Notice of new probate/trust related FL opinions: Commentary to follow:
- 4th DCA: Barrett v. Barrett, --- So.2d ----, 2008 WL 239032 (Fla. 4th DCA Jan 30, 2008)
- 4th DCA: Nasser v. Nasser, --- So.2d ----, 2008 WL 239073 (Fla. 4th DCA Jan 30, 2008)
2d DCA: Arbitration agreement fails if power of attorney did not expressly authorize it
In re Estate of McKibbin, --- So.2d ----, 2008 WL 161322 (Fla. 2d DCA Jan 18, 2008)
This case is yet another example of the distinction between the agency-law principals governing power-of-attorney disputes, versus the fiduciary-law principals governing trustee and personal-representative disputes. This distinction is significant and goes a long way towards understanding how Florida's appellate courts have consistently interpreted Florida law governing powers of attorney.
Florida law is clear: an attorney-in-fact's authority is limited solely to actions "specifically enumerated in the durable power of attorney." F.S. 709.08(7)(a). This authority is much narrower than the general scope of authority granted to personal representatives and trustees [click here for past examples].
In the linked-to case the issue was whether a decedent's estate was bound by an arbitration agreement signed prior to her death by her son and attorney-in-fact. Nothing in the power of attorney granted the attorney-in-fact authority to enter into an arbitration agreement. Unfortunately this point was lost on the trial-court judge, who ruled the arbitration agreement was binding. The 2d DCA explained its rationale for reversing the trial-court's ruling as follows:
If you're an estate planner, you want to make sure the powers of attorney you draft explicitly authorize those actions that are most important to your clients. If you're a litigator, the starting and end point of your case will be the actual text of the power of attorney. If the disputed action is not expressly authorized by the text of the power of attorney, chances are it's not legally binding.
This case is yet another example of the distinction between the agency-law principals governing power-of-attorney disputes, versus the fiduciary-law principals governing trustee and personal-representative disputes. This distinction is significant and goes a long way towards understanding how Florida's appellate courts have consistently interpreted Florida law governing powers of attorney.
Florida law is clear: an attorney-in-fact's authority is limited solely to actions "specifically enumerated in the durable power of attorney." F.S. 709.08(7)(a). This authority is much narrower than the general scope of authority granted to personal representatives and trustees [click here for past examples].
In the linked-to case the issue was whether a decedent's estate was bound by an arbitration agreement signed prior to her death by her son and attorney-in-fact. Nothing in the power of attorney granted the attorney-in-fact authority to enter into an arbitration agreement. Unfortunately this point was lost on the trial-court judge, who ruled the arbitration agreement was binding. The 2d DCA explained its rationale for reversing the trial-court's ruling as follows:
Lesson learned?Ms. McKibbin's son presented a durable power of attorney to Alterra to demonstrate that he had the legal authority to enter into the residency agreement on behalf of his mother. Nothing in that power of attorney, however, gave Ms. McKibbin's son the legal authority to enter into an arbitration agreement on behalf of his mother. See Kotsch v. Kotsch, 608 So.2d 879, 880 (Fla. 2d DCA 1992) (holding that powers of attorney are strictly construed to grant only the powers specified). Furthermore, there was no other basis upon which to bind Ms. McKibbin to the arbitration agreement. Hence, the Estate was not bound to arbitrate, and the trial court erred in granting Alterra's motion to compel binding arbitration. See id.; Regency Island Dunes, Inc. v. Foley & Assocs. Constr. Co., 697 So.2d 217, 218 (Fla. 4th DCA 1997) (“One who has not agreed, expressly or implicitly, to be bound by an arbitration agreement cannot be compelled to arbitrate.”). Accordingly, we reverse the trial court's order granting the motion to compel binding arbitration.
If you're an estate planner, you want to make sure the powers of attorney you draft explicitly authorize those actions that are most important to your clients. If you're a litigator, the starting and end point of your case will be the actual text of the power of attorney. If the disputed action is not expressly authorized by the text of the power of attorney, chances are it's not legally binding.
