Florida Probate & Trust Litigation Blog

Florida Probate & Trust Litigation Blog

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

The 35th Annual Attorney Trust Officer Liaison Conference

Posted in Musings on the Practice of Law

atoI’m going to be one of the speakers at next week’s 35th Annual Attorney Trust Officer Liaison Conference in Palm Beach. 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. We’ll, 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).

Trust protectors; they’re like trustees, but not quite. So can they get sued?

Posted in Trust and Estates Litigation In the News, Trustees In Hot Water, Will and Trust Contests

good-faith-2It used to be so simple. Back in the day trust lawyers had to contend with only three possible players: the settlor, the trustee, or the beneficiary. Today that trio’s often joined by a new creature we’re still not exactly sure what to make of: a trust protector. Over the last few years there’s been a trend towards wider use of trust protectors (see here for why), and the 4th DCA’s opinion in the Minassian case (which I wrote about here) may go a long way towards accelerating that trend — especially in Florida.

This new phenomenon raises fundamental questions our courts have yet to grapple with. The most important of which is whether trust protectors assume the same fiduciary duties as trustees, or no fiduciary duties at all, or something in between. This isn’t an esoteric point. A trust protector’s liability exposure is directly proportionate to the scope of his fiduciary duties.

So where do we draw the line? Prof. Frolik provides the best answer I’ve seen so far. In an article entitled Trust Protectors: Why They Have Become “The Next Big Thing”, he argues for a middle of the road “good faith” standard of care. In other words, a trust protector isn’t subject to all the duties of a trustee, but he doesn’t get a free pass either. Frolik’s argument works because it falls squarely within our existing statutory framework (he cites to the Uniform Trust Code). Here’s an excerpt summarizing his argument with my links to corresponding Florida Trust Code provisions:

[F.S. 736.0105(2)(b)] states that the terms of a trust prevail over the provisions of the state statute, except, inter alia, for “the duty of a trustee to act in good faith and in accordance with the terms and purposes of the trust and the interests of the beneficiaries.” This seems to permit a settlor to lower the liability bar for a trustee, but not below the standard of good faith. And if the settlor can exculpate the trustee from fiduciary status, it would seem to follow that the same degree of exculpation can be provided to a protector.

If the protector is not subject to fiduciary obligations, the protector is nevertheless subject to judicial review and is still held to some judicially reviewable standard of behavior. Looking to the law governing trustees and the need to protect the interest of the beneficiary, the bedrock standard for a protector must be to act in good faith. [F.S. 736.0801] requires the trustee to “administer the trust in good faith”; a protector should be held to a similar standard. The good faith standard of care demanded of trustees is so fundamental to trust law that exoneration clauses designed to insulate a trustee from liability do not relieve the trustee for acting in bad faith. [F.S. 736.0105(2)(b)] permits the trust provisions to prevail over the Code, except for a list of powers that includes the “duty of a trustee to act in good faith.” A protector who, like a trustee, has powers that can affect the beneficial enjoyment of the trust, should be required to act in good faith.

Even if the trust is silent and says nothing about the protector’s standard of care, the protector must act in good faith because the absence of good faith is bad faith. There is nothing in between: either the protector is acting in good faith or the protector is acting in bad faith. And no court is going to permit a protector to act in bad faith because to do so would compromise the beneficial interest of the beneficiary.

Good faith is variously described. A Wyoming court, in need of a definition of good faith for a case involving a trustee, looked to the Restatement (Second) of Contracts section 205, comment a (1981), which stated good faith was “faithfulness to an agreed common purpose and consistency with the justified expectations of the other party; it excludes a variety of types of conduct characterized as involving ‘bad faith’ because they violate community standards of decency, fairness or reasonableness.”

In a will contest, a Texas jury was instructed that “good faith” meant “an action which is prompted by honesty of intention or a reasonable belief that the action was probably correct.” This is an objective test; merely believing you are doing the right thing is not enough; the belief must be reasonable. If this were not so, acting negligently, that is, failing to act reasonably, would violate the good faith standard.

Those who do not want a protector to be treated as a fiduciary, however, may also want to ensure that mere negligence will not create liability. The settlor is free to define what is meant by “good faith” and should be able to provide that an act of ordinary negligence does not violate good faith. However, [under F.S. 736.1011] the settlor cannot exculpate a trustee, or presumably a protector, from liability for acts made in bad faith or with reckless indifference (gross negligence).

