Florida Probate Litigation, Will Contest Lawyer & Attorney : Juan C. Antúnez : Serving Miami, Jacksonville, Tampa Saint Petersburg, Orlando, Fort Lauderdale

In re Estate of Stisser, 932 So.2d 400, 31 Fla. L. Weekly D1008 (Fla. 2d DCA Apr 07, 2006)

Technical issues such as whether a Florida court has in rem jurisdiction over a matter or whether in personam jurisdiction is required can have huge impacts on how a case is litigated.  In this case, the outcome of that question determined whether a Florida personal representative was forced to sue the successor trustee of the decedent's revocable trust for payment of expenses and taxes in Florida or Minnesota.  The PR won the argument before the probate court, even though the trust was administered in Minnesota by an individual trustee residing in Minnesota containing trust assets that apparently were located in Minnesota.  Based on these facts, I don't see how the probate court concluded that it had in rem jurisdiction over the trust -- none of the assets were located in Florida.  On appeal, the 2d DCA reversed. 

The 2d DCA got to the right result, but its expressed reasoning is flawed because it fails to zero in on the single key issue before it: was the lawsuit limited solely to questions involving the parties' rights over property in Florida or was the lawsuit seeking to impose a judgment directly against a person or party?  Instead the 2d DCA framed its opinion in terms of an "indispensable party" analysis.  For the record, here's how the 2d DCA expressed its reasoning:

[T]he probate court could not enter such a ruling in the absence of the Cotrustees. “‘The law is settled that, in suits against the trustee affecting trust property, the trustees as well as the cestuis que trustent should be made parties defendant.’ ” First Nat'l Bank of Hollywood v. Broward Nat'l Bank of Fort Lauderdale, 265 So.2d 377, 378 (Fla. 4th DCA 1972) (quoting Griley v. Marion Mortgage Co., 132 Fla. 299, 182 So. 297, 300 (1937)).  The general rule is that a “trustee is an indispensable party in all proceedings affecting the estate.” Id. Yet, in the instant case, both the probate court and the parties appeared to agree that the court did not have personal jurisdiction over the Cotrustees. The probate court stated that it did not require personal jurisdiction over the Cotrustees and proceeded without it in the mistaken belief that it had in rem jurisdiction, which it believed was sufficient. Stisser conceded at the hearing that the probate court did not have personal jurisdiction over the Cotrustees.

Given the fact that the law requires the probate court to have personal jurisdiction over the Cotrustees of a trust in order to enter a ruling affecting the corpus of the trust and given the fact that the court lacked such jurisdiction over the Cotrustees, the probate court was without authority to rule on the complaint filed by Stisser. We conclude therefore that the probate court erred in denying the Cotrustees' motion to quash service of process and in taking jurisdiction over the instant case. Accordingly, we reverse.

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I previously wrote here about Florida Bar Ethics Rule 4-1.8(c), which bars Florida attorneys from writing themselves into wills and trusts they draft for clients . . . and the hot water one Florida attorney was in for allegedly running afoul of that prohibition.  In Fla. Bar Urged to Help Estate Lawyers Avoid Ethics Pitfall a related issue is reported on: Florida attorneys naming themselves as personal representatives or trustees of wills and trusts they draft.  The underlying conflict here is that fees payable to PRs and trustees can be huge windfalls for the attorneys involved.

My firm's practice is to avoid serving as PR or trustee for our clients . . . when possible.  There are situations, however, when clients need this assistance.  For example, with respect to elderly clients with no family to speak of in Florida, you may be the only person in the world they can count on once they pass away to serve as PR, or the only person in Florida willing and able to step in as successor trustee of their revocable trust in the event of incapacity.  That's why a blanket ethics rule wont work in this context.  The linked-to article addresses the other end of the spectrum: attorneys who ALWAYS solicit this business and ALWAYS write themselves in as PRs and trustees for their clients.  Here are a few excerpts for the linked-to story:

Some estate and trust lawyers are urging the Florida Bar to recommend tighter rules governing lawyers who draft a client's will or trust and also serve as the personal representative or trustee for the estate.

Florida Supreme Court rules prohibit lawyers from being named as beneficiaries in the wills they draft for clients. But nothing stops them from being designated as personal representative or trustee. As the personal representative or trustee, an attorney stands to earn significant fees.

Rohan Kelley of Fort Lauderdale, who heads the Bar's real property, probate and trust law section, said too many lawyers "are writing themselves into documents for their own personal gain." Lawyers should not serve in fiduciary roles in more than 50 percent of the cases where they draft the will or trust, he said.