5th DCA: Nominated personal representative under prior will has standing to challenge last will
Wheeler v. Powers, --- So.2d ----, 2008 WL 160881 (Fla. 5th DCA Jan 18, 2008)
Standing:
In Florida whether or not you have standing to litigate a probate dispute depends on whether or not you're an "interested person," as defined by F.S. § 731.201(21):
Caveat:
In this case the named PR had also taken the prudent step of filing a caveat. Unfortunately, the clerk of the court failed to comply with its obligation to notify him when a petition to file the later-signed will was filed. When the named PR sought to have the probate proceeding revoked on this basis the probate court ruled against him, and was again reversed on appeal for the following reason:
Standing:
In Florida whether or not you have standing to litigate a probate dispute depends on whether or not you're an "interested person," as defined by F.S. § 731.201(21):
(21) “Interested person” means any person who may reasonably be expected to be affected by the outcome of the particular proceeding involved. In any proceeding affecting the estate or the rights of a beneficiary in the estate, the personal representative of the estate shall be deemed to be an interested person. In any proceeding affecting the expenses of the administration and obligations of a decedent's estate, or any claims described in s. 733.702(1), the trustee of a trust described in s. 733.707(3) is an interested person in the administration of the grantor's estate.... The meaning, as it relates to particular persons, may vary from time to time and must be determined according to the particular purpose of, and matter involved in, any proceedings.In this case the primary issue on appeal was whether the Florida Probate Code's interested-person definition includes a nominated personal representative under a prior will. The probate court said no, the 5th DCA said YES . . . but added the following proviso:
However, we do not suggest that every personal representative from every prior will should be granted standing. As stated in [Hayes v. Guardianship of Thompson, 952 So.2d 498, 507 (Fla.2006)], the definition of “interested person” is fluid and “must be determined according to the particular purpose of, and matter involved in, any proceeding.” 952 So.2d at 507. In this case, Dorothy was of sound mind when she prepared her 2001 Will and placed Mr. Wheeler in fiduciary positions. Nearly four years later and six weeks before she was involuntarily hospitalized with late stage Alzheimer's disease, she removed Mr. Wheeler from the Will and added her previously disinherited stepson.The take-away from this part of the case is that the named PR under a prior will "may" have standing if a win at trial would result in the appointment of the PR under the prior will. It's also important to note that unlike most other forms of litigation, standing for purposes of contested probate proceedings is not limited to parties having an economic stake in the outcome. A testator's right to designate whom will be his PR is of such importance that this status alone can be the basis for standing to litigate. I've written before about the deference given under Florida law to a testator's selection of his PR [click here].
Mr. Wheeler allegedly lost standing under Dorothy's 2001 Will due to undue influence. He was the alternate personal representative and co-trustee for approximately four years until Dorothy changed her Will under suspicious circumstances. Under these circumstances, we find that Mr. Wheeler is an “interested person” within the meaning of section 731.201(21). Therefore, we reverse the trial court's denial of relief on this claim.
Because we conclude that Mr. Wheeler has standing as an alternate personal representative under a prior Will, we need not reach the issue of whether Mr. Wheeler has standing as a co-successor trustee under a prior trust.
Caveat:
In this case the named PR had also taken the prudent step of filing a caveat. Unfortunately, the clerk of the court failed to comply with its obligation to notify him when a petition to file the later-signed will was filed. When the named PR sought to have the probate proceeding revoked on this basis the probate court ruled against him, and was again reversed on appeal for the following reason:
Another issue raised on appeal is whether probate of the 2005 Will should be revoked because timely notice was not provided to a caveator. Florida Probate Rule 5.260(f) states that “[a]fter the filing of a caveat by an interested person other than a creditor, the court shall not admit a will of the decedent to probate or appoint a personal representative without service of formal notice on the caveator or the caveator's designated agent.” Additionally, the Florida Supreme Court has long recognized that the filing of a caveat precludes the admission of a will to probate until the caveator is provided statutory notice. See Street v. Crosthwait, 186 So.2d 516 (Fla.1939); Barry v. Walker, 137 So.2d 711 (Fla.1931); Grooms v. Royce, 638 So.2d 1019 (Fla. 5th DCA 1994); In re Estate of Hartman, 836 So.2d 1038 (Fla. 2d DCA 2002); Nardi v. Nardi, 390 So.2d 438 (Fla. 3d DCA 1980). Since we find that Mr. Wheeler was an “interested person” within the meaning of section 731.201(21), we hold that the trial court erred in not revoking the probate of the 2005 Will because timely notice was not provided to a caveator as required by Florida Probate Rule 5.260(f) and Florida case law. Thus, the orders appointing the personal representative and admitting the 2005 Will to probate must be set aside to provide notice to the caveator.
MISS LILLIAN PELKEY'S PETTICOAT
By the way, as noted by Joel, Illinois continues to follow the traditional rule disqualifying attesting witnesses from benefiting under wills they witnessed.
The commentary to Uniform Probate Code section 2?505 (which was adopted verbatim by Florida as F.S. 732.504) explains why the old rule against witness-beneficiaries was abandoned by the UPC drafters:
The position adopted simplifies the law relating to interested witnesses. Interest no longer disqualifies a person as a witness, nor does it invalidate or forfeit a gift under the will. Of course, the purpose of this change is not to foster use of interested witnesses, and attorneys will continue to use disinterested witnesses in execution of wills. But the rare and innocent use of a member of the testator's family on a home?drawn will is not penalized.
This approach does not increase appreciably the opportunity for fraud or undue influence. A substantial devise by will to a person who is one of the witnesses to the execution of the will is itself a suspicious circumstance, and the device might be challenged on grounds of undue influence. The requirement of disinterested witnesses has not succeeded in preventing fraud and undue influence; and in most cases of undue influence, the influencer is careful not to sign as a witness, but to procure disinterested witnesses.
