Estate of Shefner v. Shefner-Holden, — So.2d —-, 2009 WL 322153 (Fla. 3d DCA Feb 11, 2009)
When is probate litigation a compensable “service” to the estate?
There were two issues at play in the linked-to opinion. One was whether the PR’s were entitled to payment of their attorneys fees after successfully defending against a claim that F.S. 732.802 (Florida’s Slayer Statute) precluded them from inheriting under their father’s will because they assisted in his suicide. (By the way, I previously wrote here about a similar assisted-suicide/Slayer Statute case out of Wisconsin . . . the plaintiffs lost that one too.)
As is always the case in this type of fee dispute, the question was whether this litigation “rendered services” to the estate [click here]. According to the 3d DCA the answer was . . . yes. Here’s why:
In probate matters, section 733.106, Florida Statutes (2003), controls the question of attorney’s fees. Subsection (3) states: “Any attorney who has rendered services to an estate may be awarded reasonable compensation from the estate.” An attorney may render services to an estate by: (1) bringing about an enhancement in value or an increase in estate assets, or (2) actions which establish and effectuate the decedent’s testamentary intent. See, e.g., Estate of Brock v. Brock, 695 So.2d 714 (Fla. 1st DCA 1996); Segal v. Levine, 489 So.2d 868 (Fla. 3d DCA 1986); In re Estate of Lewis, 442 So.2d 290 (Fla. 4th DCA 1983).
. . . . .
[A]s a result of Deborah and Frank’s defense of the Slayer Statute claim, the terms of the decedent’s will were upheld. Thus, under section 733.106(3), Deborah and Frank are entitled to reimbursement of the attorney’s fees and expenses for defending the claim. We, therefore, reverse the order denying attorney’s fees.
But can you dip into the homestead sales proceeds to pay the lawyers?
The second issue decided by the 3d DCA was whether the following clause in the decedent’s will was the equivalent of a direction that the homestead property be sold and distributed to his heirs (thus stripping the sales proceeds of their creditor-protected status) or a devise of homestead property that was subsequently sold (thus preserving the creditor-protected status of the sales proceeds):
“I give my son, FRANK SHEFNER, JR. my house at 3420 SW 2nd Street, Miami, Florida. If and when the house is sold by my son, he will divide the proceeds equally among my children. My son is not to be forced to sell the house against his will.”
According to the 3d DCA, this was a devise of homestead property, so when Frank subsequently sold the house and split the proceeds with his siblings, the funds retained their creditor-protected status and were thus NOT subject to court ordered payment of probate-related attorneys fees.
It is well settled that homestead property devised to an heir is protected from forced sale to pay creditors’ claims of the decedent and administrative expenses of the estate under Article X, Section 4 of Florida’s Constitution. See, e.g., Pub. Health Trust of Dade County v. Lopez, 531 So.2d 946 (Fla.1988); Engelke v. Engelke, 921 So.2d 693 (Fla. 4th DCA 2006); Thompson v. Laney, 766 So.2d 1087 (Fla. 3d DCA 2000). Heirs are those persons entitled to receive property under the laws of intestacy. §§ 731.201(18), 732.103(1), Fla. Stat. (2003); Snyder v. Davis, 699 So.2d 999, 1003 (Fla.1997). Thus, when devised to a qualified heir, decedent’s homestead property is not distributed as part of the decedent’s estate, and passes directly to the designated heir. See McKean v. Warburton, 919 So.2d 341, 347 (Fla.2005); Estate of Hamel v. Parker, 821 So.2d 1276, 1280 (Fla. 2d DCA 2002).
The heir’s sale of the property, after the decedent’s death, does not change the legal consequences of the bequest from the decedent to the heir. After the decedent’s death, the heir has legal ownership of the property, and he or she may sell it without regard to decedent’s creditors or administrative expenses. See Thompson, 766 So.2d at 1088 (concluding that heir, to whom decedent’s residence was devised, “was entitled to sell the homestead property … and keep the proceeds of the sale); Estate of Tudhope v. Rudkin, 595 So.2d 312 (Fla. 2d DCA 1992) (holding that proceeds derived from sale of decedent’s homestead property directly devised to decedent’s minor children could not be reached by decedent’s creditors).
When a testator directs that his or her homestead be sold and the proceeds distributed to devisees, the property loses its constitutional protection. In such cases, the decedent is devising money, not homestead property, and the proceeds may be subject to the claims of decedent’s creditors and administrative expenses. Knadle v. Estate of Knadle, 686 So.2d 631, 632 (Fla. 1st DCA 1996) (finding that because decedent specifically directed that her homestead be sold and distributed as part of her residue estate, proceeds became subject to the claim of decedent’s creditor); Elmowitz v. Estate of Zimmerman, 647 So.2d 1064, 1065 (Fla. 3d DCA 1994) (stating that homestead property devised to trust in favor of decedent’s sister and two sons “lost its homestead status and became merely another asset of the trust”).
Here, Frank is a qualified heir, and the decedent’s will directed that Frank not be forced to sell the house. Therefore, the homestead property passed directly to Frank, and never became a part of decedent’s probate estate. Because the property was not a part of decedent’s probate estate, the trial court properly concluded that the proceeds from the subsequent sale of the property could not be used to pay creditors’ claims or administrative expenses of the estate.