In terms of legislation, the big news for 2016 was Florida’s adoption of the Revised Uniform Fiduciary Access to Digital Assets Act, which I wrote about here. But that’s not all that happened in 2016. There was also an interesting legislative tweak involving cremated ashes and probate proceeding tucked into a funeral-home industry bill, which I wrote about here.
And last but not least there’s Senate Bill No. 540, the vehicle used to pass the remaining legislative changes that should be of interest to most probate lawyers. As usual, the bill’s legislative Staff Analysis is a good place to start if you’re trying to figure out what it’s intended goals are. See here, here. Here’s my take on what happened in this bill.
Florida real estate = Florida law:
“No choice-of-law rule has earlier vintage, or greater longevity, than the rule that issues directly pertaining to real property are governed by the law of the situs of the property. The situs rule as applied in Florida dates back to the nineteenth century and has been reaffirmed by courts throughout the twentieth century.” Michael S. Finch, Choice-of-law and Property, 26 Stetson L. Rev. 257 (1996). Well, this old rule’s being codified in new F.S. 731.1055, which provides as follows:
The validity and effect of a disposition, whether intestate or testate, of real property in this state shall be determined by Florida law.
For more on the backstory to this legislation you’ll want to read Governing Law For Dispositions Of Florida Real Property By Non-Resident Decedents by Naples attorney Patrick F. Mize.
Elective share claims: they’re floors, not ceilings:
Most probate lawyers (including me) thought our existing elective-share statute was clear. If a surviving spouse files an elective share claim, she’s not giving up any property rights under the decedent’s Will. In other words, an elective share claim sets a floor, not a ceiling, on the amount of assets a surviving spouse should receive from an estate. Here’s the backstory on this very important point:
“Under the prior elective share laws, election by the surviving spouse effectively terminated all right to inherit under the will of the deceased spouse or to participate in distribution of intestate property. After payment of the elective share, the remaining assets were distributed as though the electing spouse had predeceased the decedent. F.S. 732.211 (1998). This is not the case under the current statutes. In 2001, the legislature amended F.S. 732.2105 to delete the language which provided that, after the election, ‘the balance of the elective estate … shall be administered as though the surviving spouse had predeceased the decedent.’ See F.S. 732.2105 (2001); Staff Analysis for HB 137, Council for Smarter Government (April 3, 2001). Accordingly, under the current elective share laws, the effect of an election is to simply set a floor on the amount the spouse receives from the decedent’s assets.”
See PPC Florida Bar Continuing Legal Education Materials 7-1, ELECTIVE SHARE.
Well, apparently what’s clear to a bunch of probate lawyers isn’t always so clear to your friendly neighborhood probate judge. So F.S. 732.201 was amended to add a new sentence hopefully making it even clearer that filing an elective share claim sets a floor, not a ceiling, on the amount of assets a surviving spouse should receive from an estate. In other words, filing an elective share claim doesn’t mean you’re forfeiting your rights under an otherwise valid Will, or that you’re in some way challenging/electing “against” an otherwise valid Will, or that you’re in any other way giving up any other rights you may have as a surviving spouse. The new text is italicized:
The surviving spouse of a person who dies domiciled in Florida has the right to a share of the elective estate of the decedent as provided in this part, to be designated the elective share. The election does not reduce what the spouse receives if the election were not made and the spouse is not treated as having predeceased the decedent.
Attorney’s fees in breach of trust cases:
Payment of trustee attorneys’ fees when defending breach-of-trust claims has been a hot topic for years (see here, here). The rules covering this scenario are found in F.S. 736.0802(10), which was last overhauled in 2008 (see here).
But a trustee’s attorney’s fees are always a flashpoint in trust litigation, which means this statute gets tested all the time. And over the last few years it’s become clear the 2008 changes didn’t go far enough. Here’s an excerpt from this Florida Bar white paper, summarizing the problems lawyers and judges trying to implement the statute have encountered over the last few years:
“[T]he current statute lacks clarity, and thus fails to provide direction to lawyers and the court, with respect to a number of issues.
- It lacks clarity regarding the circumstances under which the limitations imposed by the statute are triggered.
- It lacks clarity regarding which categories of attorney’s fees and costs are subject to the limitations.
- It lacks clarity regarding the circumstances under which the trustee must serve notice of an intention to pay attorney’s fees and costs from trust assets and the consequences, if any, of paying such attorney’s fees and costs from trust assets prior to serving notice.
- It literally and unconditionally mandates that qualified beneficiaries seek a court order to prohibit a trustee from using trust assets to pay attorney’s fees and costs even when a trustee has no intention of doing so.
- It lacks clarity regarding whether a trustee may use trust assets to pay its attorney’s fees and costs upon a final determination in its favor by the trial court or whether the trustee must wait until a final determination by the appellate court.
- And it lacks clarity regarding what type of showing is required to preclude a trustee from using trust assets to pay its attorney’s fees and costs, and regarding the type of evidence that may be used to make or to rebut such a showing.”
This year’s overhaul of F.S. 736.0802(10) is supposed to fix all of these problems. We’ll see. Regardless, if you’re a practitioner you’ll want to hold on to this list. A lot of really smart people put a lot of time and energy into compiling it. So it’s the best roadmap available for all of the possible pitfalls you might encounter as you work your way through this challenging statute. Even if the 2016 changes don’t accomplish everything they’re intended to do, you at least know what to be on the lookout for.
And if you’re a litigator one change should be of particular interest. A trial court can block a trustee’s access to trust funds to pay his lawyers if “it finds a reasonable basis to conclude that there has been a breach of trust.” Now keep in mind all of this happens pre-trial. So what kind of “evidence” is a trial judge supposed to rely on? Previously, the answer to that question wasn’t clear. The statute’s been amended to now provide as follows:
The movant may show that such reasonable basis exists, and the trustee may rebut any such showing by presenting affidavits, answers to interrogatories, admissions, depositions, and any evidence otherwise admissible under the Florida Evidence Code.
In other words, according to the Florida Bar’s white paper, “the categories of evidence permitted are ‘summary judgment evidence’ (as defined in Florida Rule of Civil Procedure 1.510(c))” as well as “live witness testimony.” Sounds like a trial to me.
For more on navigating your way through this complicated statutory maze you’ll want to read Paying A Trustee’s Attorney’s Fees In Breach Of Trust Actions by Boca Raton attorneys Matthew Triggs and Jonathan A. Galler.