"We need a disciplinary rule for lawyers who serve as not only trustees but personal representatives," Kelley said. Lawyers who are found to be serving as the personal representatives or trustees for most of their estate cases should face discipline, he argued.

If lawyers place themselves in fiduciary roles in wills or trust documents they draft, it is imperative that they set up a legal mechanism that allows for their removal from such positions, said Christopher Boyett, Holland & Knight's South Florida private wealth team leader based in Miami. "It's absolutely awful to set up a situation where you cannot be removed," he said.

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Some trust and estate lawyers say there are circumstances where the best way for a lawyer to represent a trust and estate client is to serve in a fiduciary role, and the lawyer should be fairly compensated.

"It's not easy to be a personal representative or a trustee, and it can come with a fair amount of liability," said Michael Simon, a partner at Gunster Yoakley & Stewart in West Palm Beach.

But lawyers also agree that the lack of ethical guidance from the Bar increases the potential for attorneys to take advantage of estate and trust clients, who generally are elderly and may not be at their mental peak.

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Pierre v. Estate of Pierre, 928 So.2d 1252, 31 Fla. L. Weekly D1434 (Fla. 3d DCA May 24, 2006)

Suppose mom writes a will that cuts out estranged son, suppose further estranged son reappears on the scene shortly before mom’s death after 10 years of no contact with mom and somehow the will that cut him out goes “missing.” Well, estranged son might be smiling because if mom died without a will (i.e., intestate), then as one of her lineal descendants he gets a piece of the estate. Under Florida law, if the originally signed copy of a will is missing, it is presumed that the testator’s intent was to destroy the will and thus a photocopy of the will is not valid. However, this presumption can be overcome, which is what happened in this case.

Here’s how the 3d DCA explained the law in Florida governing lost wills:

When a person who executes a will dies and the will cannot be located, a rebuttable presumption arises that he or she destroyed the will with an intent to revoke it. See In re Estate of Hatten, 880 So.2d 1271, 1274 (Fla. 3d DCA 2004)(stating that when a decedent who has made a will dies, and the will cannot be found among the decedent's personal papers or in other logical locations, a rebuttable presumption arises that the decedent herself destroyed the will with the intent to revoke it). The presumption may, however, be rebutted with competent substantial evidence that the interested party had access to the testatrix's home, an opportunity to destroy the will, and a pecuniary interest in doing so. See Walton v. Estate of Walton, 601 So.2d 1266, 1267 (Fla. 3d DCA 1992)(explaining that the presumption that a decedent destroyed her will with the intention of revoking it may be overcome by competent and substantial evidence, and that “the existence of persons with an adverse interest in destroying a will who have an opportunity to do so, may serve to rebut the presumption that the will has been revoked”).

As we conclude that there is competent substantial record evidence to support the trial court's finding that the presumption of revocation was overcome, we affirm.

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Bush v. Webb, 2006 WL 2872522 (Fla. 1st DCA October 11, 2006)

An overarching theme of Florida’s probate code (and recurring point of discussion on this blog) is the tension between basic due-process rights on the one hand and Florida’s strong public policy favoring the speedy administration of estates on the other. In order to move things along as quickly as possible (with the least amount of litigation expense possible), Florida law provides extremely short windows of opportunities for litigants to file claims.  Florida’s 2-year non-claim statute (733.710(1)) epitomizes this stated public policy because of its simplicity and utter disregard for due process or equitable considerations. When it comes to creditors, after 2 years it's game over . . . period, no exceptions.

The issue litigated in this case was whether language in a will explicitly directing the personal representative to pay the decedent’s funeral expenses trumps Florida’s 2-year non-claim statute. The 1st DCA described the will-language in contention as follows:

The decedent died on February 16, 2002. In her will, she bequeathed all her property to appellant and directed that her “just debts, funeral and administration expenses be paid as soon after [her] death as may be practical . . .”

The personal representative in this case was the decedent’s sister. Apparently the decedent’s children paid mom's funeral expenses then waited over two years to file a claim against mom’s estate seeking reimbursement. The PR said NO, the trial court said YES, and the 1st DCA sided with the PR, changing the answer to NO again. Here’s how the 1st DCA described the reasoning underlying its decision to reverse the probate court’s ruling:

It is undisputed in this case that appellees filed their claims against the decedent's estate more than two years after her death. Pursuant to section 733.710(1), the claims were barred. Contrary to appellees' argument, the decedent's directive that her estate pay her funeral expenses did not excuse their statutory obligation to file their claims against the estate within two years of the decedent's death. See Marshall Lodge No. 39, A.F. & A.M. v. Woodson, 190 So. 749, 751 (Fla.1939) (“We do not think that the provision of the will directing the executors to pay all of the just debts of the testator had any effect upon the operation of the statute of non-claim.”). Were that not the case, each of the decedent's creditors could have simply relied on the will and filed claims against the estate long after her death, thereby forever subjecting the estate to uncertainty. Such a situation would conflict with the purpose behind section 733.710(1).