5th DCA: Motion to strike does not qualify as an "objection" to creditor's claim
Fernandez-Fox v. Estate Of Lindsay, --- So.2d ----, 2008 WL 160920 (Fla. 5th DCA Jan 18, 2008)
This case is an example of what NOT to do. When a creditor filed a claim against this estate the personal representative moved to strike the claim rather than simply objecting to it in accordance with F.S. 733.705(2). This mistake cost the estate an easy opportunity to cut off liability cheaply and quickly. Here's how the 5th DCA made this point:
When it comes to creditor claims in probate proceedings sometimes substance trumps form [click here], and as this case shows . . . sometimes it doesn't. Failure to scrupulously follow the creditor-claim rules contained in F.S. 733.701-733.710 can cost you dearly.
This case is an example of what NOT to do. When a creditor filed a claim against this estate the personal representative moved to strike the claim rather than simply objecting to it in accordance with F.S. 733.705(2). This mistake cost the estate an easy opportunity to cut off liability cheaply and quickly. Here's how the 5th DCA made this point:
[T]he Florida Probate Code requires an objection to be served according to specific requirements. These include filing within a specified time period, personal service on the claimant, and a statement notifying the claimant of the time period limiting claimant's right to assert an independent action. Fla. Prob. R. 5.496. In this case, the motion to strike never indicated that it was also an objection and, more importantly, the motion to strike did not contain a statement that the claimant was limited to a thirty day period to file an independent action. Under the rule, this is required for an objection. Thus, even assuming that the motion to strike could double as an objection, it failed to comply with the rules governing the manner for objecting to a claim.Lesson learned?
An objection must comply with the statutory requirements of section 733.705 and Rule 5.496. Because the motion to strike did not meet the requirements for an objection, the trial court erred by treating the two as the same.
When it comes to creditor claims in probate proceedings sometimes substance trumps form [click here], and as this case shows . . . sometimes it doesn't. Failure to scrupulously follow the creditor-claim rules contained in F.S. 733.701-733.710 can cost you dearly.
FL SCT: Florida's land-trust law survives bankruptcy challenge
Raborn v. Menotte, --- So.2d ----, 2008 WL 90037 (Fla. Jan 10, 2008)
The linked-to Florida Supreme Court opinion is the latest chapter in a bankruptcy proceeding that's been ongoing since 2001, has been the subject of numerous appeals in the federal-court system, and single-handedly resulted in a 2004 amendment to F.S. 689.07(1), which governs conveyances of real property to trusts. I previously wrote about this case here.
For the family involved in this case, the question was whether the family horse farm, which was deeded to one of the children as trustee of a trust benefiting him and his two siblings, would be exposed to the trustee's personal creditor's in the context of his personal bankruptcy. For lawyers, the question is: "How can I draft a deed-to-trust that ensures none of my clients ever get sucked into this kind of nightmare?" For those looking for sample forms, an excellent starting point are documents provided by the ABA, which I discuss and link to in a blog post entitled The ABA Promotes Land Trusts.
In order to understand the issues shaping the form text contained in the ABA documents, the Florida Supreme Court provides the following concrete guidance in the linked-to opinion explaining when a deed conveying title to a trustee conveys fee-simple title (thus exposing the trust assets to the trustee's personal creditors) or mere legal title (which does NOT expose the trust assets to the trustee's personal creditors):
The linked-to Florida Supreme Court opinion is the latest chapter in a bankruptcy proceeding that's been ongoing since 2001, has been the subject of numerous appeals in the federal-court system, and single-handedly resulted in a 2004 amendment to F.S. 689.07(1), which governs conveyances of real property to trusts. I previously wrote about this case here.
For the family involved in this case, the question was whether the family horse farm, which was deeded to one of the children as trustee of a trust benefiting him and his two siblings, would be exposed to the trustee's personal creditor's in the context of his personal bankruptcy. For lawyers, the question is: "How can I draft a deed-to-trust that ensures none of my clients ever get sucked into this kind of nightmare?" For those looking for sample forms, an excellent starting point are documents provided by the ABA, which I discuss and link to in a blog post entitled The ABA Promotes Land Trusts.
In order to understand the issues shaping the form text contained in the ABA documents, the Florida Supreme Court provides the following concrete guidance in the linked-to opinion explaining when a deed conveying title to a trustee conveys fee-simple title (thus exposing the trust assets to the trustee's personal creditors) or mere legal title (which does NOT expose the trust assets to the trustee's personal creditors):
Though inartfully drafted, section 689.07(1) is unambiguous. A “deed or conveyance of real estate” that simply adds the words “trustee” or “as trustee” to the grantee's name is “declared to have granted a fee simple estate,” unless a declaration of trust is of record when the deed is recorded, or the deed itself either names any beneficiaries or the nature and purpose of the trust, if any, or facially expresses a contrary intention. See One Harbor Fin. Ltd. v. Hynes Props., LLC, 884 So.2d 1039, 1043 (Fla. 5th DCA 2004). In other words, a deed that simply refers to the grantee as “trustee” conveys a fee simple estate in Florida with three exceptions. These three exceptions are: (1) the deed names the beneficiaries or states the nature and purpose of the trust; (2) the deed expresses a contrary intention; or (3) a declaration of trust is of record. See id.
