Florida Probate & Trust Litigation Blog

Florida Probate & Trust Litigation Blog

By Juan C. Antúnez of Stokes McMillan Antúnez P.A.

Text Size: A A A

4th DCA: What’s it take to collaterally attack a “quickie” Nevada divorce as part of a Florida inheritance dispute?

Posted in Marital Agreements and Spousal Rights, Practice & Procedure

Kelley v. Kelley, — So.3d —-, 2014 WL 4427275 (Fla. 4th DCA September 10, 2014)

4th DCA: “The driving force behind Nevada’s statutory impediment on collaterally attacking divorce decrees has its origins in the state’s decision to establish itself as a premiere divorce destination. A low barrier to attacking a Nevada divorce decree would have been bad for business.”

In this case a disinherited son contested his father’s estate on the grounds that his father wasn’t “legally” married at the time of his death, thus excluding his surviving spouse as a valid beneficiary of a multigenerational family trust. This kind of status-based challenge is a common line of attack in inheritance disputes. For example, inheritance cases can turn on a person’s status as a validly “adopted” heir (click here), or status as a true “descendant by blood” (click here), or status as a “posthumously” conceived child (click here), or status as a “legally” recognized father (click here), or status as a “legally” married spouse (click here). This is what happened in the Kelley case above.

Case Study:

The seeds of this controversy were planted over 50 years ago in 1956 when Gordon P. Kelley (“Gordon I”) created the Gordon P. Kelley Trust Fund, an irrevocable trust benefiting his children for life, including his son “Gordon Jr.” Under the terms of the Kelley trust when Gordon Jr. died he had a limited power of appointment, exercisable in his Will, to transfer the remaining assets of his trust to or in further trust for his surviving “spouse,” any descendants of Gordon I, and certain charities. If Gordon Jr. didn’t exercise this power, the trust fund divested 100% by default to his son, Gordon Kelley III (“Gordon III”).

Gordon Jr. exercised the power of appointment in favor of his current wife, Joanna Kelley (“Joanna”), and three charities. Gordon III got nothing. According to the 4th DCA Gordon III sought to invalidate his father’s power of appointment on several grounds, including Joanna’s status as a legally married spouse:

Gordon III sought a declaration finding Gordon Jr.’s exercise of his power of appointment invalid since Joanna was not his legal spouse, and thus was “not a permissible appointee” under the Kelley Trust. The count alleged that in 1979 Gordon Jr.’s first wife, Holly Burguieres, “appeared in Nevada for a ‘quickie divorce’” and secured a divorce decree after falsely asserting she was a resident of Nevada. Evidence of the ruse was allegedly memorialized by a financial agreement confirmed and incorporated by the trial court in its final dissolution judgment, which reflects that Burguieres actually resided in Mexico City.

Alleging that neither Burguieres nor Gordon Jr. satisfied Nevada’s six-week residency requirement, Gordon III contended the Nevada court lacked subject matter jurisdiction over their case, rendering the divorce decree void. Building upon this revelation, since Gordon Jr. was still legally “married” to Burguieres, his marriage to Joanna would be bigamous—and thus void as against public policy—making Gordon Jr.’s exercise of his power of appointment in Joanna’s favor invalid, since she did not fall within the four classes of beneficiaries permitted by the Kelley Trust. As a result, Gordon III averred “all assets of the [Kelley Trust] are distributable to [himself] as the default taker.”

Collaterally attacking a divorce judgment entered in another state:

Gordon III argued that according to the federal constitution’s “full faith and credit clause,” a Florida probate judge wasn’t required, or even entitled, to give effect to his father’s Nevada divorce judgment. Constitutional arguments come up from time to time in inheritance cases, but they’re always tough to make, and almost never work (see here, here). This case is no exception. Here’s the controlling test for collaterally attacking another state’s divorce decree on constitutional grounds, as articulated by the 4th DCA:

Consistent with full faith and credit, a divorce decree obtained in a foreign state is impeachable in Florida only if the judgment is susceptible to collateral attack under the foreign state’s jurisprudence. See Johnson v. Muelberger, 340 U.S. 581, 589 (1951). This rule “provide[s] a substantial degree of uniformity regarding the vulnerability of divorce decrees to collateral attack,” enhancing the finality of each state’s judgments. In re Marriage of Winegard, 278 N.W.2d 505, 508 (Iowa 1979). Furthermore, collateral attacks wilt against judgments involving parties who have had their day in court; where “there has been participation by the [parties] in the divorce proceedings” and “the [parties] ha[ve] been accorded full opportunity to contest the jurisdictional issues,” any further attack on the judgment is barred by res judicata. Sherrer v. Sherrer, 334 U.S. 343, 351 (1948) (footnote omitted); Coe v. Coe, 334 U.S. 378 (1948).

Did the argument work in this case? No. Why? Because both parties to the Nevada divorce (Gordon Jr. and Burguieres) participated in and accepted the court’s final judgment. In other words, they had their day in court and accepted the final outcome. Under these circumstances, a third party (Gordon III) is barred as a matter of law from re-opening the Nevada divorce by challenging the outcome years later in a Florida courtroom.

In this case, Burguieres initiated the Nevada dissolution proceedings by filing a verified complaint with the trial court, in which she attested to Nevada’s limited jurisdictional requirements. After Gordon Jr. answered the complaint without raising a jurisdictional challenge, Burguieres appeared in court and confirmed her residency allegations. . . . Since both Gordon Jr. and Burguieres participated in the divorce proceedings and are bound by the Nevada decree, Nevada law precludes Gordon III’s collateral attack. The Faith and Credit Clause therefore bars his full assault on the Nevada judgment in Florida.

By the way, it’s no accident that out-of-state challenges to Nevada divorces are so difficult. Having it any other way is bad for business. As noted by the 4th DCA:

The driving force behind Nevada’s statutory impediment on collaterally attacking divorce decrees has its origins in the state’s decision to establish itself as a premiere divorce destination. A low barrier to attacking a Nevada divorce decree would have been bad for business. As one commentator explains:

 To escape states with harsh laws, people with money (or, more frequently, wives of people with money) could get on a train and head for a “divorce mill.” Throughout much of the twentieth century, the divorce mill was Nevada. It needed the business, and moral qualms, for whatever reason, have never played a big role in Nevada jurisprudence. In 1927, Nevada reduced its residence period to three months, and in 1931, in a “frenzied attempt to head off … threatened rivalry” from other states, Nevada reduced the residence period still further, to six weeks. “Going to Reno” became almost a synonym for getting a divorce.

 Lawrence M. Friedman, A Dead Language: Divorce Law and Practice Before No–Fault, 86 Va. L.Rev. 1497, 1504–05 (2000).

What about non-U.S. divorce decrees?

