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

Back in 2007 I wrote here about a provocative Florida Bar Journal article [click here] by renowned trusts and estates attorney Jeffrey A. Baskies sounding the alarm on the unfair economic burden borne by widows and widowers receiving life estates in homestead property and the inability of these surviving spouses to use partition actions to remedy their situations. Here's how Mr. Baskies summed up the problem:

Florida’s homestead laws have created a new trap for surviving spouses — the life estate that was designed to protect them has instead trapped them in homes they no longer want and can no longer afford.

This situation has become acute as a result of the convergence of several developments over the past five years. There has been a tremendous increase in property taxes statewide. While many homesteads have benefitted from the “save our homes” cap on ad valorem property taxes, for those that were purchased in the last few years, the base for property taxes may already be inflated. Homeowners’ insurance costs for everyone have increased as much as several hundred percent. For many surviving spouses, there have been special assessments for condo and homeowners’ associations for hurricane damage. For those in single family homes, many have had to pay for significant repairs not covered by insurance. Floridians benefitting from the “save our homes” cap on their property taxes have a generalized fear of moving, because to do so could result in significantly increased taxes as a result of purchasing a new home (even a less expensive one). Finally, as a result of increased property values, many surviving spouses who want to move fear they cannot find a reasonable alternative place to live.

Combined, these factors have created a difficult situation for many Florida residents. But, when coupled with an inability to alter or sell their life interests, many surviving spouses are trapped in their homesteads. If they no longer desire to live in their homes or they can no longer afford to do so, what can they do and where can they go?

Legislators responded to Mr. Baskies' call to action by amending F.S. 732.401 to allow a surviving spouse to opt out of a life estate and instead take a 50% tenancy-in-common interest in the homestead property. As explained in this Legislative White Paper, taking a 50% tenancy-in-common interest in lieu of a life estate can offer significant benefits to surviving spouses. If the surviving spouse is incapacitated, F.S. 744.444(9) has been amended to empower her guardian to make the election for her.

A key provision of this new legislation is the applicable deadline: the election must be made within 6 months after the decedent’s death and during the surviving spouse’s lifetime. Bottom line, the new statute and the Legislative White Paper explaining how it works should be required reading for all Florida probate lawyers.

But What about Post-death Disclaimers of Homestead Rights?

Another way surviving spouses have always been able to opt out of homestead property rights is via a post-death disclaimer. However, there's been conflicting trial-court rulings on exactly what happens as a matter of law when a surviving spouses disclaims his or her homestead-property rights. Here's how the conflcting authority was summarized in this Legislative White Paper:

In reviewing the effect of a spouse's disclaimer of his or her homestead interest, circuit courts have reached conflicting results. See In Re: Estate of Joseph T Ryerson, Jr., No. 93-307 (Fla. 15th Cir. Ct., June 17, 1993), affd, per curiam, No. 93-2074 (Fla. 4th DCA July 20,1994) and In re: Estate of Frances N Janien, 12 Fla. 1. Weekly Supp. 221 (February 28, 2005), Case No. 502004CP000973 (Fla. 15th Cir. Ct., (December 6, 2004), in which the courts held that where homestead was invalidly devised, a post death disclaimer of the surviving spouse's life estate in homestead did not divest the decedent's descendants of their vested remainder interests. At least one other circuit court has reached an opposite result under similar facts and held that the spouse's disclaimer would divest the decedent's descendants of their interests and give effect to the otherwise invalid devise. See In Re: Estate of Harry Sudakoff, No. 91-87 (Fla. 12th Cir. Ct. March 25, 1994), affd, per curiam, No. 94-02102 (Fla. 2d DCA, March 10, 1995). 

New legislation addresses this conflicting authority by codifying the Ryerson approach in new subsection (4) of F.S. 732.401 and new subsection (3) of F.S. 732.4015.

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Magill v. Dresner, --- So.3d ----, 2010 WL 3025111 (Fla. 3d DCA Aug 04, 2010)

Planning for incapacity - not just death - is a cornerstone of modern estate planning. And let's be clear, the type of incapacity most likely to affect any of us is dementia. According to the Alzheimer's Association's 2010 report: 5.3 million people in the US have Alzheimer's, it's the 7th leading cause of death, it's annual cost to our society is 172 billion dollars, and 10.9 million unpaid caregivers bear most of the burden.