As trust-protector clauses get incorporated into more and more trust agreements, sooner or later we’ll have to figure out what do when one of these trust protectors goes off the rails. When that happens, don’t count on much case law for guidance. For now, the best we can do is work with what we’ve got: Florida’s trust code. And Frolik’s article is an excellent roadmap for doing just that. Good stuff, well worth holding on to.

Can Florida arbitrators decide “validity” challenges to a will or trust?

Posted in Settling, Mediating & Arbitrating Inheritance Cases

Arbitration-3AAA’s rules for arbitrating wills and trusts specifically authorize arbitrators to decide the validity of the will or trust at issue in a given dispute. Since an arbitrator’s jurisdictional authority in that kind of case is a product of the document’s validity, in essence the arbitrator’s deciding his own jurisdictional authority. Here’s an excerpt from section 7 of the AAA rules:

The arbitrator shall have the power to determine the existence or validity of a trust or will in which an arbitration clause forms a part. Such an arbitration clause shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitrator that the contract is null and void shall not for that reason alone render invalid the arbitration clause.

By contrast, F.S. 731.401, Florida’s enabling legislation for arbitration clauses in wills and trusts (which I’m a big fan of), carves validity issues out of the statute’s scope of operation:

A provision in a will or trust requiring the arbitration of disputes, other than disputes of the validity of all or a part of a will or trust, between or among the beneficiaries and a fiduciary under the will or trust, or any combination of such persons or entities, is enforceable.

Do commercial arbitrators decide validity issues? YES

The sharp contrast between the AAA rules and Florida’s enabling statute highlights an issue the commercial arbitration world’s been grappling with for decades: does an arbitrator have jurisdictional authority to determine his own jurisdictional authority? In the commercial world the doctrine developed to answer this question has a cool German name: kompetenz/kompetenz.

Prof. Rutledge of the University of Georgia School of Law recently published an interesting article entitled The Testamentary Foundations of Commercial Arbitration, which does a great job of comparing and contrasting arbitration in the estate context vs. the commercial context. One of the points of differentiation is the kompetenz/kompetenz doctrine, which he describes as follows:

Stripped to its essence, the doctrine of kompetenz/kompetenz provides that an arbitrator has jurisdiction to determine her own jurisdiction. Though seemingly tautological, the doctrine is essential to the proper functioning of any arbitral system. The arbitrator draws her authority from the contractual agreement of the parties. Despite the source of this authority, cases regularly arise that challenge the enforceability of the arbitration clause . . . In these cases, the arbitrator will sometimes conclude that the defense is valid and, thus, the arbitration clause is unenforceable. This conclusion presents a logical conundrum: if the arbitrator derives her power from the arbitration clause, but then concludes that the arbitration clause is unenforceable, how can her award (so concluding) have any force? The doctrine of kompetenz/kompentenz solves this conundrum by providing that the arbitrator has the power to rule on challenges to her own jurisdiction.

In the United States, the [Federal Arbitration Act (“FAA”)] does not contain a specific provision addressing this issue. Instead, the rule emerged through an amalgam of case law and contractual practice. The seminal decision is typically seen to be the Supreme Court’s 1995 decision in [First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995)]. There, the Court held that courts, rather than arbitrators, presumptively have the power to rule on challenges to the arbitration clauses. However, if the agreement contains clear and unmistakable evidence that the parties intended for the arbitrators to rule on such matters, then courts must defer to that contractual allocation of authority. As a matter of practice, most sets of arbitral rules attempt to allocate decisions of this sort to arbitrators, and United States courts, relying on FirstOptions, generally have found these allocations sufficient.

Are estate cases so different we can’t arbitrate validity issues as well? NO

So if the FAA doesn’t bar arbitrators from deciding validity issues, and the U.S. Supreme Court’s decision in First Options also allows parties to arbitrate validity issues, and the AAA rules allow parties to arbitrate validity issues, why does F.S. 731.401 take such a different tack?

Prof. Rutledge points to a California Supreme Court decision from over a hundred years ago for a possible explanation. In Carpenter v. Bailey, 60 P. 162 (Cal. 1900), a dispute among heirs involving the validity of a will was decided by arbitration. When the winning side asked the court to enforce its arbitration award, the court refused, declaring that:

[T]he matter of the contest cannot be submitted to arbitration. The matter of the probate of a will is a proceeding in rem, binding on the whole world. A few individuals, claiming to be the heirs, cannot by stipulation determine such controversy.