Does it matter that the foreign divorce decree at issue in this case was entered in a sister state (i.e., Nevada), vs. a foreign nation (e.g., Mexico)? Yes. Divorce decrees entered in non-U.S. courts aren’t nearly as bullet proof as those entered in sister states (an important distinction to keep in mind in a state like Florida, which has the 4th largest immigrant population in the nation (one-in-five Floridians are foreign born)):

Gordon III contends the Florida Supreme Court’s decision in In re Estate of Kant, 272 So.2d 153 (Fla.1972), provides the child of a decedent, as a lineal descendant, with unbridled “standing to challenge and impeach the validity of a divorce decree [in Florida] when it will affect the validity of a later marriage to the reputed surviving spouse.” In Kant, the deceased’s children alleged in an answer to a petition for letters of administration that the deceased’s marriage to his current wife was void since the wife’s prior divorce to a different spouse in Mexico had never been “rendered.” In re Estate of Kant, 265 So.2d 524, 525 (Fla. 3d DCA 1972). At trial, the children presented evidence that the divorce decree was actually a forgery. Kant, 272 So.2d at 155. As a result, the trial court denied the petition for letters of administration, finding that the current wife “was in fact not the widow of the deceased because she had not been lawfully divorced from her prior husband.” Id.

Did the U.S. vs. non-U.S. divorce distinction ultimately matter in this case? No. Vegas may be its own form of alternate reality (like Miami!), but it’s still part of the U.S. Bottom line: the Nevada divorce stands; Gordon III’s claims fail.

The crucial difference between Kant and this case is that the Full Faith and Credit Clause was not at issue, since “[s]tates are not required to give full faith and credit to divorces rendered in foreign nations,” such as Mexico. In re Schorr’s Estate, 409 So.2d 487, 489 (Fla. 4th DCA 1981) (emphasis added). Bound by the precepts of full faith and credit, Gordon III was required—unlike the children in Kant—to demonstrate his ability to bring the action under the foreign state’s jurisprudence. Since, as discussed previously, Gordon III failed to meet this hurdle, his action was impotent and properly subject to dismissal.

M.D.Fla: Can a corporate trustee caught in middle of on-going divorce litigation sue one of the ex-spouses for unjust enrichment?

Posted in Practice & Procedure

Berlinger v. Wells Fargo, N.A., Slip Copy, 2014 WL 4071667 (M.D.Fla. August 18, 2014)

Can a corporate trustee caught in middle of on-going divorce litigation sue one of the ex-spouses for unjust enrichment? Court says “YES”

This isn’t the first time the trusts at the center of this on-going divorce battle have made it into a published court ruling. I previously wrote about these trusts here, in the context of a controversial appellate ruling by the 2d DCA clarifying when spendthrift/ discretionary trusts are subject to claims for unpaid alimony. This time around the battle ground is a federal court (note the increasing “federalization” of trust disputes, see here), and the question to be decided is whether a trustee can use a common-law based claim of “unjust enrichment” to recoup trust assets it’s being sued for having improperly distributed.

For reasons not discussed in the linked-to order, in framing its claims for recoupment Wells Fargo didn’t rely on F.S. 736.1018, a provision in our trust code that specifically authorizes trustees to sue for the return of improperly-distributed trust funds. I’m not sure if this omission was by design or not, and it may not ultimately matter. Why? Because F.S.  736.0106 tells us trust litigation isn’t governed exclusively by our trust code, to the extent not specifically preempted, the common law of trusts and principles of equity continue to apply.

Can a corporate trustee caught in middle of on-going divorce litigation sue one of the ex-spouses for unjust enrichment? YES:

The plaintiffs are suing Wells Fargo, alleging improper trust distributions were made on behalf of their father, “Bruce,” to their mother, “Sue,” in connection with their 2007 divorce settlement. Bruce is the primary beneficiary of the trusts, although his three children are also beneficiaries. The plaintiffs are Bruce and Sue’s three children. Wells Fargo and Bruce served as co-trustees of the trusts at the time the distributions were made. The contested distributions include $2 million to Sue, on behalf of Bruce, for the equitable distribution of marital assets and monthly distributions to provide alimony and support payments due from Bruce to Sue pursuant to a divorce settlement. In other words, trust funds that were supposed to benefit both Bruce and his children . . . were used to pay Bruce’s individual debts (i.e., settle his divorce). Why anyone at Wells Fargo thought it was a good idea to go along with this plan is beyond me.

Anyway, although we won’t know who’s ultimately at fault here until the case is tried, for now we do know this: if anyone got trust funds they weren’t supposed to get, it wasn’t Wells Fargo. So what to do now that they’ve gotten themselves caught up in this mess? Answer: sue both Bruce and Sue for the return of the trust funds their children are now contesting.

Now back to the unjust-enrichment claim. Is it viable in this kind of case? I don’t see why not. More importantly, the judge agrees it’s viable; here’s why:

Sue contends that the unjust enrichment claim . . . should be dismissed for failing to state a claim for which relief can be granted. Wells Fargo asserts that to the extent it is liable to plaintiffs for payments provided to Sue, it would be inequitable for Sue to retain those funds. Thus, Wells Fargo argues it has properly alleged a valid claim for unjust enrichment.

“A claim for unjust enrichment has three elements: (1) the plaintiff has conferred a benefit on the defendant; (2) the defendant voluntarily accepted and retained that benefit; and (3) the circumstances are such that it would be inequitable for the defendants to retain it without paying the value thereof.” Virgilio v. Ryland Grp., Inc., 680 F.3d 1329, 1337 (11th Cir.2012); Florida Power Corp. v. City of Winter Park, 887 So.2d 1237, 1241 n. 2 (Fla.2004).

In this case, Wells Fargo alleges it conferred a benefit on Sue pursuant to a divorce settlement by distributing principal or income on a monthly, on-going basis to provide for alimony and support payments. In addition, Wells Fargo distributed $2,000,000.00 to Sue, on behalf of Bruce, pursuant to the divorce settlement. Wells Fargo also alleges that Sue voluntarily accepted and retained these benefits and if plaintiffs prevail in the underlying action, Sue’s retention of the benefit conferred would be inequitable. Accordingly, the Court finds the allegations set forth a plausible claim for unjust enrichment.

What about standing?

As a fallback Sue argued that if the claim for unjust enrichment against her was viable, Wells Faro lacked standing to assert it because the funds came from the “Trusts” not Wells Fargo. Strike two, here’s why:

As discussed above, plaintiffs allege Wells Fargo made improper distributions from the Trusts to Sue, on behalf of Bruce. If plaintiffs succeed, Wells Fargo will be held liable for the distributions of the funds, not the Trusts, and it would be inequitable for Sue to keep those funds at Wells Fargo’s expense. . . . Therefore, this Court finds Wells Fargo has standing to bring a claim for unjust enrichment against Sue.

