Florida Probate & Trust Litigation Blog

Florida Probate & Trust Litigation Blog

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

S.D. Fla: In case of first impression, federal judge rules on constitutionality of Florida’s new trust-specific long arm statute

Posted in Practice & Procedure

Abromats v. Abromats, 2016 WL 4366480 (S.D. Fla. August 16, 2016)

multi-stateIf you’re a trusts and estates litigator in Florida, sooner or later you’re going to be involved in some kind of multi-jurisdictional case. This fact-of-life lead to the adoption in 2013 of F.S. 736.0202, Florida’s long-arm statute specially tailored for trust litigation (see here).

But just because a Florida statute says you can drag a non-resident into a Florida courtroom doesn’t make it so. If our statute violates the Fourteenth Amendment’s Due Process Clause, the non-resident defendant gets a pass. What’s interesting about this case is it’s the first to put F.S. 736.0202 to the constitutional due process test.

Case Study:

This case involves a revocable trust created by a parent while residing in Florida. From that trust she made distributions to a son who lives in Wyoming. After her death this son was sued in Florida by his brother, who accused him of undue influence in connection with a trust amendment that reinstated him as a beneficiary of their mother’s trust. Here’s how the lawsuit was summarized by the court:

[Plaintiff’s] Complaint seeks to declare null and void the “September Amendments,”[FN 2] which reinstated [Defendant] as a beneficiary entitled to Trust funds. . . . The Complaint also seeks approval of an Accounting, which by its nature, encompasses the distributions [Defendant] admits he received.

[FN 2:] The September Amendments were those that [the trust settlor] made with the input of [the Defendant], apparently while [the Defendant] visited Florida for that very purpose.

Under subsection (2)(a)(8) of F.S. 736.0202, our statute says you’ve submitted yourself to the personal jurisdiction of a Florida court if you accept distributions from a trust administered in Florida, which is what happened in this case. Here’s the relevant statutory text:


(a) Any trustee, trust beneficiary, or other person, whether or not a citizen or resident of this state, who personally or through an agent does any of the following acts related to a trust, submits to the jurisdiction of the courts of this state involving that trust:

. . .

8. Accepts a distribution from a trust having its principal place of administration in this state with respect to any matter involving the distribution.

So according to our statute, a man living in Wyoming can get sued in Florida even if the only contact he’s ever had with our fair state is getting a check from a Florida trust. But is that the end of the story? NO.

It’s the law, but is it constitutional?

When a state passes a specialized long-arm statute, like we did in 2013, a three-part due process test gets triggered if the statute’s challenged on constitutional grounds. The three-part test examines:

(1) whether the plaintiff’s claims ‘arise out of or relate to’ at least one of the defendant’s contacts with the forum; (2) whether the nonresident defendant ‘purposefully availed’ himself of the privilege of conducting activities within the forum state, thus invoking the benefit of the forum state’s laws; and (3) whether the exercise of personal jurisdiction comports with ‘traditional notions of fair play and substantial justice.'” Louis Vuitton Malletier, S.A., 736 F.3d at 1355 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73, 474-75 (1985); Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413-14 (1984); Int’l Shoe Co., 326 U.S. at 316; Oldfield v. Pueblo De Bahia Lora, S.A., 558 F.3d 1210, 1220-21 (11th Cir. 2009); Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 630-31 (11th Cir. 1996)). Put another way, a “nonresident generally must have ‘certain minimum contacts . . . such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014) (quoting International Shoe Co., 326 U.S. at 316 (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)).

So did F.S. 736.0202 pass its first constitutional challenge? YES. But the primary reason wasn’t because Wyoming brother actually did anything in Florida. Instead, the court focused on the trust’s connections to Florida. Not surprisingly, mom (who’d lived in Florida since 1972) hired a Florida lawyer to draft her revocable trust which — surprise! — was governed by Florida law and administered by a Florida trustee. Also not surprising mom’s trust account was held by a Florida bank. What did Wyoming brother do to get himself sued in Florida? Cash mom’s Florida trust-account checks:

[T]he Court finds that the distributions [Defendant] accepted from the Trust establish the requisite minimum contacts, as they are sufficiently “related to” the instant cause of action and the forum. Furthermore, by accepting distributions from the Trust administered from Florida, with the assistance of Florida-based professionals, from funds based in Florida accounts, and with the understanding that Florida law governed, [Defendant] unquestionably “purposefully availed [himself] of forum benefits” and made it such that he “could reasonably anticipate being haled into court” in Florida.

As to the third prong of the due-process test — “fair play and substantial justice” — here again the court ruled against Wyoming brother’s due process challenge. In reaching its conclusion the court pointed to a slew of procedural wrangling the parties had engaged in for the last ten months involving multiple lawsuits filed in New York and Florida. Did that really matter? I’m guessing it didn’t. The center of gravity for this case was always Florida, and the fact that the Defendant lived over a thousand miles away in Wyoming wasn’t going to change that.

After ten months, the Court believes that it is in the best position to efficiently and effectively resolve the disputes at issue. Moreover, many of the professionals, evidentiary documents, and other discovery matters are present in this forum, making it convenient. Counter-Defendant Baxter is domiciled in South Florida, as was [the Settlor] at the time of the alleged “undue influence.” Finally, the Court finds that Florida, the forum state, has a strong interest in resolving this matter, as [the Settlor] lived, settled the Trust, and passed away in Florida, Florida law governs the Trust, the Accounting occurred in Florida, and the Trust is administered from the forum.

What’s the takeaway?

If a trust is created and administered in Florida, the gravitational pull of a Florida courtroom to adjudicate any dispute involving that trust is going to be significant — perhaps insurmountable, especially under F.S. 736.0202’s new and very expansive long-arm test. This was the statute’s first constitutional challenge by a non-resident trust beneficiary. I expect we’ll see more. In the meantime the safe bet for any beneficiary of a Florida trust is to assume you’ll have to show up in a Florida courtroom if your trust gets litigated — and it doesn’t matter where on the planet you happened to have been living when mom’s trust-account check hit your mailbox years earlier.

