities, interested persons may agree among themselves to alter the interests, shares, or amounts to which they are entitled in a written contract executed by them. The personal representative shall abide by the terms of the contract, subject to the personal representative’s obligation to administer the estate for the benefit of interested persons who are not parties to the contract, and to pay costs of administration. Trustees of a testamentary trust are interested persons for the purposes of this section. Nothing in this section relieves trustees of any duties owed to beneficiaries of trusts.”

Mediation – Settlement – Finality?

Mediation is a process to resolve disputes without the time and expense of a trial through using a trained neutral party to assist the parties to effectively negotiate. “In the context of disputes connected to wills, where family members are disputing in the shadow of a traumatic event-the death of a loved one-and where the long-term relationships of family members are being reconfigured in light of the death, the relationship benefit of mediation may be particularly important.” Lela P. Love and Stewart E. Sterk, Leaving More Than Money: Mediation Clauses in Estate Planning Documents, 65 WASH & LEE L. REV. 539 (Spring 2008).

Although there are a variety of mediation formats and many different paths to a successful mediation, there is one thing that is always present at the conclusion of a successful mediation: a written settlement agreement signed by the parties. This agreement is typically approved by the Court and the Personal Representative is required to follow the terms and conditions of the agreement.

Although some lawyers, and clients, believe that even the mere suggestion of mediation signals weakness in their legal position, it has always been my opinion that parties are more open to considering mediation after hearing the advantages that mediation offers for resolution of probate estate disputes. Also, if litigants are required to attend mediation by a court order, any reluctance based on the fear of perceived weakness is obviated. If the sanctity of a final, signed settlement agreement becomes tarnished by being ignored, the foundation of the mediation process may be fatally weakened.
Preserve Dignity (and Assets)

Many testators desire to avoid a long drawn out battle over their probate assets in order to having their hard-earned, life savings wasted through litigation expenses. Also, many testators wish to avoid having their personal lives exposed through a will contest trial. Testators who wish to preserve the privacy of their lives, and also the assets of the probate estate, often attempt to accomplish these goals through insertion of “no contest” provisions in their wills. Simply stated, these provisions create a financial disincentive for a beneficiary to challenge a will. For example, some “no contest” provisions provide that if a beneficiary contests the validity of their will, such person forfeits any inheritance and is excluded from taking part in any distribution of probate estate assets. While these “no contest” provisions are illegal and are given no legal effect in Florida, they are recognized in some other jurisdictions. The Uniform Probate Code has adopted an approach whereby the “no contest” clause has no effect when a contestant has “probable cause” for instituting the will contest. (See Uniform Probate Code §3-905 “A provision in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable if probable cause exists for instituting proceedings.”)

My experience has confirmed my belief in the mediation process. First, it accomplishes the goals described above and keeps the family’s dirty laundry from being exposed in a trial. Second, it saves the family a lot of money that would otherwise be spent on litigation expenses through preparation for and conducting a will contest trial. Third, it is final based on the Third District’s upholding of the sanctity of the written settlement agreement which results from a successful mediation.

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