When to “Decant” a Trust. It’s getting easier to tinker with irrevocable trusts. Here’s how it works.

Posted in Practice & Procedure, Probate & Guardianship Statutes

Decanting lets trustees re-write irrevocable trust agreements by figuratively pouring the assets from an old trust into a new one.

If you’re working with an irrevocable trust that needs fixing for some reason and the trust agreement includes an “absolute” power to invade trust principal, your first thought should be to simply re-write the trust by using Florida’s “decanting” statute (F.S. 736.04117). Decanting lets trustees re-write irrevocable trust agreements by figuratively pouring the assets from an old trust into a new one. Under Florida’s decanting statute, an “absolute” power to invade principal means a power that’s not limited to specific or ascertainable purposes, such as health, education, maintenance, and support (“HEMS”), whether or not the term “absolute” is used.

Decanting’s all the rage in estate planning circles, as it should be: it’s a legislatively-sanctioned way to privately re-write an irrevocable trust without going through the costs and delays inherent to a judicial modification proceeding. (Yes, this all gets done out of court.) For a solid general introduction to decanting you’ll want to read Decanting is Not Just for Sommeliers, recently co-authored by Texas law prof. Gerry W. Beyer. Here’s an excerpt:

Times change, needs change, and laws change thus giving a trustee motivation to decant. Examples of reasons to decant include to:

  • Correct a drafting mistake;
  • Clarify ambiguities in the trust agreement;
  • Correct trust provisions, due to mistake of law or fact, to conform to the grantor’s intent;
  • Update trust provisions to include changes in the law, including new trustee powers;
  • Change situs of trust administration for administrative provisions or tax savings;
  • Combine trusts for efficiency;
  • Allow for appointment or removal of trustee without court approval;
  • Allow for appointment of a special trustee for a limited time or purpose;
  • Change trustee powers, such as investment options;
  • Transfer assets to a special needs trust;
  • Adapt to changed circumstances of beneficiary, such as substance abuse and creditor or marital issues, including modifying distribution provisions to delay distribution of trust assets;
  • Add a spendthrift provision;
  • Divide a “pot trust” into separate share trusts;
  • Partition of trust for marital deduction or generation-skipping (GST) transfer tax planning.

In trusts and estates circles, you know you’re on to a good thing when an idea’s codified by lots of state legislatures, which is exactly what’s happened with decanting. In 1992 New York became the first state to enact a decanting statute. As of 2014, at least 22 states have followed suit: Alaska, Arizona, Delaware, Florida, Illinois, Indiana, Kentucky, Michigan, Missouri, Nevada, New Hampshire, New York, North Carolina, Ohio, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Virginia, Wisconsin and Wyoming. For more on how to navigate Florida’s particular brand of trust-decanting statute you’ll want to read Trust Law Decanting: It’s Nothing to Wine About by Naples attorney Laird Lile, and Fixing Old Trusts and Exploiting New Opportunities: Florida’s Decanting Statute by Boca Raton attorney Thomas Katz.

And last but not least, before you pull the trigger on one of these transactions you’ll want to do a deep dive into all the potential tax traps that seem to bedevil estate planners at every turn. Don’t count on a PLR for cover; the IRS recently issued Rev. Proc. 2014-3, which placed decanting on its “no-ruling” list for most of the income, gift, and GST-tax issues you’d be interested in. Pending IRS guidance and case law developments, to wrap your arms around the possible tax effects of  a decanting you’ll want to read An Analysis of the Tax Effects of Decanting, co-authored by tax super star Jonathan Blattmachr.

Probate judge to personal representatives: “there is a higher power that [you're] accountable to and, short of God, that’s me.” 4th DCA says not so fast.

Posted in Compensation Disputes, Creditors' Claims, Practice & Procedure

Vazza v. Estate of Vazza, — So.3d —-, 2014 WL 4082864 (Fla. 4th DCA August 20, 2014)

“[R]egardless of whether the creditors gave approval or not, there is a higher power that [personal representatives are] accountable to and, short of God, that’s me.”

On average Broward County’s probate judges each took on 2,848 new cases in FY 2012-13 (see here). The unavoidable consequence of that kind of case load is what’s been referred to as the “cold judge” factor; a term coined in a 2009 ABA Litigation magazine piece entitled Persuading a Cold Judge.

Probate courts are especially prone to cold judging. Not because our probate judges don’t want to do the right thing (I believe most do), but because Florida’s state court system is so starved for resources they’re tempted to move cases through the system as quickly as possible. One way to do that is not requiring evidentiary hearings before ruling on temporary injunctions or “freeze” orders. Most of the time these no-evidence freeze orders don’t get appealed, but when they do, our appellate courts will step in from time to time and reverse them (see here, here). That’s what happened in this case.

Case Study:

The 4th DCA’s linked-to opinion above provides close to zero factual context for its ruling. Fortunately the case was reported on in the DBR in a piece by reporter Noreen Marcus entitled 4th DCA — Acting Somewhere Between God And Judge — Reverses Ruling Made Without Evidentiary Hearing. According to the DBR report, the decedent in this case is Richard R. Vazza, a wealthy real-estate developer who personally guaranteed loans worth $140 million. After his death Mr. Vazza’s creditors accused two of his sons of improperly siphoning funds out of the probate estate. They sought an order from the probate judge compelling the decedent’s sons, who were also serving as personal representatives, to return over $800 thousand in contested fees. The sons cried foul, claiming they’d acted with creditor approval. This argument didn’t get very far with the judge. As reported by the DBR:

Broward Circuit Judge Mark Speiser seemed to side with the creditors when he said the court registry would retain $855,253 in disputed salaries and fees to the Vazzas. He issued his Dec. 18, 2013, ruling without first holding an evidentiary hearing. According to a transcript quoted by the sons’ lawyers, Speiser stated, “regardless of whether the creditors gave approval or not, there is a higher power that they’re accountable to and, short of God, that’s me.”

Probate judges will often go out of their way to tell the lawyers involved in this kind of hearing that the ruling is temporary in nature and in no way reflects how he or she is going to ultimately rule on the merits of the case, which is apparently what happened in this instance. As reported by the DBR:

When he required the Vazzas to turn over the $855,253 to the court registry, Speiser explained: “But, again, I’m probably being redundant and repetitious, but I want to do so to overemphasize, I am not ruling today that they’re not necessarily entitled to any or all of that money. They may very well be entitled to all of it, but the proper process and procedure is that that has to get prior court approval.”