What “Hamilton” can teach trusts and estates lawyers about framing a story

Posted in Musings on the Practice of Law

Illustration by Lars Leetaru

I’m a huge Hamilton fan. To me the musical represents everything that makes this country great. But why do I feel that way? Contrary to the show’s portrayal of Hamilton as a “scrappy and hungry” man of the people, in reality he was an elitist who disdained the lower classes, feared democratic politics, and loathed the egalitarian tendencies of the revolutionary era in which he lived (see here).

And yet, I still love the show. Why? Because Lin-Manuel Miranda brilliantly “reframed” the Hamilton story in a way that’s perfect for the particular moment in history we’re experiencing today.

There’s a lesson to be had here for trusts and estates lawyers. How a story’s “framed” is critical in any kind of estate litigation. The pleadings and evidence in a typical Will contest read like a script from Days of Our Lives. The star of the show is usually the testator, often painted in surrealistic black and white terms by the contestant as a senile, diseased, mentally unbalanced victim, the equivalent of Shakespeare’s King Lear. On the other hand the proponent draws the testator as a wily, crafty senior citizen motivated by moral indignation to refuse to enable the bad conduct of relatives.

Both story lines can be compelling, which means the side that best frames its side of the case starting from the very first day in court usually has the advantage. As any veteran litigator will tell you, once a particular narrative takes hold in a judge’s mind dislodging it is practically impossible.

In this month’s ABA Journal there’s a great article that uses Hamilton as an example of how lawyers can “frame” the facts of their cases to present winning story lines. The article’s entitled What ‘Hamilton’ teaches lawyers about framing a story and it’s written by Philip N. Meyer, a professor at the Vermont Law School and the author of Storytelling for Lawyers. The article’s a must read for trusts and estates lawyers. Here’s an excerpt:

While reading the closing arguments collected in the excellent Greatest Closing Arguments books by Michael S. Lief and H. Mitchell Caldwell, I realized that trial lawyers, especially in these high-profile closing arguments in historical and spectacular trials, are akin to Miranda in Hamilton. These often theatrical closing arguments “adapt” other stories, sampling from personal anecdotes, and cultural, historical and biblical narratives. Stories-within-stories are nested like Russian dolls, one encased within the form of the next, often framed by a thematic meta-story.

2016 legislative news: Florida real estate = Florida law; elective share claims (they’re floors, not ceilings); attorney’s fees in breach of trust cases

Posted in Probate & Guardianship Statutes

florida-legislature-2016In terms of legislation, the big news for 2016 was Florida’s adoption of the Revised Uniform Fiduciary Access to Digital Assets Act, which I wrote about here. But that’s not all that happened in 2016. There was also an interesting legislative tweak involving cremated ashes and probate proceeding tucked into a funeral-home industry bill, which I wrote about here.

And last but not least there’s Senate Bill No. 540, the vehicle used to pass the remaining legislative changes that should be of interest to most probate lawyers. As usual, the bill’s legislative Staff Analysis is a good place to start if you’re trying to figure out what it’s intended goals are. See here, here. Here’s my take on what happened in this bill.

Florida real estate = Florida law:

“No choice-of-law rule has earlier vintage, or greater longevity, than the rule that issues directly pertaining to real property are governed by the law of the situs of the property. The situs rule as applied in Florida dates back to the nineteenth century and has been reaffirmed by courts throughout the twentieth century.” Michael S. Finch, Choice-of-law and Property, 26 Stetson L. Rev. 257 (1996). Well, this old rule’s being codified in new F.S. 731.1055, which provides as follows:

The validity and effect of a disposition, whether intestate or testate, of real property in this state shall be determined by Florida law.

Elective share claims: they’re floors, not ceilings:

Most probate lawyers (including me) thought our existing elective-share statute was clear. If a surviving spouse files an elective share claim, she’s not giving up any property rights under the decedent’s Will. In other words, an elective share claim sets a floor, not a ceiling, on the amount of assets a surviving spouse should receive from an estate. Here’s the backstory on this very important point:

“Under the prior elective share laws, election by the surviving spouse effectively terminated all right to inherit under the will of the deceased spouse or to participate in distribution of intestate property. After payment of the elective share, the remaining assets were distributed as though the electing spouse had predeceased the decedent. F.S. 732.211 (1998). This is not the case under the current statutes. In 2001, the legislature amended F.S. 732.2105 to delete the language which provided that, after the election, ‘the balance of the elective estate … shall be administered as though the surviving spouse had predeceased the decedent.’ See F.S. 732.2105 (2001); Staff Analysis for HB 137, Council for Smarter Government (April 3, 2001). Accordingly, under the current elective share laws, the effect of an election is to simply set a floor on the amount the spouse receives from the decedent’s assets.”

See PPC Florida Bar Continuing Legal Education Materials 7-1, ELECTIVE SHARE.

Well, apparently what’s clear to a bunch of probate lawyers isn’t always so clear to your friendly neighborhood probate judge. So F.S. 732.201 was amended to add a new sentence hopefully making it even clearer that filing an elective share claim sets a floor, not a ceiling, on the amount of assets a surviving spouse should receive from an estate. In other words, filing an elective share claim doesn’t mean you’re forfeiting your rights under an otherwise valid Will, or that you’re in some way challenging/electing “against” an otherwise valid Will, or that you’re in any other way giving up any other rights you may have as a surviving spouse. The new text is italicized:

The surviving spouse of a person who dies domiciled in Florida has the right to a share of the elective estate of the decedent as provided in this part, to be designated the elective share. The election does not reduce what the spouse receives if the election were not made and the spouse is not treated as having predeceased the decedent.

Attorney’s fees in breach of trust cases:

Payment of trustee attorneys’ fees when defending breach-of-trust claims has been a hot topic for years (see here, here). The rules covering this scenario are found in F.S. 736.0802(10), which was last overhauled in 2008 (see here).