So maybe it’s the in rem nature of a will or trust contest that sets these cases apart. If it is, I don’t find that reasoning convincing. In any estate proceeding the parties involved can choose to accept or reject the validity of the decedent’s last will. When those private parties make that decision, the contested will either gets probated or it doesn’t. That decision then gets incorporated into an uncontested probate court order, which is “binding on the whole world.” Bottom line, private parties have always had the ability to decide “validity” disputes by agreement (the vast majority of cases settle — from 80%-92% by some estimates), so there’s no logical reason why those same parties shouldn’t be able to use arbitration to reach the same result.

A more likely reason for why the Carpenter case was decided the way it was is that it reflects a general bias against arbitration that was prevalent a century ago. Times have changed. As noted by Prof. Rutledge, “[m]ore recently, a spate of U.S. Supreme Court decisions have facilitated the expansion of arbitration into previously verboten areas, including employment disputes, consumer disputes, and most disputes involving statutory claims under federal and state law.” Federal law favoring arbitration of disputes whenever possible, even if deemed contrary to Florida public policy, leads me to believe a Florida court operating in today’s pro-arbitration world should uphold an arbitrator’s ruling on validity (especially if the AAA rules are incorporated by reference into the clause). Time will tell.

4th DCA: Can a probate judge use his “equitable powers” to override our Probate Code?

Posted in Creditors' Claims, Practice & Procedure

Oreal v. Steven Kwartin, P.A., — So.3d —-, 2016 WL 1239756 (Fla. 4th DCA March 30, 2016)

certaintyHaving your case decided against you because a well-intentioned judge chose not to apply some provision of our Probate Code for “equitable” reasons is to stare into the abyss. Why? Because there’s no certainty if we can’t rely on our statutes being followed when they’re most needed — in the midst of conflict. And if there’s no legal certainty, there’s no rule of law. It’s that simple.

Uncertainty breeds litigation:

Certainty is especially important in estate proceedings because one of our primary goals as lawyers in these cases should be to avoid litigation. The collateral damage suffered by families involved in estate litigation is often devastating and irreversible. When parties differ in their predictions of the outcome of a disputed issue, they’re more likely to litigate because no one knows for sure which way the judge’s going to rule.

Also, we operate within an underfunded and overworked court system (in Miami-Dade – on average – each probate judge took on 3,122 NEW cases in FY 2014-15). We simply can’t afford to waste precious judicial resources litigating cases that should’ve been resolved by applying the clear text of our Probate Code.

Bottom line, our Probate Code might seem harsh at times (it is), but in the long run abiding by its mandates is the most “equitable” option for all concerned — and it’s the law. So saith the 4th DCA.

Case Study:

In this case a creditor filed a claim against an estate to collect on an unpaid promissory note. At the time the claim was filed the unpaid principal amount was $375,000, with an accrued interest amount of $397,000, for a total of $772,500. The estate didn’t file a timely objection to the claim, and the probate judge denied the estate’s motion for an extension of time to file an objection. But the judge was apparently unhappy with how the debt was pursued, so he exercised his “equitable powers” and reserved the right to determine whether a set-off against the creditor’s “interest component [was] appropriate due to any unexcused and excessive delay exercised by [the creditor] in attempting to perfect and collect on [its] valid unpaid claim.”

Clearly reading the tea leaves, the estate filed a motion for equitable set-off which (surprise!) the judge granted, finding that the creditor had an equitable duty to prevent the accumulation of interest. According to the 4th DCA, this ruling was directly contrary to the terms of the subject promissory note and section 733.705(9) of our Probate Code:

Section 733.705(9), Florida Statutes, provides that “[i]nterest shall be paid by the personal representative on written obligations of the decedent providing for the payment of interest.” In First Union National Bank of Florida v. Aftab, 689 So.2d 1137 (Fla. 4th DCA 1997), the claimant filed a statement of claim, seeking principal and interest due under two promissory notes executed by the decedent. The estate did not object to the claims. The probate court disallowed default interest. This court reversed, reasoning that “section 733.705(8) [now section 733.705(9)] provides for the payment of interest by a personal representative on a claim that is ‘founded on a written obligation of the decedent providing for the payment of interest.’ Thus, the statute requires that the personal representative pay interest in accordance with the written instrument.” Id. at 1139.