I have no doubt the judge’s comments were sincerely made. However, in the real life push and pull of contested probate proceedings this kind of ruling is inevitably viewed as a big win for the prevailing party. Why? Because it’s perceived as a strong indication of how your judge is “leaning” in terms of a final ruling, which isn’t a problem if the judge’s “leanings” are based on actual evidence. What is a problem is when the court skips the evidence step and rules on nothing other than uncorroborated argument of counsel, which is apparently what happened here. The DBR quotes the Vazzas’ lawyer, Gerald Richman of Richman Greer in West Palm Beach, as follows:

Richman characterizes what Speiser did as granting a mandatory injunction or prejudgment writ of attachment, both of which require a lot of record support.  “You don’t go ahead and say put this back when there’s no evidence that it wasn’t justified,” he said. “The important thing is that there’s a reason why you have to have an evidentiary hearing rather than just assuming that what was done is wrong.”

According to the 4th DCA he’s right: no evidence = reversal:

Richard W. Vazza and Stephen F. Vazza, former personal representatives of their father’s estate, appeal the trial court’s December 8, 2013 “Order on [Successor] Personal Representative’s Motion to Void and Set Aside Transactions Involving Conflicts of Interest.” The order required the Vazzas to return and reimburse the estate for allegedly improperly distributed funds.

Despite the disputed allegations regarding whether the Vazzas acted properly under Florida law and within their statutory power, the trial court entered its order requiring return of specific funds without holding an evidentiary hearing. Accordingly, we reverse and remand the case back to the trial court to hold an evidentiary hearing. See In re Estate of Winston, 610 So.2d 1323, 1325 (Fla. 4th DCA 1992) (citing § 733.6175, Fla. Stat. (1991)) (“[T]he Florida probate court has exclusive jurisdiction and is obligated to review estate fees upon the petition of a proper party.”).

Lesson learned?

The problem here isn’t a particular judge who doesn’t understand the right way to go about entering a freeze order, in my opinion it’s systemic: we ask our state court judges to do too much with too little. So what’s to be done? That depends on when you’re hired. Ideally, you’re brought in at the planning stage before the client passes away, which allows you to anticipate — and plan accordingly for — the structural limitations inherent to an overworked and underfunded state court system. As I’ve previously written here, one important aspect of that kind of planning should be “privatizing” the dispute resolution process to the maximum extent possible by including mandatory arbitration clauses in all our wills and trusts.

Once the client passes away, your options for opting out of the public court system are limited. What to do then? Anticipate — and plan accordingly for — the “cold judge” factor. And how do you do that? Follow the advice provided in Persuading a Cold Judge:

Begin at the beginning. In every court appearance, there are six basic queries to answer for a judge: [1] Who are you? [2] Who is with you, and whom are you representing? [3] What is the controversy, in one sentence? [4] Why are you here today? [5] What outcome or relief do you want? [6] Why should you get it? This last query is most often forgotten. Indeed, these six essential queries are a good beginning even when you are dealing with a warm judge. Consider putting them on a PowerPoint slide, a handout in the form of an “executive summary,” or a demonstrative exhibit to project through Elmo or other presentation technology.

A judge in a suburban district told me that the one thing I could do to assist his judging was to begin succinctly by telling him what was before the court, remind him of the nature of the case, and tell him what action I wanted the court to take and why I thought I had the right to that action. Once I did this for him, he would be ready to listen to my argument. This particular judge told me that he has so many cases that he can’t read the motions before the hearing, and if he has read them, it was so long ago that he couldn’t recall what he’d read. He has no legal assistant to write memos for him; he does his own legal research, and if you cited more than 10 cases for him to read, he couldn’t do it. He likes being a judge and wants to do the best job he can, but he is forced to come into hearings and trials cold. So, help him be the good judge he wants to be and the quality of his decisions will be your reward.

How much money do trust funders inherit?

Posted in Musings on the Practice of Law, Trust and Estates Litigation In the News

The median inheritance reported in the Federal Reserve’s Survey of Consumer Finances (SCF) was $69,000 (the average was $707,291). For trust funds, that median wealth transfer was way, way higher — $285,000 (and the average was $4,062,918).

If you earn your living as an attorney working with and around private and charitable trusts, it’s probably a good idea to have some sense of how large the “market” is for what you do and what your future prospects look like. Here’s my guess, based on personal experience and the best empirical data I’m aware of. First the good news: the market’s big — and growing fast. Now the bad: due to extreme market concentration and huge competitive barriers, most of that new business is going to go to a tiny % of lawyers.

Market size: think billions

In an article entitled The Prudent Investor Rule and Trust Asset Allocation: An Empirical Analysis, Prof. Sitkoff of Harvard Law reported that according to federal banking data roughly $760 billion was held in roughly 1.25 million private and charitable trust accounts as of year-end 2006, and according to IRS data in filing year 2007 more than 2 million 1041 tax returns were filed for trusts, reporting $142.5 billion in gross income, $3.7 billion in fiduciary fees paid, and $1.6 billion in attorney, accountant, and other professional services paid. These are all national figures.

The Florida-specific numbers are just as big. According to tax return data for 2012 (the latest available), the IRS received more than 140,000 fiduciary tax returns (Form 1041) for Florida-based trusts and estates, which reported in the aggregate over $6 billion in net income and approximately $273 million in attorney, accountant, and other professional services paid. These figures exclude trusts that are not “simple” or “complex” under the tax code, such as revocable trusts, thus understating the actual market size to some degree. On the other hand, the IRS figures lump all professional fees into a single line-item and include probate estates in their figures, which overstates the actual market size to some degree.

Florida – Filing Year 2012

IRS Tax Statistics — Fiduciary Income Tax Returns Filed (Form 1041)

Complex Trusts

Decedent’s Estates

Simple Trusts

Total

Returns Filed:

79,026

16,878

47,962

143,866

Net income:

$3,631,859,000

$850,236,000

$1,686,093,000

$6,168,288,000

Fees paid to Fiduciaries:

$160,018,000

$56,958,000

$84,963,000

$301,939,000

Fees paid to attorneys, accountants and other professionals:

$98,186,000

$137,765,000

$36,855,000

$272,806,000

Reflecting the rapid growth of this market, Prof. Sitkoff provided updated national figures in Major Reforms of the Property Restatement and the Uniform Probate Code: Reformation, Harmless Error, and Nonprobate Transfers, reporting that as of year-end 2010 federal banking data indicated $870 billion was held in trust accounts (in other words, an increase of over $1 billion or roughly 15% in just four years). As eye-popping as those figures might be, they exclude the vast majority of trusts. How do we know that? Because the federal banking data Prof. Sitkoff relies on only accounts for institutional trustees that are part of the U.S. Federal Reserve System, they categorically exclude all trusts in which the trustee or co-trustees are private individuals (which is most trusts). And we can expect these figures to skyrocket over the next few decades as we work our way through the largest generational wealth transfer in U.S. history. (See Why the $41 Trillion Wealth Transfer Estimate is Still Valid).