But a trustee’s attorney’s fees are always a flashpoint in trust litigation, which means this statute gets tested all the time. And over the last few years it’s become clear the 2008 changes didn’t go far enough. Here’s an excerpt from this Florida Bar white paper, summarizing the problems lawyers and judges trying to implement the statute have encountered over the last few years:

“[T]he current statute lacks clarity, and thus fails to provide direction to lawyers and the court, with respect to a number of issues.

  1. It lacks clarity regarding the circumstances under which the limitations imposed by the statute are triggered.
  2. It lacks clarity regarding which categories of attorney’s fees and costs are subject to the limitations.
  3. It lacks clarity regarding the circumstances under which the trustee must serve notice of an intention to pay attorney’s fees and costs from trust assets and the consequences, if any, of paying such attorney’s fees and costs from trust assets prior to serving notice.
  4. It literally and unconditionally mandates that qualified beneficiaries seek a court order to prohibit a trustee from using trust assets to pay attorney’s fees and costs even when a trustee has no intention of doing so.
  5. It lacks clarity regarding whether a trustee may use trust assets to pay its attorney’s fees and costs upon a final determination in its favor by the trial court or whether the trustee must wait until a final determination by the appellate court.
  6. And it lacks clarity regarding what type of showing is required to preclude a trustee from using trust assets to pay its attorney’s fees and costs, and regarding the type of evidence that may be used to make or to rebut such a showing.”

This year’s overhaul of F.S. 736.0802(10) is supposed to fix all of these problems. We’ll see. Regardless, if you’re a practitioner you’ll want to hold on to this list. A lot of really smart people put a lot of time and energy into compiling it. So it’s the best roadmap available for all of the possible pitfalls you might encounter as you work your way through this challenging statute. Even if the 2016 changes don’t accomplish everything they’re intended to do, you at least know what to be on the lookout for.

And if you’re a litigator one change should be of particular interest. A trial court can block a trustee’s access to trust funds to pay his lawyers if “it finds a reasonable basis to conclude that there has been a breach of trust.” Now keep in mind all of this happens pre-trial. So what kind of “evidence” is a trial judge supposed to rely on? Previously, the answer to that question wasn’t clear. The statute’s been amended to now provide as follows:

The movant may show that such reasonable basis exists, and the trustee may rebut any such showing by presenting affidavits, answers to interrogatories, admissions, depositions, and any evidence otherwise admissible under the Florida Evidence Code.

In other words, according to the Florida Bar’s white paper, “the categories of evidence permitted are ‘summary judgment evidence’ (as defined in Florida Rule of Civil Procedure 1.510(c))” as well as “live witness testimony.” Sounds like a trial to me.

2016 legislative news: A person’s ashes are not assets of his probate estate

Posted in Probate & Guardianship Statutes

Cremated remains are not property, as defined in s. 731.201(32), and are not subject to partition for purposes of distribution under s. 733.814.

In 2014 the 4th DCA grappled with a tragic case I wrote about here involving a dispute between two divorced parents over the disposition of their deceased son’s cremated remains. The father hoped to split his son’s ashes 50/50 with his ex-wife by arguing they’re assets of his son’s probate estate, and thus subject to equal partition. The 4th DCA ruled against him in Wilson v. Wilson based on centuries of common law.

Appellate decisions are fine, but life’s a whole lot easier when a rule’s plainly stated in a statute, which is what finally happened. Effective July 1, 2016 the common-law rule on ashes not being probate property was codified in new F.S. 497.607(2) as follows:

Cremated remains are not property, as defined in s. 731.201(32), and are not subject to partition for purposes of distribution under s. 733.814. A division of cremated remains requires the consent of the legally authorized person who approved the cremation or, if the legally authorized person is the decedent, the next legally authorized person pursuant to s. 497.005(43). A dispute regarding the division of cremated remains shall be resolved by a court of competent jurisdiction.

This was one small change incorporated into a wide-ranging bill that revamped much of Ch. 497, which governs Florida’s funeral home industry. For a comprehensive summary of all of those changes you’ll want to read the bill’s Legislative Staff Analysis.

By the way, the statute’s last sentence should jump out to probate litigators.

A dispute regarding the division of cremated remains shall be resolved by a court of competent jurisdiction.

What this sentence is telling us is that the old rules regarding litigation over remains haven’t changed. If there’s a dispute, a person’s ashes will be disposed of according to his intent, as established by clear and convincing evidence (see here).

3d DCA: Can the 500-year-old “relation back” doctrine be used to block today’s $4 million probate creditor claim?

Posted in Creditors' Claims, Practice & Procedure

Richard v. Richard,  — So.3d —-, 2016 WL 2340787 (Fla. 3d DCA May 04, 2016)


The “relation back” doctrine enjoys virtually unanimous application throughout the fifty states, and dates back, by some accounts, more than 500 years. See generally, Relation back of letters testamentary or of administration, 26 A.L.R. 1359 (1923).

Just because someone’s Will says you’re their personal representative (PR) doesn’t make it so. First, you’re not a PR until a judge says you are. Second, you don’t have to take the job; you can always say no. And if something goes wrong in the interim, you’re not on the hook; you have zero fiduciary duties to anyone until after a court appoints you PR (see here).

What’s the “relation back” doctrine?

But what if the testator’s died and something needs to get done before a judge gets around to appointing a PR? Say a bill needs to get paid before the power’s shut off, or a house needs to get sold before a sale contract’s breached, or a lawsuit needs to get filed before a limitations period is blown. What then? Think “relation back” doctrine. Under this doctrine anything you do on behalf of an estate gets validated after the fact once you’re appointed PR (see here).

Getting stuff done during the gap period between the day a person dies and the day his PR gets appointed is a problem that’s been around for a long time, and the relation back doctrine is a fix that’s been around just as long. According to the 3d DCA:

The relation back doctrine enjoys virtually unanimous application throughout the fifty states, and dates back, by some accounts, more than 500 years. See generally, Relation back of letters testamentary or of administration, 26 A.L.R. 1359 (1923).