Can a probate judge use his “equitable powers” to override our Probate Code? NO:

OK, so the judge’s ruling ran head on against the law on the books, but what if that law’s unfair. In other words, if the end result is just and equitable, can a probate judge use his “equitable powers” to override our Probate Code? NO, so saith the 4th DCA:

Just as a court cannot rewrite a contract to relieve a party from an “apparent hardship of an improvident bargain,” see Dickerson Fla. ., Inc. v. McPeek, 651 So.2d 186, 187 (Fla. 4th DCA 1995), a court cannot use equity to remedy a situation the court perceives to be unfair.

As the Florida Supreme Court has explained:

[W]e cannot agree that courts of equity have any right or power under the law of Florida to issue such order it considers to be in the best interest of ‘social justice’ at the particular moment without regard to established law. This court has no authority to change the law simply because the law seems to us to be inadequate in some particular case.

Flagler v. Flagler, 94 So.2d 592, 594 (Fla.1957) (en banc). “Where the legislature has provided” “a plain and unambiguous statutory procedure … courts are not free to deviate from that process absent express authority.” Pineda v. Wells Fargo Bank, N .A., 143 So.3d 1008, 1011 (Fla. 3d DCA 2014).

In the instant case, section 733.705(9) plainly and unambiguously provides for the payment of interest and does not provide any judicial discretion. Because “there is a full, adequate, and complete remedy at law,” equity has no role. U.S. Bank Nat’l Ass’n v. Farhood, 153 So.3d 955, 958 (Fla. 1st DCA 2014) (quoting Wildwood Crate & Ice Co. v. Citizens Bank of Inverness, 98 Fla. 186, 123 So. 699, 701 (Fla.1929)). “The imposition of sanctions which contravene … statutes … exceed a trial court’s discretion and require reversal.” Id at 959.

The Florida Fiduciary Access to Digital Assets Act

Posted in Probate & Guardianship Statutes

Illustration: Richard Mia. When You Die, Who Can Read Your Email?

A new law is making it easier for Florida personal representatives to access digital data—such as email, photos and social-media postings—after the account holder dies. It’s called the Florida Fiduciary Access to Digital Assets Act, and it’s modeled on the Revised Uniform Fiduciary Access to Digital Assets Act. This new legislation was passed as Senate Bill No. 494, and it goes into effect starting July 1, 2016. Once effective you’ll be able to find the new act at new Chapter 740 of the Florida Statutes.

The Florida Fiduciary Access to Digital Assets Act accomplishes two purposes. First, it provides fiduciaries the legal authority to manage digital assets and electronic communications in the same manner that they manage tangible assets and accounts. The act distinguishes between when a fiduciary may access the content of digital assets and electronic communications and when the fiduciary may only access a catalog of the digital property. Second, the act provides custodians of digital assets and electronic communications the legal authority they need to interact with the fiduciaries of their users while honoring the user’s privacy expectations for his or her personal communications. Most importantly, a custodian is granted immunity from liability for acts or omissions done in good faith compliance with the provisions of the new act.

And last but not least, the new legislation gives Internet users the ability to plan for the management and disposition of their digital assets if they should die or become unable to manage their assets. This is done by vesting fiduciaries with the authority to access, control, or copy digital assets and accounts.

For more on how the new law is supposed to work while still respecting legitimate privacy concerns, you’ll want to read the bill’s Legislative Staff Analysis. Here’s an excerpt:

General Overview

Because the Florida Statutes do not authorize fiduciary access to digital assets, the purpose of [Senate Bill No. 494] is to provide fiduciaries with specific authority to access, control, or copy digital assets and accounts. The four types of fiduciaries this bill applies to are personal representatives of decedents’ estates, guardians of the property of minors or incapacitated persons, agents who are acting under a power of attorney, and trustees.

According to the Real Property, Probate and Trust Law Section of The Florida Bar, or RPPTL, this act provides the legal authority that a fiduciary needs to manage digital assets in compliance with a person’s estate plan, while also ensuring that a person’s private electronic communications remain private unless the person gave consent for disclosure. The bill allows a user to specify whether his or her digital assets will be preserved, distributed to heirs, or destroyed. In keeping with federal privacy laws, the bill prevents companies that store electronic communications from releasing them to fiduciaries unless the user has consented to the disclosure. Fiduciaries are required under the bill to provide proof of their authority under Florida law to the custodians of the digital assets. Custodians that comply with a fiduciary’s apparent authorization request are given immunity from liability under the statutes that prohibit unauthorized access.