Lesson learned:

If you even suspect an estate may owe you money, when in doubt file a claim . . . and do it sooner rather than later.  An early claim can always be withdrawn, a late claim is gone forever.

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In Florida it is almost inevitable that attorneys -- and especially trusts and estates attorneys -- will end up counseling clients who have existing relationships with off-shore trust companies or are considering some sort of arrangement involving an off-shore trust.  Like any industry, there are good and bad actors doing business out there.  Perhaps unfairly, my inclination is to approach the entire industry with more than my usual degree of skepticism (which says a lot!).

Recent events underscore why Florida attorneys would be wise to counsel caution when evaluating tax savings ideas proposed to clients by off-shore trust operators.  In April of 2006 the heads of a Bahamian corporation operating under the name "Sterling Trust" were jailed in North Carolina after a sting operation mounted by undercover agents of the IRS in connection with an alleged tax fraud conspiracy.  The trust angle was described in Executives With Bahamas Ties Jailed as follows:

The indictment, signed by Assistant U.S. Attorney Matthew Martens, says Graves, the Woltzes and Currin "would and did concoct foreign ‘dual trust’ arrangements so that wealthy United States citizens could evade federal income tax."

According to the indictment, the IRS undercover agents solicited advice from Graves on evading U.S. taxes on the fictitious sale of "gaming rights" for $10 million. Graves allegedly recommended a scheme known as a "dual trust structure" by which Sterling Trust would set up two trusts that would facilitate the evasion of the taxes.

Attorneys can get personally stung by this type of fraud when they step over the line from simply acting as counselors to affirmatively facilitating their cleints' involvement in this type of scheme.  As reported in Former U.S. Attorney to Plead Guilty in Tax Fraud Scheme, a distinguished former U.S. Attorney is facing up to 43 years! in prison because of his involvement . . . in addition to the personal catastrophe this must be for his family.  Here are a few excerpts from the linked-to article:

A former U.S. Attorney, state judge and state Republican chairman has agreed to plead guilty to charges related to a tax fraud conspiracy, federal prosecutors in Raleigh, N.C., said Wednesday.

Samuel T. Currin will plead guilty to conspiring to launder $1.45 million through his law firm's client trust account and to lying on his taxes by failing to report an offshore debit card account, prosecutors said. Three others also have been charged.

He could be sentenced to as many as 43 years in prison.

Tax attorney Ricky Graves; Howell Way Woltz, president of Sterling Trust in the Bahamas; and his wife, Vernice Woltz, a director of Sterling Trust, are also charged.

Lesson learned: Caveat Emptor!

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Florida’s new trust code continues the common law rule in this state that charitable trusts are policed primarily by the Florida Attorney General (F.S. §736.0110(3)). The same rule applies to Florida not-for-profit corporations (F.S. §617.2003). However, in a significant break from the common law rule, the new trust code also gives settlors standing to personally enforce the charitable trusts they create (F.S. §736.0405(3)).

The ongoing saga over the J. Paul Getty Trust in California (see here for prior post) is a dramatic example of how charitable trusts can go awry and how a state’s attorney general’s office can play a role in policing these organizations. In the latest twist, the New York Times reported in California Attorney General Appoints Overseer of Reforms at J. Paul Getty Trust that the California attorney general has appointed an independent monitor to oversee mandated reforms. The following is an excerpt from the linked-to story:

LOS ANGELES, Oct. 2 — Ending a 14-month investigation, the California attorney general appointed an independent monitor on Monday to oversee reforms at the J. Paul Getty Trust, one of the world’s richest cultural organizations. The inquiry determined that the trust’s former president, with the approval of the Getty board, misspent trust money on his wife’s travel, used employees for personal errands and made improper payments to a graduate student.

Although the attorney general, Bill Lockyer, found that the former president and the board violated their legal duties, he declined to take civil or criminal action against them. The report stated that the misuse of funds did not result from fraud and that the value of a settlement between the former president, Barry Munitz, and the trust exceeded the value of the losses from any improper payments.

The Getty, which has adopted several reforms since Mr. Munitz resigned under pressure in February, expressed satisfaction with the results of the inquiry.

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