Market concentration: think 1.3%

With figures this big, you’d expect a lot more lawyers and other professionals to be active in this practice area. So why aren’t they? Think market concentration. While there may be huge sums tied up in U.S. trusts, those trusts are concentrated in a miniscule slice of the population, meaning the potential pool of clients is correspondingly limited. Which brings me to a cool set of charts recently published in this blog post on the FiveThirtyEight Blog. According to the blog-post’s author, Mona Chalabi, the most detailed data on inheritance in the U.S. comes from the Federal Reserve’s Survey of Consumer Finances (SCF). And according to the latest SCF data available, only 1.3% of the survey respondents who reported receiving an inheritance received it via a trust. In other words, close to 99% of all inheritances are NOT received in trust. (Think market concentration.) Here’s an excerpt from the FiveThirtyEight Blog post:

[A]ccording to the SCF, trust funds are rare. As of 2010 (yep, it’s a while ago, but this survey is only conducted every three years and SCF has yet to publish 2013’s results), 22.5 percent of respondents said they had inherited money. Only 1.3 percent said they had inherited money through a trust fund.

But how do trust inheritances compare to non-trust inheritances in terms of size: on average they’re orders of magnitude larger. (Think market size.) Here’s an excerpt from the FiveThirtyEight Blog post:

The median inheritance in the survey was $69,000 (the average was $707,291). For trust funds, that median wealth transfer was way, way higher — $285,000 (and the average was $4,062,918).

The outliers here are probably lying on a beach somewhere — one respondent inherited $105,000 in 1970, followed by $220 million via a trust fund in 2000 before finally receiving a $2 million top-up inheritance in 2005.

Malcolm Gladwell writes in Outliers it takes 10,000 hours of focused practice to master any skill. “What’s really interesting about this 10,000-hour rule is that it applies virtually everywhere,” Gladwell told a conference held by The New Yorker magazine. “You can’t become a chess grand master unless you spend 10,000 hours on practice. The tennis prodigy who starts playing at six is playing in Wimbledon at 16 or 17 [like] Boris Becker. The classical musician who starts playing the violin at four is debuting at Carnegie Hall at 15 or so.”

Market competition: think barriers to entry

The future growth prospects for this practice area are good, but the barriers to entry are huge. In terms of future “market” growth, the stat’s speak for themselves, so I’ll focus on the barriers-to-entry issue.

Malcolm Gladwell writes in Outliers it takes 10,000 hours of focused practice to master any skill. (Click here.) “What’s really interesting about this 10,000-hour rule is that it applies virtually everywhere,” Gladwell told a conference held by The New Yorker magazine. “You can’t become a chess grand master unless you spend 10,000 hours on practice. The tennis prodigy who starts playing at six is playing in Wimbledon at 16 or 17 [like] Boris Becker. The classical musician who starts playing the violin at four is debuting at Carnegie Hall at 15 or so.” Assuming you have the necessary education (usually that involves a tax or estate planning LL.M. in addition to your J.D.), the only way you’ll log the 10,000 hours of “practice” needed to master this very complex area of the law is by earning your stripes at a firm (usually a small boutique, the big firms have been abandoning this practice area for years) that’s already built a practice serving this highly-concentrated market niche. When it comes to competitive barriers, that one’s tough to beat.

Florida must recognize gay widower’s Delaware marriage for purposes of appointing the non-resident personal representative of his ancillary estate, Palm Beach probate judge rules

Posted in Marital Agreements and Spousal Rights, Removal of Personal Representatives and Surcharge

Estate of Bangor, Case No. 502014CP001857 (Fla. 15th Cir, Palm Beach, August 5, 2014)

Boca Raton attorney Andrew ‘Drew’ Fein successfully challenged Florida’s ban on gay marriage as applied to the appointment of a non-resident personal representative.

Florida law says you can’t appoint a non-resident to serve as personal representative of your estate unless that person’s your “spouse” or otherwise related to you. (See F.S. 733.304). This rule’s always struck me as an arbitrary trap for the unwary that doesn’t seem to serve any purpose other than create work for litigators (see here, here, here), and I’m not the only one that thinks so. In fact, in 1979 it was held unconstitutional by a federal trial court in Fain v. Hall, 463 F. Supp. 661 (M.D. Fla. 1979). Not wasting any time, the Florida Supreme Court stepped in the following year in In re Greenberg’s Estate, 390 So.2d 40 (Fla. 1980), in which the rule was rationalized as follows:

The state, in enacting these provisions, recognized that the administration of a decedent’s estate is an intensely localized matter requiring the personal representative to be thoroughly informed on local matters and to be available to the court, beneficiaries, and creditors of the estate. The state declares that these statutes serve the valid function of ensuring that the personal representative, if not a relative of the testator, is close enough in proximity to the Florida estate to protect the rights of the creditors, ensure that the estate will be probated without needless delays caused by travel, and reduce the cost of representation to the estate by reducing travel costs or preventing the need to associate an in-state representative.

But if residency is such an important requirement for Florida personal representatives, why is it OK to appoint my crazy non-resident uncle Joe, but not OK to appoint my non-resident college buddy who also happens to be a CPA with a genius I.Q.? Our Supreme Court didn’t even try to figure that one out, concluding instead that a statute doesn’t have to be perfect to be constitutional.

Pincus further maintains that the exemption in section 733.304 for nonresident relatives of a decedent demonstrates that the statute is irrational. We disagree. Where utilizing the rationality test, the equal protection clause is not violated merely because a classification made by the laws is not perfect. . . . Furthermore, we find that it is not unreasonable for an exception to be created for nonresident relatives because, more than likely, the nonresident relative will also be a beneficiary of the decedent’s estate.

United States v. Windsor changed everything:

Fast forward to 2014 and the constitutional challenge currently facing F.S. 733.304(3) is all about whether the non-residency exception for non-resident spouses also applies to same-sex couples. Until recently this argument would have been unthinkable in a place like Florida, which both in its state constitution (Article I, Section 27) and by statue (F.S. 741.212) has expressed unequivocal opposition to same-sex marriage. But everything changed after the U.S. Supreme Court’s 2013 ruling in United States v. Windsor, striking down as unconstitutional section 3 of the Federal Defense of Marriage Act, which defined marriage as a union between one man and one woman. After Windsor, our state attorney didn’t even show up to contest the issue.

Because the Amended Petition for Administration challenges the constitutionality of provisions of Florida law, Mr. Simpson properly gave notice of the challenge to the Florida Attorney General, Pamela Jo Bondi, pursuant to Florida Statutes Section 86.091. The Attorney General has not filed any response or an objection to the Amended Petition and did not attend the hearing.