The doctrine’s codified in section 3-701 of the Uniform Probate Code, which in 1974 was adopted almost verbatim as section F.S. 733.601 of Florida’s Probate Code. The Florida statute currently provides as follows:

Time of accrual of duties and powers.—The duties and powers of a personal representative commence upon appointment. The powers of a personal representative relate back in time to give acts by the person appointed, occurring before appointment and beneficial to the estate, the same effect as those occurring after appointment. A personal representative may ratify and accept acts on behalf of the estate done by others when the acts would have been proper for a personal representative.

Note the difference between the first and second sentence of the statute. A PR’s “duties” kick in once he’s appointed (first sentence), but his “powers” relate back prior to his appointment (second sentence). This distinction’s at the core of the 3d DCA’s ruling in this case.

Case Study:

In this case a $4 million creditor claim was filed against an estate over three months after the “notice to creditors” was first published, which means the claim was time barred under F.S. 733.702. But what if the notice to creditors wasn’t validly published? Then the time-bar defense vanishes, and the $4 million claim springs back to life. So was it valid? Claimant said NO; because under F.S. 733.2121 only a PR can validly publish a notice to creditors, and the order appointing the PR in this case was entered one day after the notice was first published.

But what about the relation back doctrine? Claimant argued it didn’t apply because publishing a notice to creditors is a “duty” — not a “power” — and duties only kick in after the PR’s appointed, they don’t relate back. Clever argument, but did it work? NOT with the 3d DCA. Here’s why:

Although the statute provides that the “powers … relate back in time,” the same sentence goes on to clarify that they relate back “to give acts by the person appointed, occurring before appointment and beneficial to the estate, the same effect as those occurring after appointment.” § 733.601 (emphasis added). Therefore, it is the acts of the person, who is later appointed personal representative of the estate, taken before his or her actual appointment that are granted “the same effect as those occurring after appointment,” so long as those acts are beneficial to the estate. Id. Certainly one cannot have the duty to act unless one also has the power to act. Taking the instant case as an example: implicit in the nature of the duty to publish a notice to creditors is the existence of the power to publish the notice to creditors . . .

In addition, the publication of the notice to creditors can reasonably be described as both a duty and a power of the personal representative. The personal representative is the only person authorized to publish a valid notice to creditors and the personal representative is obligated to publish the notice promptly. See § 733.2121(1), Fla. Stat. (2012). Thus, to the extent [claimant’s] proposed construction of section 733.601 is plausible, the “act” of publishing a notice to creditors, prior to the order appointing personal representatives, was validated by the relation back doctrine.

According to the 3d DCA, not only was the claimant’s statutory construction argument flawed textually, it also failed the “what’s practical” test.

Were we to adopt [claimant’s] construction of the statute, it would create significant and substantial uncertainty for a personal representative, who would now be required in each instance to determine whether the act undertaken is considered to have been taken pursuant to a “duty” or a “power” such that the former would not relate back but the latter would. This would be in conflict with the duties of a personal representative to “settle and distribute the estate of the decedent … as expeditiously and efficiently as is consistent with the best interests of the estate,” § 733.602(1), and to “promptly publish a notice to creditors.” § 733.2121. . . .

We hold that the relation back doctrine, codified in section 733.601, applies to the personal representative’s act of publishing the notice to the creditors, and that the order appointing personal representative relates back and validates the preappointment act of publication of the notice to creditors. We reverse the orders on appeal and remand this cause to the trial court for further proceedings with this opinion.

So what’s the takeaway?

Anything you do before a PR gets appointed that benefits an estate is subject to after-the-fact validation by a court-appointed PR under the relation back doctrine, as codified in F.S. 733.601. And it doesn’t matter if the thing that needed getting done is called a “duty” or a “power”, it’s all the same under F.S. 733.601. I like it; nice clear rules are good for all concerned.

Interview with a Probate Lawyer: Shannon M. Miller

Posted in Contested Guardianship Proceedings, Interview with a Probate Lawyer

Shannon M. Miller of The Miller Elder Law Firm, PA, in Gainesville, Florida, is a Florida Bar Board Certified Elder Law Attorney and the past president of the Academy of Florida Elder Law Attorneys.

One of the pleasures of publishing this blog over the years has been the opportunity to meet and interact with some truly impressive lawyers. I recently had one of those moments when I was introduced to Shannon M. Miller of The Miller Elder Law Firm, PA, in Gainesville, Florida. Ms. Miller is a Florida Bar Board Certified Elder Law Attorney and the past president of the Academy of Florida Elder Law Attorneys. She’s also a fellow USMC veteran (Semper Fi!) and former public defender.

I’m guessing Ms. Miller’s past familiarity with our criminal justice system had something to do with her willingness to take on civil cases that also involved criminal violations arising from the financial exploitation of the elderly. In 2014, she was heavily involved in the legislative revamp of F.S. 825.103, which criminalizes the financial exploitation of elder Floridians (see here). A lot of work and study went into that legislation, as summarized in its legislative Staff Analysis.

Ms. Miller’s a big fan of F.S. 825.103 – when used properly – and was concerned my coverage of the statute in the context of the Franke case didn’t do it justice (see here). I invited her to share her thoughts with all of us in the form of an interview, and she graciously accepted.

[1] Can you give us some background of your experience with exploitation cases?

My experience with exploitation cases began when I became an attorney in private practice in 1995.  Before that time, I was a public defender.  During my first exploitation case, I learned that my 92-year-old client had been widowed and that her pastor had offered to assist her with managing her personal bank account.  Having never managed her own finances, she added him as a joint account holder on her account.  Shortly thereafter the pastor removed all of my client’s savings which totaled about $115,000.  Actually, he left $5,000 for “her spending money” in the account.  He moved the money into his own account indicating that he was doing it in order “to protect her from predators”.  He would not give the funds back, nor pay any of her bills.  After much research, I learned that by adding someone to her account, there was a presumption that the pastor had the ability to remove assets from the account.  After much litigation, and some horrifying discovery, mostly due to my client’s confusion and short term memory loss, we were able to settle the case by securing additional funds for her from the joint account, but it ended up that he retained approximately half of the joint account assets for himself.  This man is a predator. I would not be surprised if this was not the first time he had exploited someone.   This was one of the first experiences that I had with exploitation and one that prompted my interest in pursuing law changes in Florida, as well as pursuing exploitation cases.