In this case, the deed itself clearly expresses that the grantors, Robert and Lenore Raborn, intended to deed the Raborn family farm to Douglas Raborn in trust. Thus, the deed falls under the “contrary intention” exception in section 689.07(1). This “contrary intention” is expressed in the deed in multiple ways. First, the deed is entitled “Conveyance Deed to Trustee Under Trust Agreement.” In re Raborn, 470 F.3d at 1321. It then identifies Robert and Lenore Raborn as “Settlors under the Raborn Farm Trust Agreement dated January 25, 1991” and conveys the farm to Douglas Raborn, not simply as “trustee” or “as trustee,” but “as Trustee under the Raborn Farm Trust Agreement dated January 25, 1991.” Id. The deed then amplifies the limited nature of the conveyance by stating that the trustee is “to have and to hold the said estate with the appurtenances upon the trust and for the uses and purposes herein and in said Trust Agreement set forth.” Id. Moreover, the deed repeatedly refers to the Trust Agreement and acknowledges the Trustee's broad power to deal with the property. Id. Finally, the grantors/settlors signed the deed and swore before a notary public that they “executed said instrument for the purposes therein expressed.” Id. In light of these facts, though no beneficiaries are named and the nature and purpose of the trust is not stated, this deed expresses the grantor's clear intent to deed the Raborn family farm to Douglas Raborn to be held in trust in accordance with the Raborn Farm Trust Agreement dated January 25, 1991.
Accordingly, section 689.07(1) does not operate to declare that this deed conveyed a fee simple estate to the grantee.FN2 Instead, Douglas Raborn holds mere legal title as trustee.
FN2. As noted by the amicus curiae and undisputed by the appellant, this result is consistent with the standard practice in Florida. Florida lawyers and their clients have long understood and relied on the fact that specifically identifying the trust by its name or date in a deed is sufficient to indicate the grantor's intention to convey real property in trust and thus avoid any contrary dictate of section 689.07(1). See Administration of Trusts in Florida, 14.11 (Fla. Bar Cont'ng Legal Educ. 3rd ed.2001).
Notice of new probate related FL opinions: Commentary to follow:
- 5th DCA: Wheeler v. Powers, --- So.2d ----, 2008 WL 160881 (Fla. 5th DCA Jan 18, 2008) (Standing to Revoke Probate)
- 5th DCA: Fernandez-Fox v. Estate Of Lindsay, --- So.2d ----, 2008 WL 160920 (Fla. 5th DCA Jan 18, 2008) (Deadlines to File Independent Actions)
- 2d DCA: In re Estate of McKibbin, --- So.2d ----, 2008 WL 161322 (Fla. 2d DCA Jan 18, 2008) (Powers of Attorney)
3d DCA: Court says YES to order reopening estate
Macier v. Estate of Giamportone, --- So.2d ----, 2008 WL 80199 (Fla. 3d DCA Jan 09, 2008)
Sometimes new assets are discovered after probate proceedings are completed and it becomes necessary to "reopen" an estate. Examples include stocks, bonds, real estate holdings or cash. Finding a new will after an estate is closed is NOT a valid basis for reopening an estate. The controlling statute is F.S. 733.903, which provides as follows:
Sometimes new assets are discovered after probate proceedings are completed and it becomes necessary to "reopen" an estate. Examples include stocks, bonds, real estate holdings or cash. Finding a new will after an estate is closed is NOT a valid basis for reopening an estate. The controlling statute is F.S. 733.903, which provides as follows:
733.903. Subsequent administrationIn the linked-to case the probate court's order reopening an estate was upheld on appeal. The three-paragraph opinion is cryptic, to say the least; but here it is:
The final settlement of an estate and the discharge of the personal representative shall not prevent further administration. The order of discharge may not be revoked based upon the discovery of a will or later will.
Richard Macier and Foreclosure Management Services, Inc. appeal a non-final order of the circuit court, probate division, re-opening the Estate of Bessie Giamportone, Appellee, and denying the appellants' motion to quash service and to dismiss the motion to re-open the Estate. Inasmuch as the probate judge had jurisdiction and the power to re-open the Estate under section 733.903, Florida Statutes (2007), as well as the authority to protect an alleged property interest of the Estate, we affirm.
Macier and Foreclosure Management Services were given the courtesy of notice, based on the personal representative's knowledge of the name and address of their counsel in other litigation among the parties in the civil division of the circuit court. This afforded them the opportunity to be heard, and it also provided them actual notice of the actions taken in the probate court so that they may move to dissolve the injunction entered there.