Case Study:

In the linked-to order above a Palm Beach County probate judge ordered that W. Jason Simpson could serve as personal representative of the estate of his husband, Frank Bangor, who died March 14. The two men, together 37 years, were married Oct. 23, 2013, in Delaware and resided in Pennsylvania. Mr. Simpson, who was the sole beneficiary of the decedent’s estate and the named personal representative under his Will, would have been automatically barred from serving as personal representative unless he qualified as a non-resident surviving “spouse” under F.S. 733.304(3). Noting that Federal Courts in thirteen different states have all held that state laws prohibiting the recognition of same-sex marriages are now unconstitutional post Windsor, the probate court could find no “compelling state interest” in treating same-sex couples differently for purposes of the non-resident spousal exception under F.S. 733.304(3).

The State of Florida has not offered, and this Court cannot find, any compelling state interest in denying the Decedent’s choice for his Personal Representative to serve in the State of Florida. This Court routinely appoints non-resident surviving spouses as Personal Representatives without inquiry into the nature of their marriage. While the Courts cited above have considered and rejected many policy reasons proffered to support the ban on same-sex marriage, those reasons have no application to this Estate. Indeed, Florida’s Marriage Laws unconstitutionally impair Mr. Bangor’s right to choose his Personal Representative, and Mr. Simpson’s right to so act, not because of who they are married to, but only because of who they were married to, prior to Mr. Bangor’s death. There is no justification in denying Mr. Simpson the privilege of acting as the fiduciary, based solely on the gender and sexual orientation of his now-deceased spouse. “The Marriage Laws” unnecessarily discriminate against this “spouse”, who is recognized by other States as a “spouse”, to act as a fiduciary. Clearly, it was Mr. Bangor’s intent that Mr. Simpson serve as his Personal Representative and inherit all of his property.

Nothing in this Estate will be contested. This Estate would have been opened as a routine matter on this Court’s ex parte calendar but for their same-sex marriage. There is no rational basis to apply those laws to the facts of this case. Same-sex couples are entitled to respect, dignity and protection as any other spouse requesting to be a Personal Representative.

Here’s an excerpt from a Miami Herald piece entitled Florida must recognize gay widower’s Delaware marriage, Palm Beach judge rulesreporting on the case:

The Bangor-Simpson ruling is the first time any Florida judge has recognized an out-of-state same-sex marriage, according to Daniel Tilley, a staff attorney for the ACLU of Florida, who is helping represent other married gay couples in a current federal lawsuit filed in Tallahassee.

The Palm Beach case is the fourth in under three weeks to undermine Florida’s gay marriage ban.

On July 17, Monroe Chief Circuit Judge Luis Garcia ruled the ban unconstitutional and that Aaron Huntsman and William Lee Jones of Key West could marry.

Eight days later, Miami-Dade Circuit Judge Sarah Zabel ruled six same-sex couples in South Florida also had the right to marry. Those decisions are valid only in the judges’ respective counties, and both rulings have been put on hold pending appeals by Attorney General Pam Bondi.

On Monday, Broward Circuit Judge Dale Cohen ruled Florida must recognize and then dissolve the Vermont civil union of a lesbian whose partner left her four years ago. Bondi’s office hasn’t responded in that case.

Bondi’s office did not file a response or an objection in the Bangor-Simpson case, Lewis wrote in her ruling.

Her office has 30 days to appeal, but Fein thinks that’s unlikely.

“I really respect Pam Bondi’s office not to oppose my client’s petition and to allow my client the same rights and privileges as any other widow or widower in an opposite sex marriage,” Fein said.

3d DCA: Is a probate judge’s “jurisdictional” authority limited to only probate-related matters?

Posted in Practice & Procedure

Kates v. Lifter, — So.3d —-, 2012 WL 832802 (Fla. 3d DCA March 14, 2012)

Judge Schwartz reminds us that all circuit court judges share the same inherent jurisdictional authority; it doesn’t matter if he or she’s deciding a will contest or adjudicating a murder trial. The various divisions of a court operate for the convenience of the litigants and for the efficiency of the administration of the circuits’ judicial business, what they don’t do is create jurisdictional boundaries.

Our state circuit courts are usually split up into specialty divisions, as authorized by Article V, § 7, of the Florida Constitution. For example, my home circuit court in Miami-Dade, the 11th, has six specialty divisions: Circuit Civil, Circuit Criminal, Family, Juvenile, Probate, and the Unified Family Court (UFC) division. Pursuant to Administrative Order 78-31-S, Miami’s Probate division also hears all trust-related claims.

But just because a circuit court’s specialized divisions adjudicate different types of cases, doesn’t mean a judge sitting in one division (e.g., Probate) lacks authority to adjudicate a type of case usually handled in another division (e.g., a corporate dispute usually tried in Circuit Civil or a custody dispute usually decided in the Family division). You’d be surprised how often lawyers (and judges) seem to miss this basic point. In the linked-to opinion above Senior Judge Schwartz penned a concurring opinion reminding us that all circuit court judges share the same jurisdictional authority, no matter what division they happen to be serving in.

Is a probate judge’s “jurisdictional” authority limited to only probate-related matters? NO

Although the opinion doesn’t give us much in terms of facts, from what I can gather there was some kind of dispute involving “sweetheart” loans and a corporation that was at least partially owned by a trust. At trial the probate judge adjudicated related claims involving both the trust and the corporation. On appeal the losing side cried foul, arguing that the “probate court” had no authority over the corporation, and that a new and different proceeding in a “non-probate court” had to be prosecuted to achieve the same result. This argument went nowhere on appeal. Judge Schwartz explains why:

The basis for my vote is that the judge of the circuit court who made the decision on review had complete jurisdiction over both aspects of the existing litigation and that it does not matter in which division of the court he happened to find himself. As this Court has stated:

[E]very judge of the circuit court possesses the full jurisdiction of that court in his or her circuit and that the various divisions of that court operate in multi-judge circuits for the convenience of the litigants and for the efficiency of the administration of the circuits’ judicial business.

Maugeri v. Plourde, 396 So.2d 1215, 1217 (Fla. 3d DCA 1981); see Baudanza v. Baudanza, 78 So.3d 656 (Fla. 4th DCA 2012). In other words, there is no such thing as “a” or “the” Florida Probate Court with the limited jurisdiction the appellants argue is fatal to the order on review. The decisions which represent this position are based on [Gettinger v. Gettinger, 165 So.2d 757 (Fla.1964)]. But that case was decided in 1964, when there was a “probate court” in Florida, the County Judges’ Court. While it is understandable in view of the well-known judicial tendency to cling resolutely to the past, Parker v. Shullman, 906 So.2d 1236 (Fla. 4th DCA 2005), review denied, 915 So.2d 1196 (Fla.2005), for example, overlooked that, as recently as 1973, the County Judges’ Court was abolished and its jurisdiction transferred to the circuit court. See Art. V, § 20(c)(3), Fla. Const. (Rev.1972). I believe that this fact renders Gettinger obsolete and more modern authority which follows it incorrect.

Lesson learned?