At our firm we have probably done 30-40 exploitation cases from the civil/probate side.  We did these cases before the new statute was implemented and after.  The greatest addition to obtaining judgments and convictions from a criminal prosecution has been the revamping of the definition of exploitation under Fla. Stat. 825.103.  This revamping is important to civil/probate practitioners as well because it provides the basis of the definition of exploitation under the civil theft statute (F.S. 772.11), which provides for many more civil theft cases.  Civil theft, when properly plead provides for repayment of the stolen funds within 30 days or the victim is able to seek treble damages. This threat often gets the stolen funds back into the hands of older victims very quickly without the scary landscape of civil litigation dragging out for years.

F.S. 825.103 also includes the ability for us to get beyond the idea that “It’s a civil matter” simply because someone is a family member.  I noticed in your original blog post on this topic that you were talking about criminalizing civil disputes, but the reality is that if a person steals from another person, whether they are a brother who is a trustee who takes from a sister who is a beneficiary, or a son who buys fur coats for his wife from dad’s money because he is an agent under a durable power of attorney that says self-dealing is okay, these are theft cases and they should be prosecuted as criminal cases, not as civil disputes.

Entertainer Mickey Rooney testifies on Capitol Hill in Washington, Wednesday, March 2, 2011, about elder abuse, before the Senate Aging Committee. (AP Photo/Alex Brandon) Original Filename: Congress Aging Rooney.JPEG-07ca4.jpg

Entertainer Mickey Rooney testifies on Capitol Hill in Washington, Wednesday, March 2, 2011, about elder abuse, before the Senate Aging Committee. (AP Photo/Alex Brandon)

I think the same is true when we are talking about “over-criminalizing”.  The reality is, we are under-criminalizing exploitation cases and I think that is clear in the attached Senate Assessment of the law as it was pending in the legislature. This assessment gives some of the statistics with regard to the lack of prosecution of these cases, as well as a lack of reporting simply because people are afraid that their disabled parent, or they themselves, will not be listened to and then they will have some kind of stigma attached to them for reporting of a family member who is, in fact, abusing them.  I would encourage you to review Mickey Rooney’s testimony at the Senate Committee on Exploitation that was conducted six (6) years ago to understand how exploitation is perpetrated.

Most of the cases that we deal with usually involve isolation and financial pressure because no one else cares for the senior or they will have to go into a nursing home if the predator were to leave the situation.  Often the perpetrator will tell lies to the victim who often suffers from diminished capacity or full incapacity.

[2] Why is Adult Protective Services dedicated to prosecuting cases against fiduciaries?

Adult Protective Services is charged with protecting seniors who are vulnerable.  That is their only mission.  They are not charged with any powers to prosecute cases, but they can refer them to law enforcement or to the prosecutor’s office, not only to the State Attorney’s office, but also to the Medicaid Fraud Unit, the Attorney General’s office, whichever is appropriate, and they can make a recommendation, but they have no law enforcement powers.  They do not carry firearms, they do not have the ability to subpoena documents.  If a case involves a durable power of attorney under the Durable Power of Attorney statute there is some provision for Adult Protective Services to obtain accountings, but other than that, it is really up to law enforcement and prosecutors to pursue criminal charges.  So, Adult Protective Services is not in the role of prosecuting these cases criminally.  They do not have that ability, nor is that their mission.  Their primary goal is making sure that the vulnerable adult is safe.  They go in, they assess and if they have to relocate a person or if they need to take steps to make sure the person is safe, then they will go to court and do that, but their job is not to prosecute criminal cases.

[3] In my blog on this topic, I indicated that perhaps we should be advising fiduciaries to “Plead the Fifth” and advise clients to get with a criminal defense attorney in dealing with these matters.  Does that not appear to you as over-criminalization of inheritance litigation?

My advice is that we should be advising clients, agents under a durable power of attorney, guardians, trustees, and joint account holders that expenditures that are made by fiduciaries should be for the benefit of the vulnerable adult, not the agent, trustee, guardian or joint account holder.

The Astor case is an excellent example of undue influence.  We cannot allow people to direct the incapacitated person to the point where they feel like they have no other choice, but to make a change to their estate plan, or end up on the street.  I would point out as well that the Astor estate changes were made at the very end of Brooke Astor’s life—she died at 105 years old.  Her grandson eventually stepped into protect her by establishing a guardianship. In reviewing the facts of that case, it is clear when we look at the Carpenter factors that the presumption shifted so that the beneficiary (Marshall Astor) had the burden of showing it was NOT undue influence. I agree with you that when we are talking about a future expectancy like an inheritance, it really is not a typical nor predicted scenario under Fla. Stat. 825.103.  I can tell you as one of the work group members who drafted the legislation, undue influence was not one of our considerations as it related to inheritance.  I am not sure that it really meets the definitions of exploitation because it is a future expectancy.  Anybody can change their estate plan at any time.

But that particular matter aside, the rest of these cases – when we are dealing with trustees who are literally stealing money from beneficiaries, attorneys-in-fact, and even guardians, this statute gives us the opportunity to create real remedies for these clients who otherwise really just get their lives stolen away from them and they must wait for years for any recompense.

[4] What does your typical exploitation case look like?

Typically, we start with an emergency temporary guardianship case and an ex parte motion to freeze assets, although some cases can proceed without a determination of incapacity depending on the exploitation definition, such as the joint account provision or negligent use of funds.  Once we get the emergency guardianship established, we subpoena documents, bank statements, and find everything that we can to assist the Assistant State Attorney, and then we wrap it up in a nice big package and send it over to them and say, “Hey, guys.  This is a case we would like you to look at.”  Then we proceed with the case on the civil side, by sending a Civil Theft Demand letter, then proceed with an action against the predator.  What we often find is that this is not the first person they have exploited in the family or as a caregiver.