At this interlocutory point, and with the matter apparently referred for criminal investigation, the probate judge assuredly did not abuse his discretion or disregard any controlling principle of law.
US SCT: Supreme Court rules that general stock picking advice is subject to 2 percent-of-AGI floor but specialized fiduciary advice is fully deductible
Knight v. C.I.R. , --- S.Ct. ----, 2008 WL 140749 (U.S. Jan 16, 2008)
In an opinion that will have significant implications for every estate or trust paying U.S. income taxes, the Supreme Court has just ruled on the level of deductibility Internal Revenue Code Section 67(e)(1) permits for trust investment advisory fees (IAFs). The trustee/taxpayer in this case argued that IAFs are fully deductible before arriving at a trust's taxable income. As I previously reported [click here], this argument lost both at trial and before the Second Circuit.
Unfortunately for the trustee he also lost before the Supreme Court, which ruled in the linked-to opinion that most IAFs are are deductible only to the extent that they exceed 2 percent of a trust's adjusted gross income (AGI), often referred to as the “2 percent-of-AGI floor.”
But the news isn't all bad. Some IAFs remain fully deductible if they can be construed as being uniquely applicable to trusts. Chief Justice Roberts hinted at this reading of the statute during oral arguments, as reported here on law.com:
In an opinion that will have significant implications for every estate or trust paying U.S. income taxes, the Supreme Court has just ruled on the level of deductibility Internal Revenue Code Section 67(e)(1) permits for trust investment advisory fees (IAFs). The trustee/taxpayer in this case argued that IAFs are fully deductible before arriving at a trust's taxable income. As I previously reported [click here], this argument lost both at trial and before the Second Circuit.
Unfortunately for the trustee he also lost before the Supreme Court, which ruled in the linked-to opinion that most IAFs are are deductible only to the extent that they exceed 2 percent of a trust's adjusted gross income (AGI), often referred to as the “2 percent-of-AGI floor.”
But the news isn't all bad. Some IAFs remain fully deductible if they can be construed as being uniquely applicable to trusts. Chief Justice Roberts hinted at this reading of the statute during oral arguments, as reported here on law.com:
Several times during the argument hour, Chief Justice John Roberts brought up the idea of breaking up the costs for investment advice into those representing "general stock picking advice," and those for "specialized fiduciary advice," and only providing an exception for the latter. Justice Antonin Scalia, however, expressed skepticism about whether it would be possible to "slice up" adviser fees.And here's how this approach was expressed in the Court's linked-to opinion (which was written by Chief Justice Roberts):
As the Solicitor General concedes, some trust-related investment advisory fees may be fully deductible “if an investment advisor were to impose a special, additional charge applicable only to its fiduciary accounts.” Brief for Respondent 25. There is nothing in the record, however, to suggest that Warfield charged the Trustee anything extra, or treated the Trust any differently than it would have treated an individual with similar objectives, because of the Trustee's fiduciary obligations. See App. 24-27. It is conceivable, moreover, that a trust may have an unusual investment objective, or may require a specialized balancing of the interests of various parties, such that a reasonable comparison with individual investors would be improper. In such a case, the incremental cost of expert advice beyond what would normally be required for the ordinary taxpayer would not be subject to the 2% floor. Here, however, the Trust has not asserted that its investment objective or its requisite balancing of competing interests was distinctive. Accordingly, we conclude that the investment advisory fees incurred by the Trust are subject to the 2% floor.
Notice of new trust-law related US S.Ct. opinion: Commentary to follow:
- US S.Ct.: Knight v. C.I.R. , --- S.Ct. ----, 2008 WL 140749 (U.S. Jan 16, 2008) (Income tax deductions for trusts and estates)
FL SCT: "The homestead exemption protects not only the debtor, but also the debtor's family and the State"
Chames v. DeMayo, --- So.2d ----, 2007 WL 4440212 (Fla. Dec 20, 2007)
Within the probate context there are two aspects of Florida's constitutional homestead protections that loom large: the debtor protections found in sections 4(a) and (b) of article 10 of the Florida Constitution; and the limitations on devise found in section 4(c) of article 10.
Homestead Debtor Protections:
For probate practitioners this case is important because the Florida Supreme Court clearly defines the public policy reasons for why Florida's constitutional homestead debtor protections are NOT purely personal rights that may be waived by a homeowner like any other constitutional protection. Florida's homestead laws protect not only the homeowner, they also protect the homeowner's family and the State. So no matter what the homeowner/debtor may say, the "State" has a stake in the outcome and will thus limit the homeowner's personal property rights in his or her home to the extent necessary to protect those public interests. That's been the law in Florida for over a hundred years, and in the linked-to opinion the Florida Supreme Court makes clear it sees no reason to change things now.
Here's how the Florida Supreme Court made this point:
Within the probate context there are two aspects of Florida's constitutional homestead protections that loom large: the debtor protections found in sections 4(a) and (b) of article 10 of the Florida Constitution; and the limitations on devise found in section 4(c) of article 10.