The Uniform Law Commission has stated [here] that this revised uniform act, which [Senate Bill No. 494] mirrors, gives Internet users the ability to plan for the management and disposition of their assets in similar ways that they make plans for tangible property. The bill has a three-tiered system of priorities in the event of conflicting instructions. Additionally, the bill is designed as an overlay statute that works in conjunction with a state’s existing laws involving probate, guardianship, trusts, and powers of attorney.

Limited Application

According to RPPTL, the bill is limited in its scope and applies only to fiduciaries who are already bound to act in compliance with their fiduciary duties and powers. The bill does not extend to family members or other people who seek access to digital assets unless they are also a fiduciary. Moreover, the ability of a fiduciary to access a digital asset does not entitle the fiduciary to own the asset or make transactions with the asset.

The scope of the bill is further limited by the definition of “digital assets.” The bill’s only application is to an electronic record, which includes electronic communications, and does not apply to the underlying asset or liability unless the asset or liability is itself an electronic record.

Online Tool

One significant addition to this year’s version of the bill that was not present last year is the concept of an “online tool” for directing fiduciary assets. The online tool is an electronic service provided by a custodian which allows the user, in an agreement separate and distinct from the terms-of-service agreement, to provide directions for disclosure or nondisclosure of digital assets to a third person.

2013 . . . A probate mediator’s guide to 2013 Mediator Ethics Advisory Committee (MEAC) Opinions

Posted in Settling, Mediating & Arbitrating Inheritance Cases

The Florida Supreme Court’s Mediator Ethics Advisory Committee (MEAC) has been issuing formal advisory ethics opinions to certified and court-appointed mediators since 1994. MEAC opinions deal with ethics questions governed primarily by Florida’s Rules for Certified and Court-Appointed Mediators.

The Florida Supreme Court’s Mediator Ethics Advisory Committee (MEAC) has been issuing formal advisory ethics opinions to certified and court-appointed mediators since 1994. MEAC opinions deal with mediation-related ethics questions governed primarily by Florida’s Rules for Certified and Court-Appointed Mediators.

As a probate mediator and litigator, I’m convinced one of the best risk-management tools available to us are the ethics rules. Not because we need someone to tell us it’s a bad idea to lie, steal or cheat; but because we need someone to point out the pitfalls that are NOT self-evident. As former Secretary of Defense Donald Rumsfeld famously put it, it’s the “unknown, unknowns” you need to worry about. Which is why MEAC opinions are valuable tools more of us should be aware of. To that end, here’s my summary of the MEAC opinions for 2013:


It is a breach of confidentiality for a certified mediator to report to the court that a party who appears telephonically or by other electronic means pursuant to court order, failed to return the signed agreement after verbally agreeing to sign it. If a party appearing by phone fails to sign and return an agreement after agreeing to do so, that is a confidential “mediation communication.” The mediation unit cannot report to the court that a party has repeatedly not returned signed mediation agreements after agreeing to do so. A notification to the court that the mediator is “waiting for signatures” for an agreement is a breach of confidentiality.


Unless a crime disclosed to the mediator in caucus falls under one of the exceptions to confidentiality for mediation communications in section 44.405, Florida Statutes (2012), the mediator should not report it. If a mediator decides, during the course of the mediation, that the mediator will make such a report, the mediator must withdraw from the mediation.


If a mediator believes that financially contributing to a judicial campaign or signing a petition supporting a candidate for judge who would preside over the court in which the mediator mediates would compromise or could have the appearance of compromising the mediator’s impartiality or the relationship with the judge, it is ethically correct for the mediator to decline to do so.


It is beyond the scope of a mediator’s role and responsibilities to complete and file a “Notice of Confidential Information within Court Filing” pursuant to rule 2.420(d)(2), Florida Rules of Judicial Administration.


This opinion focuses on several questions related to the appropriateness of a mediator raising issues during mediation. In this case the questions pertain to a family mediation setting but the MEAC responses are not limited to family mediation unless so stated.


Unless the parties have agreed otherwise, written communications included in a mediated agreement that has been signed by all parties and counsel are not confidential.