What Elder Law and Probate and Trust litigators are able to do is to create publicity that ultimately can result in very positive results where people might think twice about exploiting.  There are actually seven (7) ways to define exploitation under the new statute, one of which is something called a “presumption of exploitation”.  I have yet to hear that this has been used in the criminal setting.  I am not sure any prosecutors have used it, simply because it is untested.  Prosecutors that are doing these cases are dedicated and now we are getting some judges on board across the state with the understanding that there is really no difference between theft from your parent versus theft from someone else, or physical or mental abuse of a child vs.  physical or mental abuse of a senior.  We really just need to get people on board to understand that theft is theft and we hope that this new law is going to help us change the way people consider these serious situations as civil matters.  I would encourage you to take a good look at that statute and talk to people who have actually prosecuted these cases.

In the Elder Law community, if you ask how many people know someone who has been exploited, or how many people have seen exploitation cases of ten (10) or more, nearly every hand in the room goes up.  We get referrals probably two to three times a week for these kinds of cases.  It is really exploding in Florida, which is why Fla. Stat. 825.103 is so important.

“Undue Influence and Financial Exploitation” by Dr. Bennett Blum; thoughts on litigation-avoidance estate planning

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

risk-too-muchPlease, please, PLEASE!! Spend a few extra bucks today to avoid tomorrow’s disastrous estate litigation. In the public health world it’s estimated every dollar spent on vaccines returns up to $44 dollars in savings over the long haul. My own totally subjective and unscientific walking-around sense of the world (based on 20 years of experience) tells me we get the same kinds of returns for every dollar spent on litigation-avoidance estate planning.

What’s litigation-avoidance estate planning?

So how can you “vaccinate” an estate against future litigation? It’s easier said than done. Why? Because your single most important witness in these cases — the testator — is dead (think: worst evidence rule). This problem is especially acute in undue influence cases, which are inherently fact-intensive and open to manipulation by unscrupulous litigants. Here’s how Dr. Bennett Blum, a forensic and geriatric psychiatrist and author of the Undue Influence Worksheet (which I wrote about here), described this threat and the need for smart preventive planning in his latest article, Undue Influence and Financial Exploitation:

[F]alse claims of undue influence are used by those who wish to dispute the wishes of someone who is impaired or has died. Undue influence claims undermine testator wishes, promote family feuds, and — when prominent individuals or families are involved — create media attention and public scrutiny of their private lives. In addition, contested wills, trusts, and estate plans are expensive to litigate and can significantly erode the corpus of an estate. Challenges are more likely to arise when late changes are made to an existing plan. Planning for the possibility of a will contest is both prudent and cost-effective.

There’s no one magic bullet for immunizing estates against litigation (for a comprehensive list of options, see here), and the level of preventive planning will depend in large part on the client’s risk profile and willingness to cooperate. In high-risk cases one of my favorite defensive planning techniques is a variation on the “golden rule” standard of care commonly followed in UK and Commonwealth jurisdictions: I arrange for a medical professional’s assessment of the client at the time the documents are executed and preserve this evidence in a stand-alone affidavit executed by the clinician.

This kind of planning requires a good amount of logistical coordination, client buy-in, and flexibility from all concerned, but it pays huge dividends in future cost savings. In Undue Influence and Financial Exploitation Dr. Blum describes the value of this technique using two real-world examples:

[A] careful and well-documented assessment covering all the relevant behavioral issues, not just medical or cognitive concerns, can prevent years of litigation and unnecessary delays in executing the client’s desires, and avoid associated public scandals. Two examples:

In one case, a man separated from his wife and wanted to change his estate plan, but believed that his wife would challenge the new will.  An assessment was performed at the time that the will was executed.  When he died several years later, the former wife indeed said he had been unduly influenced.  However, she withdrew her legal challenges after reviewing the expert’s report.

In another case, a wealthy and high profile woman who had suffered a mild stroke wanted to divide her estate equally amongst her children, but also gave one adult child large amounts of cash.  Knowing that there was animosity towards this child from his siblings, the mother agreed to an undue influence assessment.  After she died, the siblings claimed their brother had committed elder financial abuse.  Again, the claims were withdrawn after seeing the report.

In these cases, as well as many others, the estates were preserved, the client’s wishes were carried out, and privacy was maintained.

What’s the takeaway?

Traditionally, the risk factor most estate planners and their clients spent most of their time fretting about was taxes. In reality, estate litigation poses a much greater risk for most families. According to this study fewer than 2 out of every 1,000 Americans who die — 0.14% — owe any estate tax whatsoever because of the high exemption amount (which jumped from $650,000 per person in 2001 to $5.43 million per person in 2015). By contrast, the potential wealth-destroying risk posed by estate litigation is exponentially greater. In fact, according to a study cited in a WSJ piece entitled When Heirs Collide it’s a risk that actually impacts as many as 70% of all families (see here).

Bottom line, it’s litigation — not taxes — that most families need to worry about. And to build your tool box for this kind of planning you’ll want to start following authors like Dr. Blum. His clinician’s view of the world is indispensable to working estate planners and litigators alike.

The 35th Annual Attorney Trust Officer Liaison Conference

Posted in Musings on the Practice of Law

breakerstodayI’m going to be one of the speakers at next week’s 35th Annual Attorney Trust Officer Liaison Conference at the Breakers Hotel in Palm Beach (my all time favorite venue). This year’s organizers have put together a great program. If you’re able to attend, you should. It’ll be time well spent. For a link to the ATO Brochure and registration information, click here.

4th DCA says no to criminalizing inheritance litigation; reverses 7-year prison sentence

Posted in Practice & Procedure

Franke v. State, — So.3d —-, 2016 WL 358614 (Fla. 4th DCA January 27, 2016) 

prison-553836_1280As lawyers, one of our jobs is anticipating the “worst case scenario” and counseling our clients appropriately. For trusts and estates lawyers the worst that can happen usually involves a client losing a sizable inheritance, paying unnecessary taxes, getting surcharged for doing something wrong as a fiduciary, or otherwise suffering some other form of economic setback. We’re not thinking jail time. Well, maybe it’s time we did.