Homestead Debtor Protections:
For probate practitioners this case is important because the Florida Supreme Court clearly defines the public policy reasons for why Florida's constitutional homestead debtor protections are NOT purely personal rights that may be waived by a homeowner like any other constitutional protection. Florida's homestead laws protect not only the homeowner, they also protect the homeowner's family and the State. So no matter what the homeowner/debtor may say, the "State" has a stake in the outcome and will thus limit the homeowner's personal property rights in his or her home to the extent necessary to protect those public interests. That's been the law in Florida for over a hundred years, and in the linked-to opinion the Florida Supreme Court makes clear it sees no reason to change things now.
Here's how the Florida Supreme Court made this point:
Chames argues that waiver of the homestead exemption should be permitted because we have permitted waiver of other constitutional rights. This would be the most compelling reason for receding from Carter and Sherbill, for if indeed we have held that other constitutional rights can be waived, it would seem anomalous to prohibit waiver of the homestead exemption. We do not agree, however, that such an inconsistency exists.
It is true that we recently noted that “most personal constitutional rights may be waived.” In re Rule 4-1.5(f)(4)(B), 939 So.2d at 1038; see also In re Shambow's Estate, 153 Fla. 762, 15 So.2d 837, 837 (Fla.1943) (“It is fundamental that constitutional rights which are personal may be waived.”). However, an individual cannot waive a right designed to protect both the individual and the public. See, e.g., Coastal Caisson Drill Co. v. Am. Cas. Co. of Reading, Pa., 523 So.2d 791, 793 (Fla. 2d DCA 1988), approved, 542 So.2d 957 (Fla.1989); Asbury Arms Dev. Corp. v. Fla. Dep't of Bus. Regulations, 456 So.2d 1291, 1293 (Fla. 2d DCA 1984). We have repeatedly recognized that the homestead exemption protects not only the debtor, but also the debtor's family and the State. See Havoco, 790 So.2d at 1020; Snyder, 699 So.2d at 1002; Caggiano, 605 So.2d at 60; Lopez, 531 So.2d at 948; Slatcoff, 76 So.2d at 794; Hill, 84 So. at 192. Therefore, the right to the homestead exemption is not purely personal as some others are.
Homestead Limitations on Devise:
In contrast to Florida's homestead debtor-protection rights, the limitations on the devise of homestead property ARE purely personal in nature, and thus ARE subject to waiver [click here for explanatory examples]. For Florida probate practitioners understanding this distinction is the key to any hope of making sense of Florida's convoluted homestead laws. Here's how the amicus curiae brief of the Real Property Probate & Trust Law Section of the Florida Bar explained the difference between the constitutional homestead protections for general creditor-debtor relationships found in article 10, sections 4 (a) and (b), versus the homestead protections involving the devise of homestead property and other intra-family transactions found in article 10, section 4 (c) of the Florida Constitution:
[S]ections (4) (a) and (b) protect Floridians from general creditors. Section 4 (c), on the other hand, protects the surviving spouse and minor children from having the homestead transferred out from under them without the consent of both spouses.For more background on this case and a link to the underlying 3d DCA opinion click here and here.
Section 4 (c) has nothing to do with protection from general creditors and is manifestly a pure, personal right that is subject to waiver. Similarly, waiver of homestead in agreements between spouses is permissible in the context of nuptial agreements and divorce settlements. See Hartwell v. Blasingame, 584 So. 2d 6 (Fla. 1991); §732.702, Fla. Stat.; Myers v. Lehrer, 671 So. 2d 864, 866 (Fla. 4th DCA 1996)
Sections 4 (a) and (b), on the other hand, when applied to general creditors are mandatory and have precisely expressed exceptions, precluding all others. See Sherbill v. Miller Mfg. Co., 89 So. 2d 28, 31 (Fla. 1956); see also In re Clements, 194 B.R. 923, 925 (M.D.Fla. 1996) (confirming that under the expressio unius est exclusio alterius rule, homestead, in Florida, may not be used to satisfy debts other than those expressly permitted by article X, section 4). To be sure, the purpose of sections 4 (a) and (b) in the context of a general creditor-debtor relationship is to protect each of us from being destitute and, in that regard, might be considered a personal right and waivable. See City of Treasure Island v. Strong, 215 So. 2d 473, 479 (Fla. 1968) (“[I]t is firmly established that such constitutional rights designed solely for the protection of the individual concerned may be lost through waiver.”). But, this homestead protection is also designed to promote the stability and welfare of the state, which would otherwise be burdened as the caregiver for its destitute citizens. See McKean v. Warburton, 919 So. 2d 341, 344 (Fla. 2005); Public Health Trust v. Lopez, 531 So. 2d 946, 948 (Fla. 1988). Because of the state's interest in protecting debtors in the general creditor-debtor relationship, the homestead protection cannot be lost through waiver. See Sherbill v. Miller Mfg. Co., 89 So.2d at 31.