All circuit court judges have the same inherent authority; it doesn’t matter if he or she’s deciding a will contest or adjudicating a murder trial: same authority. If you’re convinced a claim’s being litigated in the wrong division, the proper remedy is to file a motion seeking to transfer the case to the correct division. See Weaver v. Hotchkiss, 972 So. 2d 1060 (Fla. 2d DCA 2008); Fort v. Fort, 951 So. 2d 1020 (Fla. 1st DCA 2007). At its heart this is an administrative-convenience argument, not a jurisdictional challenge.

On the other hand, even when owned 100% by a decedent or trustee, corporations retain their separate legal existence, which means the corporation’s assets don’t automatically become assets of the probate estate or get sucked into a related breach-of-trust suit. As I’ve previously reported (see here and here), when probate judges get this point wrong it’s usually not because they lack subject matter jurisdiction to adjudicate the claim; more likely than not it’s a problem involving a failure to properly serve the corporation as a separate legal entity.

Note to readers:

The linked-to opinion above was first published in 2012. I try to report on cases as they’re published. I don’t always succeed. This blog post is part of an ongoing project to comment on older cases I wasn’t able to get to previously.

5th DCA notes conflict with 4th DCA while siding with 1st and 2nd DCA’s on when “reasonably ascertainable” creditor’s filing deadline begins to run; issue to be decided by Florida Supreme Court

Posted in Creditors' Claims

Souder v. Malone, — So.3d —-, 2014 WL 3756356 (Fla. 5th DCA August 01, 2014)

The growing split among our DCA’s on this important probate creditor issue should be resolved by the Florida Supreme Court in the near future, which has already agreed to accept jurisdiction of the Golden v. Jones case. Stay tuned for more . . .

Assuming I file my creditor claim before the 2-year post-death deadline set by F.S. 733.710 (Florida’s “statute of repose” for probate creditor claims), what’s my deadline for litigating whether or not I’m a reasonably ascertainable creditor?

First the 1st DCA in 2009, and then the 2d DCA in 2012, each held in separate cases that a creditor forfeits his chance to argue his status as being “reasonably ascertainable” and thus his entitlement to personal service of a “notice to creditors” (vs. publication notice alone), if he doesn’t also file a motion for an extension of time under F.S. 733.702(3) within the two-year repose period of F.S. 733.710. See Morgenthau v. Estate of Andzel, 26 So.3d 628 (Fla. 1st DCA 2009) (which I wrote about here), and Lubee v. Adams, 77 So.3d 882 (Fla. 2d DCA 2012) (which I wrote about here).

In 2013 the 4th DCA came to a different conclusion in Golden v. Jones (which I wrote about here), holding that there  is NO deadline for litigating a creditor’s status as being “reasonably ascertainable,” as long as the creditor gets his claim filed before the 2-year post-death deadline set by F.S. 733.710.

The 5th DCA has now jumped into the fray, explicitly rejecting the 4th DCA’s holding in Golden, siding instead with the 1st and 2d DCA’s reasoning in Morgenthau and Lubee.

We disagree with Golden’s apparent holding that the remedy for a personal representative’s failure to serve a known or reasonably ascertainable creditor with a copy of the notice to creditors is a determination that the limitations period set forth in subsection (1) does not begin to run. Subsection (3) expressly provides that a probate court may grant a petition to extend the time in which to file a claim where there was “insufficient notice of the claims period.” Thus, construing subsections (1) and (3) together, we believe that the Legislature has determined that where a personal representative has failed to serve a copy of the notice to creditors on a known or reasonably ascertainable creditor, that creditor’s remedy is to petition the probate court for an extension of time.

In summary, as stated in Lubee, creditors who are served a copy of the notice to creditors are required to file their claims within thirty days following service. Creditors who are not served a copy of the notice to creditors are required to file their claims within the three-month window following publication or, alternatively, may seek an extension from the probate court pursuant to section 733.702(3) within the two-year window set forth in section 733.710. Lubee, 77 So.3d at 884.

So what now?

The growing split among our DCA’s on this important probate creditor issue should be resolved by the Florida Supreme Court in the near future, which has already agreed to accept jurisdiction of the Golden v. Jones case. Stay tuned for more . . .

2012-13 Probate Court Filing Statistics Chart

Posted in Musings on the Practice of Law, Trust and Estates Litigation In the News

In Miami-Dade – on average – each judge took on 2,848 NEW cases in FY 2012-13, in Broward the figure was even higher at 3,105/judge, with Palm Beach scoring the lowest at 1,871/judge.

If you make your living in and around our probate courts you’ll find the FY 2012-13 Probate Court Statistical Reference Guide interesting reading. Below I’ve charted the “cases filed” data for three of our largest circuits/counties: Miami-Dade (11th Cir), Broward (17th Cir), and Palm Beach (15th Cir).

But numbers alone don’t tell the whole story. To understand the breadth of issues a typical probate judge contends with in an average year at the end of this post I’ve provided a glossary with the official definition given for each of the categories listed in my chart. (For a “battlefield” perspective on how varied a typical probate judge’s docket can be you’ll want to read Probate judges handle so much more, by Georgia probate judge William J. Self). Finally, as a rough measure of the crushing case load your average big-city probate judge is saddled with in Florida, I took the total filing figures and divided them by the number of probate judges serving in each of those counties.

So what’s it all mean?

In Miami-Dade – on average – each judge took on 2,848 NEW cases in FY 2012-13, in Broward the figure was even higher at 3,105/judge, with Palm Beach scoring the lowest at 1,871/judge. Keep in mind these figures don’t take into account each judge’s EXISTING case load or other administrative duties. These stat’s may be appropriate for uncontested proceedings, which likely represent 99% of the matters handled by a typical probate judge, but when it comes to that 1% of cases that are litigated, these same case-load numbers (confirmed by personal experience) make two points glaringly clear to me:

[1]  We aren’t doing our jobs as estate planners if we don’t anticipate — and plan accordingly for — the structural limitations inherent to an overworked and underfunded state court system. As I’ve previously written here, one important aspect of that kind of planning should be “privatizing” the dispute resolution process to the maximum extent possible by including mandatory arbitration clauses in all our wills and trusts. Arbitration may not be perfect, but at least you get some say in who your judge is and what his or her minimum qualifications need to be. And in the arbitration process (which is privately funded) you also have a fighting chance of getting your arbitrator to actually read your briefs and invest the time and mental focus needed to thoughtfully evaluate the complex tax, state law and family dynamics underlying these cases (a luxury that’s all but impossible in a state court system that forces judges to juggle thousands of cases at a time with little or no support).

[2]  We aren’t doing our jobs as litigators if we don’t anticipate — and plan accordingly for — the “cold judge” factor I wrote about here; which needs to be weighed heavily every time you ask a court system designed to handle un-contested proceedings on a mass-production basis to adjudicate a complex trial or basically rule on any technically demanding issue or pre-trial motion of any significance that can’t be disposed of in the few minutes allotted to the average probate matter.

