In the recent Florida Third District Court of Appeal case, Jeanine Sagebien Hinson v. In Re: John A. Hinson, et al., 50 Fla. L. Weekly D2254a (3rd Dist. Oct. 15, 2025), the court provided significant clarity on the concept of in-kind distributions in probate estates, emphasizing the importance of adhering to a decedent’s will and Florida law. This blog post explores the case and the critical role of in-kind distributions, shedding light on their application in estate administration.
What is an In-Kind Distribution?
An in-kind distribution in probate refers to the distribution of estate assets in their original form—such as real property, business interests, or stock—rather than converting them to cash before distribution. Florida law, specifically section 733.810, Florida Statutes, strongly favors in-kind distributions unless specific exceptions apply, such as a general power of sale in the will, a contrary intention in the will or trust, or other statutory provisions requiring a different approach. This preference aims to preserve the nature of the decedent’s assets and avoid unnecessary costs or delays, such as those associated with appraisals or sales.
Case Overview: Hinson v. Estate of John A. Hinson
The Hinson case involved the estate of John A. Hinson, who passed away on September 18, 2021. His will designated his wife, Jeanine Sagebien Hinson, as the personal representative with broad discretionary authority to manage and distribute estate assets. The will allocated a 95% residuary share to Mrs. Hinson, 3% to Monica A. Pelella (Mr. Hinson’s secretary), and 2% to James M. Baker (a friend). Among the estate’s assets were limited partnership interests in a Georgia limited liability partnership and shares in six closely held Florida corporations, primarily involved in real property ownership, development, and management.
Mrs. Hinson, as personal representative, petitioned the probate court to distribute these business interests in kind on a pro-rata basis to the residuary beneficiaries, arguing that this approach would avoid the costs and delays of appraisals and valuation disputes while treating all beneficiaries equitably. However, Ms. Pelella and Mr. Baker objected, requesting a formal valuation of the assets and a cash distribution instead, citing personal circumstances and potential complexities of owning minority interests in closely held businesses.
The probate court sided with the objecting beneficiaries, denying the in-kind distribution and ordering that the distributions be made in cash. Mrs. Hinson appealed, arguing that the probate court’s order violated the express terms of the will and Florida law.
The Appellate Court’s Ruling
The Third District Court of Appeal reversed the probate court’s decision, holding that it improperly overrode the personal representative’s discretion and contravened Florida’s preference for in-kind distributions. Key points from the ruling include:
- Broad Discretionary Authority in the Will:
The will granted Mrs. Hinson “continuing, absolute, discretionary power” to manage estate assets “as freely as [Mr. Hinson] might in the handling of [his] own affairs” and explicitly authorized distributions “in money or in kind or partly in money and partly in kind.” This unambiguous language vested the personal representative with the authority to choose the form of distribution.
- Florida Law’s Preference for In-Kind Distributions:
Section 733.810(1), Florida Statutes, mandates that assets “shall be distributed in kind” unless specific exceptions apply. The court found that none of the exceptions—such as a general power of sale, a contrary intention in the will, or other statutory provisions—were applicable. While the will included a general power of sale, this merely made in-kind distribution permissive rather than mandatory, preserving the personal representative’s discretion.
- Lack of Justification for Cash Distribution:
The probate court’s decision was influenced by Ms. Pelella’s personal circumstances, including her age, health, and desire to avoid the complexities of owning minority business interests. However, the appellate court found no evidence of prejudice to the estate or other inequities sufficient to override the personal representative’s discretion. The court noted that requiring a cash distribution shifted the costs of appraisals and sales to the estate, unfairly burdening the majority beneficiary (Mrs. Hinson) to benefit the minority beneficiaries.
- Fiduciary Duties and Equity:
Under section 733.602(1), Florida Statutes, a personal representative is a fiduciary obligated to act in the best interests of the estate and its beneficiaries, in accordance with the will and probate code. The court emphasized that Mrs. Hinson’s proposed in-kind distribution aligned with these duties by minimizing costs and disputes while adhering to the will’s terms.
Implications for In-Kind Distributions
The Hinson case underscores several critical principles for probate practitioners and estate planners:
- Respect for the Decedent’s Intent: A personal representative’s discretion, when clearly granted by a will, must be honored unless compelling reasons justify judicial intervention. Courts cannot override such discretion merely to accommodate a beneficiary’s preferences.
- Statutory Preference for In-Kind Distributions: Florida law prioritizes in-kind distributions to preserve the nature of estate assets and avoid unnecessary expenses. Exceptions to this preference are narrowly construed and require clear evidence of applicability.
- Balancing Beneficiary Interests: While courts may consider beneficiaries’ circumstances, such considerations cannot supersede the terms of the will or the best interests of the estate as a whole. In Hinson, the probate court’s focus on Ms. Pelella’s needs improperly elevated minority interests over the majority beneficiary and the estate’s efficiency.
- Practical Considerations for Closely Held Business Interests: In-kind distributions of closely held business interests, like those in Hinson, can be complex for minority beneficiaries due to liquidity and management challenges. However, these challenges do not automatically justify converting a residuary devise into a cash distribution, especially when the will grants discretion to distribute in kind.
Practical Takeaways for Estate Administration
- Drafting Wills with Clear Intent: Estate planners should ensure wills explicitly address the personal representative’s authority to make in-kind distributions, particularly for complex assets like business interests. Clear language can prevent disputes and reinforce the decedent’s intent.
- Understanding Statutory Exceptions: Personal representatives and attorneys must carefully assess whether any exceptions under section 733.810, Florida Statutes, apply before opting for cash distributions. In Hinson, the general power of sale did not negate the personal representative’s discretion to distribute in kind.
- Balancing Efficiency and Fairness: In-kind distributions can minimize costs and disputes, as seen in Mrs. Hinson’s proposal to avoid appraisals. Personal representatives should weigh these benefits against beneficiaries’ objections, ensuring decisions align with fiduciary duties.
- Challenging Improper Court Orders: The Hinson ruling demonstrates that probate court orders deviating from a will’s terms or statutory mandates are subject to reversal on appeal. Beneficiaries and personal representatives should be prepared to challenge such orders when warranted.
Conclusion
The Hinson v. Estate of John A. Hinson decision reaffirms Florida’s strong preference for in-kind distributions in probate, particularly when a decedent’s will grants the personal representative broad discretion. By reversing the probate court’s order for cash distributions, the Third District Court of Appeal highlighted the importance of adhering to the decedent’s intent and statutory guidelines. For estate planners, personal representatives, and beneficiaries, this case serves as a reminder to carefully consider the implications of in-kind versus cash distributions and to ensure that estate administration respects both the will’s terms and Florida law.
For further insights into probate and estate planning, contact our team at Adrian Philip Thomas, P.A. to discuss how we can assist with your estate administration needs.
Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance on specific probate matters.