Notice of new trust-law related FL opinion: Commentary to follow:
- FL SCT: Raborn v. Menotte, --- So.2d ----, 2008 WL 90037 (Fla. Jan 10, 2008)
Notice of new probate related FL opinion: Commentary to follow:
- 3d DCA: Macier v. Estate of Giamportone, --- So.2d ----, 2008 WL 80199 (Fla. 3d DCA Jan 09, 2008)
Probate and Trust Litigation Committee Meeting Reports/White Papers
Click here for a PDF copy of the Agenda and related Reports/White Papers for the upcoming meeting of the Florida Bar's Probate & Trust Litigation Committee. These materials are an excellent way to keep up on the latest probate-related developments that could affect you, your firm or your clients. I found the following items to be especially interesting:
New Legislation:
Fiduciary Lawyer-Client Privilege: [ITEM 3]
New F.S. 90.5021 is being proposed to address the attorney-client privilege issues I wrote about here.
Payment of trustee's fees from trust assets: [ITEM 4]
A revision to F.S. 736.0802(10) is being proposed to address the conflict-of-interest issues that come up when a trustee uses trust assets to pay for his legal defense in a breach of trust lawsuit. I recently wrote about this here.
White Papers:
Collateral Attack on the Validity of A Marriage after Death Based Upon Undue Influence: [ITEM 6]
No jury trial in breach of trust action: [ITEM 8]
Questions/comments regarding the meeting and the linked-to materials should be directed to the committee chair: William ("Bill") T. Hennessey.
2d DCA: What to do when competing guardianship petitions are filed in different states
In re Guardianship of Morrison, --- So.2d ----, 2007 WL 4180873 (Fla. 2d DCA Nov 28, 2007)
Inter-state forum shopping in contested guardianship proceedings is a growing problem [click here]. So knowing what to do in a case involving parallel guardianship proceedings in different states with concurrent jurisdiction is useful for Florida probate litigators.
He who hesitates is lost!
In the linked-to case a guardianship proceeding was first commenced in New Jersey by the ward's girlfriend, then a parallel guardianship proceeding was commenced in Florida by his daughter. Both courts had jurisdiction. So the question became: which court should adjudicate the matter, and which should stay its proceeding?
Under Florida law the test is pretty simple: the court that first "exercises its jurisdiction" over the matter gets priority unless there are "special circumstances" justifying a denial of the stay. So when in doubt, file first, ask questions later. This approach is the exact opposite of how I generally do anything as a lawyer, but in this context the side who wins the race to a courthouse with jurisdiction definitely gains an advantage.
In this case the New Jersey action was filed first, that court thus first "exercised" its jurisdiction over the matter, and thus the Florida court should have stayed its proceeding. Here's how the 2d DCA explained the basic rule in Florida, as enunciated by the Florida Supreme Court in Siegel v. Siegel, 575 So.2d 1267 (Fla.1991):
There is (of course) an exception to the general principal-of-priority rule. Court's may deny a motion to stay - even if another court first exercised jurisdiction - if they enter an order containing findings of "special circumstances" justifying a denial of the stay. Here's how the 2d DCA made this point:
Inter-state forum shopping in contested guardianship proceedings is a growing problem [click here]. So knowing what to do in a case involving parallel guardianship proceedings in different states with concurrent jurisdiction is useful for Florida probate litigators.
He who hesitates is lost!
In the linked-to case a guardianship proceeding was first commenced in New Jersey by the ward's girlfriend, then a parallel guardianship proceeding was commenced in Florida by his daughter. Both courts had jurisdiction. So the question became: which court should adjudicate the matter, and which should stay its proceeding?
Under Florida law the test is pretty simple: the court that first "exercises its jurisdiction" over the matter gets priority unless there are "special circumstances" justifying a denial of the stay. So when in doubt, file first, ask questions later. This approach is the exact opposite of how I generally do anything as a lawyer, but in this context the side who wins the race to a courthouse with jurisdiction definitely gains an advantage.
In this case the New Jersey action was filed first, that court thus first "exercised" its jurisdiction over the matter, and thus the Florida court should have stayed its proceeding. Here's how the 2d DCA explained the basic rule in Florida, as enunciated by the Florida Supreme Court in Siegel v. Siegel, 575 So.2d 1267 (Fla.1991):
If courts in different states have concurrent jurisdiction over a matter, then the proper court is determined by either legislation or the principle of comity. Philip J. Padovano, Civil Practice § 1.7 (2007). In this case, there is no legislation governing the subject of concurrent jurisdiction over guardianship proceedings, so the principle of priority governs as a matter of comity.In a concurring opinion, Judge Altenbernd nailed the race-to-the-courthouse aspect of this rule (which is a bad thing), and offered an alternative test that focuses on domicile instead of timing. If you ever lose the courthouse race, this domicile argument may come in handy (especially if you frame it within the context of the "special circumstances" exception discussed below). Here's an excerpt from Judge Altenbernd's concurrence:
In general, where courts within one sovereignty have concurrent jurisdiction, the court which first exercises its jurisdiction acquires exclusive jurisdiction to proceed with that case. This is called the “principle of priority.” Admittedly, this principle is not applicable between sovereign jurisdictions as a matter of duty. As a matter of comity, however, a court of one state may, in its discretion, stay a proceeding pending before it on the grounds that a case involving the same subject matter and parties is pending in the court of another state.