FY 2012-13 Probate Court Filing Statistics

Type of Case Miami-Dade (11th Cir) Broward (17th Cir) Palm Beach (15th Cir)
Probate 3,864  3,839  4,531
Baker Act  4,882  3,845  1,319
Substance Abuse 835  805  696
Other Social Cases 917  345  246
Guardianship 835  413  482
Trust 58  68  211
Total 11,391  9,315  7,485
# Judges 4 3 4
Total/Judge 2,848  3,105  1,871

Glossary: 

Probate: All matters relating to the validity of wills and their execution; distribution, management, sale, transfer and accounting of estate property; and ancillary administration pursuant to chapters 731, 732, 733, 734, and 735, Florida Statutes.

Guardianship (Adult or Minor): All matters relating to determination of status; contracts and conveyances of incompetents; maintenance custody of wards and their property interests; control and restoration of rights; appointment and removal of guardians pursuant to chapter 744, Florida Statues; appointment of guardian advocates for individuals with developmental disabilities pursuant to section 393.12, Florida Statutes; and actions to remove the disabilities of non-age minors pursuant to sections 743.08 and 743.09, Florida Statutes.

Trusts: All matters relating to the right of property, real or personal, held by one party for the benefit of another pursuant to chapter 736, Florida Statutes.

Florida Mental Health Act or Baker Act: All matters relating to the care and treatment of individuals with mental, emotional, and behavioral disorders pursuant to sections 394.463 and 394.467, Florida Statutes.

Substance Abuse Act: All matters related to the involuntary assessment/treatment of substance abuse pursuant to sections 397.6811 and 397.693, Florida Statutes.

Other Social Cases: All other matters involving involuntary commitment not included under the Baker and Substance Abuse Act categories. The following types of cases would be included, but not limited to:

  • Tuberculosis control cases pursuant to sections 392.55, 392.56, and 392.57, Florida Statutes;
  • Developmental disability cases under section 393.11, Florida Statutes;
  • Review of surrogate or proxy’s health care decisions pursuant to section 765.105, Florida Statutes, and rule 5.900, Florida Probate Rules;
  • Incapacity determination cases pursuant to sections 744.3201, 744.3215, and 744.331, Florida Statutes;
  • Adult Protective Services Act cases pursuant to section 415.104, Florida Statutes.

5th DCA: Can a probate judge admit a challenged will to probate before the will contest is adjudicated?

Posted in Will and Trust Contests

Platt v. Osteen, — So.3d —-, 2012 WL 6629650 (Fla. 5th DCA December 21, 2012)

5th DCA: “Under Florida law, will contests and the rights of caveators must be determined prior to admitting a will to probate, appointing a personal representative or issuing letters of administration.”

The outcome of this inheritance dispute turned on two questions: first, was the decedent’s will valid, and second, did the party challenging its validity have a stake in the outcome as a “virtually adopted” intestate heir (see here, here, here for more on the test for virtual adoption in Florida). If the challenger lost on either of these two issues, the case was over. So which question gets decided first; the will contest or the virtual-adoption case? According to the 5th DCA, the virtual-adoption case establishes standing, so it goes first.

[W]e reverse and remand with directions that the trial court determine whether Platt has standing to contest the will;FN1 and, if she does, to adjudicate Platt’s challenge to the will before taking any action on the petition for administration.

FN1. Platt is a beneficiary under the will and is listed in the will, along with Osteen, as a daughter of the decedent. It is undisputed that Platt was not the decedent’s biological daughter and was never legally adopted by him. However, it also appears undisputed that the decedent raised Platt as his daughter from the age of three. As Platt alleges sufficient facts to establish all elements of virtual adoption, see Matter of Heirs of Hodge, 470 So.2d 740, 741 (Fla. 5th DCA 1985), she is entitled to an evidentiary hearing as to this issue.

Makes sense to me. By the way, how the virtual-adoption issue is “framed” can make a huge difference in terms of whether or not common sense prevails in your case. If you frame the issue in terms of “judicial economy” (i.e., why waste time/money litigating a claim if the challenger isn’t an intestate heir?), you’re undoubtedly right as a practical matter, but you might end up getting reversed on procedural grounds (which is exactly what happened in the McMullen case). But if (as was done in this case) you frame the virtual-adoption issue in terms of “standing” (i.e., we need to determine whether or not she can even bring a will contest as a predicate to deciding the validity of the will), not only does your argument pass the common-sense test, it’s also bullet proof on procedural grounds.

The second take-away from this case is how uncertain any contested probate proceeding can be. Even the simplest, most black-and-white legal rule can get swept aside in the rush to move huge caseloads through our overworked and underfunded probate courts (which is why we should all privatize these disputes by including mandatory arbitration clauses in all our wills/trusts). Case in point: how do you make sure a contested will doesn’t get admitted to probate before your client’s had her day in court? Simple, file a caveat (see here), followed by an answer and objection to administration. And that’s exactly what the challenger did in this case. So what happened next? The probate judge ignored it all and simply admitted the contested will to probate. Bottom line, we now have an appellate decision stating the obvious: you can’t admit a challenged will to probate before the will contest is adjudicated.

Elaine D. Platt timely appeals an order admitting the will of Martin S. Day to probate and appointing Sharon Day Osteen as personal representative. After Osteen filed a petition for administration of Day’s will, Platt filed a caveat, followed by an answer and objection to administration of the will. Under Florida law, will contests and the rights of caveators must be determined prior to admitting a will to probate, appointing a personal representative or issuing letters of administration. See, e.g., Rocca v. Boyansky, 80 So.3d 377 (Fla. 3d DCA 2012) (see here); In re Estate of Hartman, 836 So.2d 1038 (Fla. 2d DCA 2002); Grooms v. Royce, 638 So.2d 1019 (Fla. 5th DCA 1994); see also 18 Fla. Jur.2d Decedents’ Property § 494 (“After the filing of a caveat by an interested person other than a creditor, the court may not admit a will of the decedent to probate or appoint a personal representative without service of formal notice on the caveator or the caveator’s designated agent. [Fla. Prob. R. 5.260(f).] Thus, if a caveat is filed, a formal notice of the submission of a will for probate must be given, and the court must thereafter adjudicate any challenge to the will before admitting the will to probate.”). Here, without notice to Platt, the trial court simply entered an order admitting the decedent’s will to probate, erroneously finding that “no objection [had] been made to its probate [.]” Accordingly, we reverse and remand with directions that the trial court . . .  adjudicate Platt’s challenge to the will before taking any action on the petition for administration.

Note to readers:

The linked-to case above was first published in 2012. I try to report on cases as they’re published. I don’t always succeed. This blog post is part of an ongoing project to comment on older cases I wasn’t able to get to previously.