As long as the advertising is consistent with mediation statutes, court rules, administrative orders, and the Rules for Certified and Court-Appointed Mediators, a mediator may employ an individual on his or her behalf to market mediation services.


Engaging in the dual role of mediator and notary is ethically inappropriate.


It is a clear conflict of interest for a mediator to mediate a case when a party’s attorney is or was previously related to the mediator. A clear conflict of interest cannot be waived regardless of disclosure.


The Notice of Vendor Expectations (Notice) the mediator is questioning creates a non-waivable conflict of interest because of the language it contains.


A Florida Supreme Court certified mediator subject to local rule 9019-2(A)(5), United States Bankruptcy Court, Southern District of Florida, who is mediating in the Loss Mitigation Mediation Program, may sign the referenced mediator’s oath currently required by the rule without violating the Florida Rules for Certified and Court-Appointed Mediators.

2014-15 Probate Court Filing Statistics

Posted in Musings on the Practice of Law

In Miami-Dade – on average – each judge took on 3,122 NEW cases in FY 2014-15, in Broward the figure was slightly lower at 3,044/judge, with Palm Beach scoring the lowest at 2,020/judge.

If you make your living in and around our probate courts you’ll find the FY 2014-15 Probate Court Statistical Reference Guide interesting reading. The chart below provides the “cases filed” data for three of our largest circuits/counties: Miami-Dade (11th Cir), Broward (17th Cir), and Palm Beach (15th Cir). For prior years see (2013-14), (2012-13), (2011-12).

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. 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 probate judge took on 3,122 NEW cases in FY 2014-15, in Broward the figure was slightly lower at 3,044/judge, with Palm Beach scoring the lowest at 2,020/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 represent the vast majority of the matters handled by a typical probate judge, but when it comes to that small % of estates 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 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’s going to decide your case 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 our 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 2014-15 Probate Court Filing Statistics

Type of Case Miami-Dade (11th Cir) Broward (17th Cir) Palm Beach (15th Cir)
Probate 4,156  4,028  4,941
Baker Act  5,107  3,384  1,475
Substance Abuse 861  973  697
Other Social Cases 1,361  312  242
Guardianship 950  396  506
Trust 55  41  219
Total 12,490  9,134  8,080
# Judges 4 3 4*
Total/Judge 3,122  3,044  2,020

*In Palm Beach County (15th Cir) there are 6 part time probate judges and 1 full time probate judge. For purposes of the chart I count them as 4 full time probate judges.


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.

3d DCA: Can you sue hostile parties for fraud if they lie to you during settlement negotiations?

Posted in Practice & Procedure, Settling, Mediating & Arbitrating Inheritance Cases

Moriber v. Dreiling, — So.3d —-, 2016 WL 145968 (Fla. 3d DCA January 13, 2016)

risk-managementLawyers love to brag about their court wins, not so much about their prowess as contract drafters. But the reality is that the vast majority of inheritance cases settle, which means in most instances “who gets what” is going to be the product of a settlement agreement, not some dramatic trial victory. And inheritance negotiations almost always turn on the value of the assets being divvied up.

So one of the big risk factors that needs to be nailed down in any estate-related settlement agreement is whether anyone’s being dishonest about the assets (which is easily done with “reps and warranties”, as discussed below). Two recent decisions out of the 3d DCA are prime examples of what can go wrong when this risk factor is NOT addressed in the text of your settlement agreement. The first was the Sugar case, which I wrote about here. The second is this case. Both boil down to one simple rule: GET IT IN WRITING!

Case Study:

This case involves three siblings, one of whom (Ms. Moriber) sued her mother over disputes involving a family business, her father’s estate and trusts, and three $1.5 million life insurance policies. The case settled. Part of the settlement agreement involved Ms. Moriber getting one-third of the life insurance after her mother’s death.

According to Ms. Moriber, her mother (and her mother’s lawyer) led her to believe the insurance policies remained in effect at the time she signed her settlement agreement. However, these were all oral statements, they weren’t incorporated into the actual text of the contract. Should Ms. Moriber have relied on her mother’s oral representations? Not according to the 3d DCA:

It is without question that the parties in the instant case had a hostile and antagonistic relationship at the time of Ms. Moriber’s alleged reliance on [her mother’s] representations. Ms. Moriber knew, or should have known, from her own dealings with [her mother] that Ms. Moriber should not rely on any representations made by [her mother].