Siegel v. Siegel, 575 So.2d 1267, 1272 (Fla.1991) (quoting Bedingfield v. Bedingfield, 417 So.2d 1047, 1050 (Fla. 4th DCA 1982)). The purpose of applying the principle of priority as a matter of comity is to prevent “unnecessary and duplicitous lawsuits” that “would be oppressive to both parties.” Siegel, 575 So.2d at 1272 (quoting Bedingfield, 417 So.2d at 1050).
I concur in this opinion, but write to explain that I would reverse this case even if the petition for guardianship in Florida had been filed first. The principle of priority can sometimes unreasonably reward the person who wins the race to a courthouse with jurisdiction.Exception to the Rule: "Special Circumstances Justifying Denial of the Stay":
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In a state like Florida that has a large population of older people who are actually domiciled in other states, it would seem prudent to me to encourage trial courts to defer to the state of a ward's domicile even when petitions for guardianship are first filed in Florida.
There is (of course) an exception to the general principal-of-priority rule. Court's may deny a motion to stay - even if another court first exercised jurisdiction - if they enter an order containing findings of "special circumstances" justifying a denial of the stay. Here's how the 2d DCA made this point:
The most common example of such special circumstances is undue delay by the court with priority. See Siegel, 575 So.2d at 1272; Parker v. Estate of Bealer, 890 So.2d 508, 512 (Fla. 4th DCA 2005); Norris, 573 So.2d at 1086. At least one court has found special circumstances in a dissolution action when primary residences, property, business interests, and most of the parties' children were in Florida. See Maraj v. Maraj, 642 So.2d 1103, 1104 (Fla. 4th DCA 1994).
In this case, the Florida court did not make any findings of special circumstances to explain its decision not to apply the principle of priority as a matter of comity. Instead, the court found that the New Jersey judgment on jurisdiction has no impact on the Florida court's jurisdiction over the matter. However, the parties do not dispute that the Florida and New Jersey courts have concurrent jurisdiction. Instead, the question is whether the Florida court abused its discretion in refusing to stay the Florida guardianship proceedings while the New Jersey guardianship proceedings went forward.
Although the Florida court had the discretion to decline to stay the Florida proceedings as a matter of comity, it abused its discretion in doing so absent a finding of special circumstances.
N.Y. Court Suspends Lawyer Accused of Taking Money From Judge's Guardianship Estate Funds
An article written by Anthony Lin of the New York Law Journal entitled N.Y. Court Suspends Lawyer Accused of Taking Money From Judge's Estate underscores the wisdom of building systemic, structural safeguards against malfeasance into ALL guardianship proceedings. In Miami-Dade and Broward counties probate judges require the liquid funds of ALL probate or guardianship estates to be immediately deposited into a "restricted depository account" governed by F.S. 69.031.
Although some grouse about the minor expense and delay caused by a blanket policy requiring restricted depository accounts for ALL estates, those "costs" are far outweighed by the obvious advantage of eliminating the "moral hazards" inherent to attorneys (often solo practitioners) holding estate funds in their own firms' escrow accounts and paying themselves from these funds without having to justify such payments to any third party in advance.
The following excerpts from the linked-to New York Law Journal article prove - again - why systemic, structural safeguards, such as Florida's restricted depository account regime, are a good idea.
Emani P. Taylor has been the subject of disciplinary proceeding over her alleged withdrawal without authorization of $327,100 from accounts of John L. Phillips, a onetime Civil Court judge who was ruled mentally incompetent in 2002. Taylor, who served as Phillips' guardian from 2003 to 2006, has acknowledged withdrawing some money but claims she did so properly to pay both herself and others for services rendered.
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Citing Taylor's lack of cooperation, the court said it would accept as uncontested an accounting prepared by a court-appointed examiner of the period during which Taylor acted as Phillips' guardian. According to this accounting, Taylor wrote $200,000 in checks to herself from guardianship accounts for supposed retainers and legal fees. Another $69,000 was paid to herself or to "cash" for supposed expenses, and another $57,000 was withdrawn in cash.
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"While [Taylor] was entitled to be compensated for the work she performed for three years, self-help to guardianship funds is not the way to proceed," the court said.
The court also said it was "very disturbing" that Taylor had applied to the court for $853,100 in legal fees relating to her guardianship but did not disclose that she had already withdrawn from the guardianship account more than $327,000 for her own use.