Under F.S. 825.103 just about any kind of dispute your average trusts and estates lawyer encounters in an average year can get your client arrested and sent to prison for a very long time. And there’s a state agency dedicated to prosecuting these cases; it’s called Adult Protective Services and their motto is: “report elder abuse — it’s a crime.”

Criminalizing what most of us would consider to be civil disputes is a growing problem (see here), and the trusts and estates world is no exception (as demonstrated by the Astor case). Which means in the future we may need to consider teaming up with criminal defense attorneys much more frequently than we have in the past, start advising our clients to “plead the 5th” at the first sign of trouble (see here), and take steps to make sure we don’t get prosecuted ourselves (see here).

The 4th DCA’s opinion in this case involves a scary example of what can go terribly wrong when F.S. 825.103 — a broadly-worded statute meant to protect the elderly from financial exploitation — gets used to prosecute what should be a garden variety civil dispute involving a contested inheritance.

A case study in “overcriminalization”

This case involves an elderly widow named Mary Teris who had a “mother/daughter-type relationship” with a woman named Cynthia Franke, her stockbroker and friend of over thirty years. In 1996 Ms. Teris created a special needs trust for her two disabled adult sons and a separate revocable trust apparently naming family members as the residuary beneficiary of her $10 million estate. At issue in this case are changes Ms. Teris made to her existing estate plan in 2009, which the 4th DCA described as follows:

Teris met with [estate planning attorney] Mr. Friedman and made multiple changes to the trust. At issue are changes made on June 22, 2009, when Teris changed the trustee of the trust from her sister to Franke and made Franke a residuary beneficiary of the trust. According to Mr. Friedman, Teris made the changes because her sisters were close to her age and would be unable to manage her property if something happened to her. She wanted someone she could trust to manage her assets and take care of her sons, so she chose Franke. Teris named Franke as residuary beneficiary because her sons were already taken care of with the special needs trust, her sisters did not need her money, and Franke had always been there for her.

Now assume Ms. Franke walks through your door, tells you she needs to update her estate plan to account for the sizable inheritance she’s expecting, and also tells you about troubling rumors she’s heard regarding accusations of undue influence by irate family members. “What’s the worst that can happen?” she asks. If you’re an estate planner, I’m guessing you might respond by discussing the evils of the estate tax and a possible challenge to the trust after the settlor passes away. Here’s what you probably wouldn’t say, “you could be criminally prosecuted and face up to 30 years in prison.” Well, that’s exactly what happened.

Does a future expectancy in a will or trust fall under F.S. 825.103’s purview?

Ms. Franke was arrested in 2010, criminally prosecuted, and ultimately convicted by a jury under F.S. 825.103 for exploitation of an elderly person (see here). After the charges were filed, Ms. Franke lost her job and was stripped of her license as a broker. Adding to the nightmare, she was eventually sentenced to seven years in prison, and spent close to two years behind bars before the 4th DCA reversed her conviction (see here).

When the case finally got to the 4th DCA Ms. Franke’s conviction was reversed for technical reasons best understood by criminal defense attorneys. But the 4th DCA also made a point of commenting on whether this kind of case should have ever been prosecuted to begin with, focusing on fundamental property-law principals familiar to most practicing trusts and estates lawyers:

Finally, we note that Franke would not have received any of Teris’s property until after Teris passed away. Even then, Franke would receive something only if anything remained in the trust. Although we need not decide the issue in this case, it does not seem that obtaining the future expectancy of property under a will or trust falls under the purview of the statute. Prior reported cases which we have found addressing section 825.103 have concerned a present transfer of property, not a future expectancy in a will or trust. See Guarscio v. State, 64 So.3d 146, 147 (Fla. 2d DCA 2011) (defendant used victim’s proceeds from refinancing mortgage on a house); Bernau v. State, 891 So.2d 1229, 1230 (Fla. 2d DCA 2005) (victim endorsed $847,000 check to defendant); McNarrin v. State, 876 So.2d 1253, 1254 (Fla. 4th DCA 2004) (defendant cashed $6000 check signed by victim); Everett, 831 So.2d at 739–40 (defendant closed out one of victim’s bank accounts in the amount of $38,604.79 at the victim’s request).

What’s the takeaway?

We all know the promise of a future inheritance isn’t something you own today, it’s an “expectancy” that entitles you to zero current property rights until the inheritance is actually received — if ever (see here). So how can you get convicted and sent to prison if all we’re talking about are conflicting claims to a future expectancy under a revocable trust? Until now I would have said that’s impossible. And I’d have been wrong.

Overcriminalization isn’t a problem only criminal defense attorneys need to deal with; that’s the point, it can happen to anyone. So the first takeaway from this case is that if you’re a trusts and estates lawyer and someone involved in a case somehow involves Adult Protective Services, criminal prosecution is a risk you need to incorporate into your thinking, no matter how far fetched the alleged “crime” may seem.

The second takeaway is more positive. The 4th DCA’s decision didn’t turn on whether a future expectancy in a will or trust falls under F.S. 825.103’s purview, but the court strongly hinted it did NOT. That kind of “hint” is gold for working lawyers, and it’s certainly something you’ll want to add to your toolbox.

How to litigate deed-to-trust cases in Florida

Posted in Will and Trust Contests

land-trustJust because a deed says property’s being transferred to a “trustee” doesn’t make it so. If the deed doesn’t comply with F.S. 689.07′s disclosure requirements, the named trustee is deemed to own the property in fee simple, which means it’s his to do with as he pleases.

Under F.S. 689.07(1) a deed-to-trust that conveys property to a trustee but does not name the trust’s beneficiaries, or identify the nature and purposes of the trust, or identify the subject trust by title or date, fails. The theme here is disclosure. But this disclosure requirement runs head on against one of the primary reasons families use trusts to begin with: privacy.

So how does F.S. 689.07 balance the minimum public disclosure needed to ensure marketable title against the natural desire to keep family trusts private? It lets you keep a trust “secret” until it’s challenged, at which time anyone with a stake in the outcome can cure the lack of disclosure by recording a copy of the trust agreement in accordance with subsection (4) of F.S. 689.07, which provides in relevant part as follows:

Nothing herein contained shall prevent any person from causing any declaration of trust to be recorded . . . after the recordation of the instrument evidencing title or ownership of property in a trustee . . .

