Sheets v. Palmer, 2005 WL 3403620 (Fla. 1st DCA Dec 14, 2005)
In this case the parties settled a will contest by executing a settlement agreement that provided, in part, that the party challenging the will would
“receive a $38,500.00 credit from the Estate as a specific bequest made to him under the terms of the . . . [w]ill.”
Apparently when the settlement agreement was signed the parties did not address if this “bequest” would bear any of the taxes and administrative expenses of the estate. Well, they should have. The residuary assets of the estate were insufficient to cover these expenses. As such, the personal representative said the $38,500.00 specific bequest would have to bear a proportionate share of these expenses. The will-challenger said NO, arguing the parties never intended that result. Duval County Judge James L. Harrison agreed.
The First DCA said not so fast, holding as follows:
- In the absence of specific language in the will voiding the statutory apportionment scheme, a probate court does NOT have the discretionary authority to relieve a specific bequest of its obligation to bear a proportionate share of estate taxes and administrative expenses, thus warranting reversal of this portion of the probate court’s order. 2004->Ch0733->Section%20817#0733.817″>F.S. §§ 733.817(5)(a)1. and 2004->Ch0733->Section%20805#0733.805″>733.805(1)(d).
- A probate court DOES have the discretionary authority to direct from what part of the estate attorneys’ fees and costs shall be paid, thus these items could be allocated away from the settlement bequest. 2004->Ch0733->Section%20106#0733.106″>F.S. § 733.106(4).
- A probate court DOES have the discretionary authority to direct from what part of the estate interest and penalties on estate taxes shall be paid, thus these items could be allocated away from the settlement bequest. 2004->Ch0733->Section%20817#0733.817″>F.S. § 733.817(5)(g).
It can be incredibly frustrating to find yourself in litigation after apparently settling a case in mediation. However, as this case makes clear, carefully drafting the settlement agreement is just as important as negotiating the underlying deal. If the parties had explicitly addressed in the settlement agreement whether or not the $38,500.00 specific bequest would have to bear a proportionate share of the estate’s taxes and expenses, the acrimony, expense and delay associated with this post mediation litigation might have been avoided.