After her mother’s death Ms. Moriber learned she’d been duped. The three insurance policies had been cancelled years before the settlement agreement was signed. Ms. Moriber sued her mother’s estate for fraud. According to the 3d DCA:

The gravamen of the fraud counts . . . is that Ms. Moriber would never have entered into the Settlement Agreement had she known that the insurance policies . . . had been canceled.

So here’s the $1.5 million question on appeal. Can you sue a hostile party for fraud if they lie to you during settlement negotiations? NO, so saith the 3d DCA:

Beginning with Columbus Hotel Corp. v. Hotel Management Co., 116 Fla. 464, 156 So. 893 (Fla.1934), Florida state and federal courts have . . . consistently [held] that, as a matter of law, a plaintiff may not rely on statements made by litigation adversaries to establish fraud claims. . . .

In reaching its holding [in Columbus Hotel, the [Florida Supreme Court] explained, “[t]here can be no ground for complaint against representations where the hearer lacked the right to rely thereon, because he had reason to doubt the truth of the representation, as where … a [representor] … was obviously hostile to the hearer and interested in misleading him.” Id. at 486, 156 So. 893.

While, in Butler v. Yusem, 44 So.3d at 105, the Florida Supreme Court recently determined that “justifiable reliance” is not an essential element of fraud, we do not read Butler as receding from the well-established and common sense principle of law espoused in Columbus Hotel and its progeny: generally, adverse parties negotiating a settlement agreement in an attempt to avoid litigation cannot rely upon the representations of one another.

So if you can’t sue a hostile adversary for (surprise!) lying to you during settlement negotiations, how can you protect yourself from this kind of deception? Better contract drafting. Again from the 3d DCA:

In the context of settlement agreements, one party certainly may insist upon certain assurances from the other party. In our opinion, however, such assurances are better enforced through contract principals (e.g., warranties, indemnities, etc.) rather than fraud claims.

What’s the takeaway? Think “reps and warranties”

If you’re settling a case based on the assurance by an adverse party that fact “X” is true, that representation needs to be incorporated into the text of your contract and the adverse party needs to assume the risk of the statement being false by warranting its truthfulness. For example, “Party ‘A’ represents and warrants that the three $1.5 million life insurance policies are in effect.” If the fact that’s been represented and warranted in your settlement agreement turns out to be false (for example, the three $1.5 million life insurance policies were cancelled), your client’s remedy is a standard breach of contract lawsuit, not a fraud claim.

For more on the value of “reps and warranties” and how they work in real life, you’ll want to read this short ABA article on the subject. Here’s an excerpt:

A lawyer drafting a business contract has multiple responsibilities, but two of the most important are to protect her client against risks and to secure those advantages that are reasonable and appropriate. Having a client receive both “representations and warranties” will generally help you fulfill these responsibilities. . . .

We will begin with representations. They are statements of present or past fact. For example, “The financial statements fairly present the financial condition of the seller.” Future “facts” cannot generally form the basis of representations because no one can know the future. At best, someone can have an opinion. . . .

Now, let’s turn to warranties. In the past 15 years, courts have been struggling anew with the meaning and implications of a common law warranty — a promise that a fact is true. The seminal case was CBS Inc. v. Ziff-Davis Publishing Co., 75 N.Y.2d 496 (1990). In that case, Ziff-Davis “represented and warranted” the financial condition of the division it was selling to CBS. CBS, however, as part of its due diligence, sent in its own accountants to review the division’s financial statements. They reported that the financial condition was not as represented and warranted. The parties closed anyway, and then CBS sued.

In New York’s highest court, the issue was whether CBS had a cause of action for breach of warranty. Ziff-Davis argued that CBS did not because it had known about the problems with the financial statements and had not justifiably relied on the warranties. Stated differently, Ziff-Davis argued that the standards for a cause of action for a fraudulent misrepresentation and a breach of warranty both required justifiable reliance on the truthfulness of the statement. Ziff-Davis lost.

According to the New York court, a warranty is a promise of indemnity if a statement of fact is false. A promisee does not have to believe that the statement is true. Indeed, the warranty’s purpose is to relieve a promisee from the obligation of determining a fact’s truthfulness.

Since the CBS case was decided, the majority of states have followed New York.