How and when this curative provision gets used in the midst of litigation is the subject of the 1st DCA’s opinion in the Heiskell case.

Can you rely on F.S. 689.07(4)’s “cure” clause 30 years after the original deed was recorded and after a lawsuit’s been filed? YES

Heiskell v. Morris, — So.3d —-, 2015 WL 9258277 (Fla. 1st DCA December 18, 2015)

The property at issue in this case is a 1,360-acre estate in northern Florida known as the “Morris Grove Plantation” that’s been owned by the same family for over a hundred years. In 1983 six siblings took title to the property from their parents and simultaneously conveyed the property to a revocable trust they all signed and were all beneficiaries of. Two of the siblings were appointed co-trustees and they took title to the property as “trustees”.  The trust contained a “non-recordation” clause that was intended to keep the trust’s provisions out of public view. Apparently these clauses were common back in the day.

Fast forward 30 years. The siblings are deadlocked over how to manage the property. One of the co-trustees filed a partition action asserting that the property was conveyed to him in fee simple — not as trustee — because the 1983 deed didn’t comply with F.S. 689.07′s disclosure requirements. A month after the lawsuit was filed — and 30 years after the original deed was recorded — the other co-trustee recorded the subject trust in an attempt to trigger F.S. 689.07(4)’s “cure” clause. So does this after-the-fact defensive move work? Yes, so saith the 1st DCA:

Though no reported case has mentioned subsection (4) since its addition over five decades ago, its apparent purpose was to temper potentially harsh readings of subsection (1) that could marginalize the interests of trust beneficiaries. . . . [S]ubsection (4) says that nothing in the statute precludes any person from recording a trust agreement before or after the recordation of a deed or other “instrument evidencing title or ownership of property in a trustee[.]” It thereby permits the recordation of a trust agreement after a deed’s recordation, even decades later, which is what happened here. . . . Subsection (4) counterbalances subsection (1) in two important ways. One is that it allows previously unrecorded trusts (“secret” trusts discussed below) to be recorded as a means of protecting the interests of beneficiaries and innocent third parties by providing public notice of a trust’s existence. The other is its recognition that trusts, even if unrecorded, may be enforced by beneficiaries against their trustees. In either instance, a focus of subsection (4) is the protection of beneficiaries.

But what about the trust’s non-recordation clause? Does it void the statute’s after-the-fact cure provisions? NO:

The Trust Agreement stated that it “shall not be placed on record in the county in which the Trust property is situated or elsewhere, but if it is so recorded such recording shall not be considered as notice of the rights of any person under this Agreement derogatory to the title or powers of the Trustees.” This type of clause, which is commonplace in private trusts, see, e.g., Florida Jurisprudence Forms Legal & Business, Recordation of Trust Instrument § 34:594 (2015) (providing standard language for prohibiting recordation of a trust instrument), is designed to advance the settlor’s intent of preventing public disclosure of the terms of a trust and thereby protecting the privacy of beneficiaries. See generally Frances H. Foster, Trust Privacy, 93 Cornell L.Rev. 555 (2008) (discussing the pros/cons of the use of trust privacy provisions). Trust privacy has many benefits, which a non-recordation clause advances. But circumstances exist where a trust agreement must be recorded, as the language in the Trust Agreement envisions (“but if it is so recorded”), such as when a beneficiary is attempting to establish the enforceability of a trust, as was done here. Recordation for such a purpose does not violate the central purpose of the trust’s non-recordation clause.

Does a Personal Representative (PR) have standing to litigate deed-to-trust cases under F.S. 689.07? YES

Giller v. Giller, — So.3d —-, 2016 WL 1658754 (Fla. 3d DCA April 27, 2016) 

This case involves the estate of famed Miami architect Norman Giller. Prior to his death he transferred title to various parcels of real estate to himself as trustee of his own revocable trust. The deeds didn’t comply with F.S. 689.07′s disclosure requirements, identifying the transferee only as “Norman Giller, Trustee”. After Giller’s death two of his children filed a declaratory-judgment action in their representative capacities as PRs of his estate asking the court to rule on whether the deeds failed, which means the properties would become assets of the probate estate.

Giller’s third child (Brian) filed a motion to dismiss asserting that the PRs lacked standing to file suit under F.S. 689.07. His theory was that the statute’s designed to protect “subsequent parties” who might innocently buy property that’s subject to some kind of secret trust, not the property owner’s PRs. Was he right? NO, so saith the 3d DCA:

Brian asserted in his Motion to Dismiss that section 689.07(1) has no application to this case, and the Personal Representatives are not “entitled” to relief under section 689.07(1), because they are not parties who relied on the public records in acquiring an interest in the properties. In support of his argument, Brian cites to language in various cases addressing the purpose of section 689.07(1). . . . Notably, none of these cases address the issue of standing or “entitlement” of the personal representatives of a decedent-grantee to seek relief based on the operation of section 689.07(1), and none limit the class of parties entitled to relief under subsection (1) to “subsequent parties.”

Moreover, this Court’s precedent supports our conclusion that a grantee’s personal representative may seek a determination regarding ownership under section 689.07(1). In Turturro v. Schmier, 374 So.2d 71 (Fla. 3d DCA 1979), the personal representative of the decedent’s estate claimed title to the property under section 689.07 by virtue of a deed conveying a remainder to the decedent, “Morris Siegel, as Trustee,” and specifically alleged that the estate was the fee simple title holder to which the property reverted upon the demise of the holder of the life estate. . . .

In reaching its conclusion, this Court noted that the purpose of the statute is “to prevent a fraud from being perpetrated on a subsequent transferee who might rely on the record and be unaware of a secret trust creating ownership in another.” Id. The fact of whether a subsequent transferee did or did not rely on the deed, however, did not contribute to this Court’s analysis—the personal representative was not required to be a “subsequent party” in order to seek relief under section 689.07(1).