What's scary about dementia is that you're vulnerable to the worst forms of abuse and exploitation by your own caregivers. The single most effective way to plan against this risk is choosing the right person - in advance - to be your legal guardian in the event of incapacity. The way you do that under Florida law is by executing a "Declaration Naming Preneed Guardian" in which you make known to the world the one person (or group of persons) you think is best suited to serve as your guardian if at some later date you become incapacitated.

Here's the statutory scheme controlling how these documents work in real life:

• F.S. 744.3045: This is the key statute. It creates a statutory presumption in favor of appointing your designated preneed guardian. This directive's been interpreted as requiring a probate judge to appoint your designated preneed guardian unless there's "substantial, competent evidence" establishing that:
• your designated preneed guardian is disqualified from serving as a matter of law under F.S. 744.309 (e.g., a felony conviction will automatically disqualify you); or
• the court determines under F.S. 744.312 that it's NOT in your best interest to appoint your designated preneed guardian (which is what happened in this case).

Preneed guardianship designations work fine most of the time. The linked-to case above is an example of when things go wrong. Rather than waiting to actually read the ward's Declaration Naming Preneed Guardian, the court simply relied upon a verbal summary of the document provided by counsel for one of the parties (which turned out to be wrong!) and then proceeded to rule on the merits of the case in the absence of "substantial, competent evidence."

The 3d DCA reversed this ruling, ultimately honoring the ward's preneed guardian designation. Nice to know, but not especially helpful to practicing lawyers called upon to actually litigate these cases. What lawyers need to know is what kind of evidence is outcome determinative. Once you know that, you can plan ahead for your next trial. Here's what the 3d DCA had to say about that:

We find that the probate court abused its discretion in appointing Dresner as Shirley's plenary guardian. First, the probate court failed to properly consider the Declaration prior to appointing Dresner. It is undisputed that the Declaration was not filed with the probate court until June 24, 2009, eight days after the hearing on the petition. Therefore, the probate court did not have the Declaration before it when it concluded that the Declaration required all three daughters to act in unison as guardian. Instead, the probate court based its conclusion on representations made by Tew concerning the Declaration as well as other testamentary documents Shirley executed. This was error.

Translation: Representations of counsel aren't evidence, if you don't have the actual Declaration in evidence, your judge shouldn't rule.

Second, contrary to the probate court's belief, the Declaration is clear that it is Shirley's wish that in the event of her incapacitation her three daughters are to serve as her guardian. The probate court did not make a factual finding that any of the daughters was unqualified, unwilling, or unable to serve as guardian. Rather, the probate court based its conclusion on a belief that the Declaration required them to act in unison, and that because one of the sisters, Maureen, was not in agreement with the appellants concerning their mother's living arrangement, she could not appoint all three to serve as guardian. Because the Declaration does not require unanimity among the daughters in order to be appointed or serve as guardian, this conclusion was also erroneous.

Translation: A court can't ignore a person's preneed guardian designation in the absence of a factual finding - based upon substantial, competent evidence - that the designated preneed guardian is "unqualified, unwilling, or unable to serve as guardian."

Finally, there was no evidence that the appointment of the daughters as guardian would not be in Shirley's best interest. The record reveals simply that the appellants and Maureen are in disagreement concerning one aspect of their mother's life-her living arrangement. As already explained, the Declaration does not require that they be in agreement on all aspects of their mother's life or care. Because Dresner and Nguyen agreed with Maureen's proposal for her mother's living arrangement and the probate court ultimately appointed Dresner as plenary guardian, the probate court's ruling has the effect of allowing the minority of the designated preneed guardians to control the majority. This result, however, is contrary to the plain language of the Declaration, which clearly allows for decisions concerning guardianship matters to be made by majority rule rather than minority. Additionally, the probate court's finding that Shirley's assets will “dissipate very quickly” because the appellants and Maureen cannot agree on this one aspect of their mother's life has no basis in fact in the record.

Translation: A court can't ignore a person's preneed guardian designation in the absence of a factual finding - based upon substantial, competent evidence - that appointing the designated preneed guardian would NOT be in the ward's "best interests."

For the above reasons, the record lacks substantial competent evidence to overcome the statutory presumption that the designated preneed guardians, as set forth in Shirley's Declaration, are entitled to serve as her plenary guardian. Accordingly, we reverse the order on appeal appointing Dresner the plenary guardian and reverse with directions to the probate court to appoint all three daughters, the appellants and Maureen, as the plenary guardian of their mother, Shirley.

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