In Florida a couple’s marital property rights are based on the common law’s “separate property” regime. According to the IRS, the “theory underlying common law is that each spouse is a separate individual with separate legal and property rights.”
There’s a competing marital-property-rights regime known as “community property” that, as reported by the IRS, has been adopted by nine U.S. states (including California and Texas, our two most populous states). These nine community-property states have a combined population of over a hundred million people, or about 30% of the entire U.S. population. And that’s not counting Puerto Rico, the largest U.S. territory, which is also a community property jurisdiction.
That’s a lot of people; many of whom are going to retire — and ultimately die — in Florida (the nation’s perennial number one retirement destination). Anytime a married couple moves to Florida from any of these community-property jurisdictions they bring with them all of their testamentary rights in property that was community property prior to their change of domicile (as well as in property substituted therefor). That’s why these property rights matter to Florida probate practitioners.
The theory underlying community property is analogous to that of a partnership. In Commissioner v. Chase Manhattan Bank, the court summarized the origins and basic principles of the community property system in a case originating in Texas (a community-property jurisdiction):
The community property system comes from the custom of the women of the Visigoths and other Germanic tribes sharing the fighting and the spoils of war with their men; it owes its strength to the civilized view that marriage is a full partnership. Husband and wife are equal partners. Each has a present, vested half interest in all community property. All property accumulated during marriage is community property, unless it is received by gift, devise, or inheritance. … Thus, on death or divorce the community is divided equally. Neither spouse has testamentary disposition over the other’s half of the community. The wife has complete testamentary disposition over her half and may leave it even to her paramour.
Why should Florida probate attorneys care about community property rights?
A couple’s pre-existing community-property rights are statutorily preserved when they move to this state by the Florida Uniform Disposition of Community Property Rights at Death Act (“FUDCPRDA”). That’s Florida’s version of the Uniform Disposition of Community Property Rights at Death Act, which was superseded by the new Uniform Community Property Disposition at Death Act (“UCPDDA”).
So does any of this conflicts-of-law theory matter in real life? Oh yeah, just ask the Johnson v. Townsend litigants. As demonstrated in that case, even though these “imported” marital property rights can dramatically reshape the ultimate disposition of a Florida probate estate they’re often overlooked by local practitioners who generally lack the training and experience necessary to spot these non-Florida community-property issues … until it’s too late.
The new Uniform Community Property Disposition at Death Act (UCPDDA)
OK, so as Florida practitioners we can’t ignore the possibility of non-Florida community-property rights upending our Florida probate proceedings. And we know FUDCPRDA is intended to make sure we don’t fall into that trap. But is FUDCPRDA still up to the task? That act’s based on a uniform law promulgated in 1971. That’s over 50 years ago. Nixon was president in 1971. A lot’s changed since then, including the “nonprobate revolution”, which transformed the trusts-and-estates world.
Enter the new and improved UCPDDA, promulgated in 2021. According to the Uniform Law Commission (ULC) we all need to run out and adopt this new uniform act for the following reasons:
- The UCPDDA protects property rights for married couples. The United States has two different systems of property law. Nine states and two U.S. territories treat all property acquired by a married couple during their marriage as community property – the remaining states do not. The UCPDDA ensures spouses will retain their rights in community property even if they relocate to a non-community property state.
- The UCPDDA prevents unnecessary litigation. If the legal status of a married couple’s property is unclear at the time the first spouse dies, disputes between potential recipients can arise. The UCPDDA clarifies the status of property with a set of default rules that apply unless the couple made other arrangements in their estate plan. Clear rules lead to fewer disputes and help preserve court resources.
- The UCPDDA modernizes the law. The increased popularity of nonprobate transfers and the recognition of same-sex marriage have made obsolete many older statutes in non-community property states governing the disposition of community property. The UCPDDA addresses these issues in a manner consistent with modern estate planning practices.
- The UCPDDA is flexible. Every couple’s situation is different. The UCPDDA allows married couples to make their own plans for property distribution by deferring to valid pre-marital and post-marital agreements between spouses. The UCPDDA’s default rules apply only if the couple has not made their own arrangements.
- The UCPDDA is more necessary than ever. In our increasingly mobile world, many couples live in multiple states over the course of their marriage. Therefore, these couples will often acquire a mix of community property and non-community property, complicating the distribution to heirs when one spouse dies. The UCPDDA provides clear and effective rules that will prevent distributions of property to persons who are not entitled to receive it.
Florida Uniform Disposition of Community Property Rights at Death Act: Time for an Update?
The ULC pitch sounds reasonable in theory, but does it hold up to the kind of real-world scrutiny required to vet any new uniform act before it’s adopted as law and let loose on the populace? To answer that question we need experienced and thoughtful practitioners who are willing to both volunteer their expertise and engage in the kind of rigorous, intellectual work needed to do that job. Enter Anthony Guettler and Patrick Lannon, two of the smartest estate planners I know.
Anthony and Patrick recently published Florida Uniform Disposition of Community Property Rights at Death Act: Time for an Update? This article is a must read for anyone dealing with a community-property issue, be it as planner or litigator. Why? Because you can’t really understand this body of law without considering why we got to where we are now and how the law is evolving (or should evolve) to meet tomorrow’s challenges. Anthony and Patrick’s article does that. Here’s an excerpt:
Immigration into Florida from other states and countries continues apace, and Florida property continues to be an attractive investment opportunity for outsiders. As attorneys rush to help the recent arrivals and outside investors adjust to our legal landscape, it is a worthwhile effort to consider how Florida law may be modernized and expanded to accommodate the legal baggage that these immigrants and investors bring with them. The need for review and modernization is particularly relevant in the often-overlooked area of marital property rights. …
In 1992, Florida adopted the Florida Uniform Disposition of Community Property Rights at Death Act (“FUDCPRDA”). This Act, which has seen only minor revisions since its passage, offers some much-needed guidance regarding division upon death of community property assets. … In 2021, the National Conference of Commissioners on Uniform State Laws promulgated a new and improved Uniform Community Property Disposition at Death Act (“UCPDDA”). UCPDDA offers an expanded roadmap for treatment of community property and provides guidance on questions, which are currently unclear under Florida law. …
Community property rights will likely never fit comfortably within Florida’s separate property marital property regime, and FUDCPRDA contains only guidance for Florida advisors. UCPDDA offers great insight into ways that Florida law could be expanded and modernized. A thorough review and at least a partial adoption of UCPDDA will likely provide great comfort to Floridians who have immigrated from community property jurisdictions, community property investors, and attorneys advising with respect to community property.