A candid discussion between counsel regarding settlement and mediation is generally a good idea at some point in any type of litigation, especially will and trust contests and similar probate issues. Since these cases are almost always inter-family case, settlement should be attempted to try to keep the family intact. A good settlement is usually a division of assets that neither side particularly likes, but with which both sides can live. It is generally a good idea to include at least a discussion of these items in any probate settlement agreement:

• A mutual release;
• Determination of the validity of the will (if it is agreed that the will is invalid, then a prior will must be admitted to probate and the estate fiduciary must be appointed. If the will remains valid, the estate fiduciary can continue on and the estate may be completed sooner.);
• Clear recitation of which party receives what specific assets;
• A time certain for making the payments (if any);
• What will happen to later-discovered assets (or expenses); and
• Time and responsibility for filing documents to end lawsuit.

In O’Neill v. Scher, — So.2d —-, 2008 WL 5352183, 34 Fla. L. Weekly D9a , decided on December 24, 2008, the Third District Court of Appeals affirmed the probate court’s enforcement of a settlement agreement entered in the Estate of Benjamin Scher. The case originated when Benjamin Scher, the father of Sandra O’Neill and Richard Scher, died leaving a will naming Scher as the Personal Representative of the probate estate. O’Neill and Scher became embroiled in probate litigation which went to mediation and resulted in the parties and their lawyers signing documents titled “Memorandum of Settlement” and “Exhibit to Memorandum of Settlement.” The Third District in its opinion cited the following pertinent sections of the Settlement Agreement:

“3.Sandra O’Neill hereby releases any present and/or future interest which she may have in and to the following:
a. The Estate of Benjamin Scher opened in Miami-Dade County, Florida, under case number 06-0057 CP (04);
b. The Benjamin Scher Revocable Inter Vivos Trust dated 8/30/01, as amended and restated on 8/11/04, and/or any successor trust created through said trust, including but not limited to Marital Trust, Credit Shelter Trust, and Trust for the Benefit of Cassandra O’Neill;
c. Benjamin Scher Irrevocable Trust dated 9/1/99;
d. Any interest claim or expectancy of an inheritance from or against the Estate of Sophie Scher, including but not limited to any testamentary documents executed by Sophie Scher.
e. The Sophie Scher Revocable Inter Vivos Trust dated 8/30/01, as amended and re-stated on 8/9/05.
f. Any interest claim or expectancy of an inheritance from or against the Estate of Richard Scher, including but not limited to any testamentary documents executed by Richard Scher.
4. It is understood that this agreement is a memorial of the terms of the within settlement. However, the parties hereby agree to execute formal releases in accordance with the terms set forth herein.”
The litigation in the Miami Dade County probate court (Judge Celeste Muir) centered around O’Neill’s argument that the parties had entered an oral agreement that the settlement was conditioned upon Scher producing documents establishing that their father’s Estate was valued at between $6 million and $6.5 million. O’Neill then insisted on an evidentiary hearing to determine if a condition precedent existed and whether it had been satisfied.

After the probate court disagreed with O’Neill, she appealed to the Third District seeking to, inter ali, set aside the settlement agreement. The appellate court again upheld the sanctity of the settlement agreement:
“Generally, parol evidence is admissible only to clarify the terms of an ambiguous contract [citations omitted] [w]here the contractual language is clear and unambiguous, courts may not indulge in construction or modification and the express terms of the settlement agreement control…Based on our review of the settlement agreement, we find that the agreement’s language is unambiguous, and, therefore, we conclude that the trial court did not err in refusing to conduct an evidentiary hearing in order to consider parol evidence. Accordingly, we affirm the trial court’s order enforcing the settlement agreement.”

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.