Ebanks v. Ebanks, — So.3d —-, 2016 WL 358867 (Fla. 2d DCA January 29, 2016)
International divorces that morph into multi-national probate proceedings can be especially challenging. Even if you’re litigating your case in Florida, the law governing your dispute is often multi-jurisdictional. Which means basic assumptions we all take for granted as Florida lawyers can be traps for the unwary.
Prime example: Florida’s patchwork system for automatically severing certain inheritance rights post divorce.
If a divorcing couple jointly owns a house or other real estate in Florida as husband and wife (i.e., as tenants by the entireties), that joint property interest is automatically severed and becomes tenants in common property without survivorship rights upon divorce (see F.S. 689.15) (which means each ex-spouse inherits half at death, no one gets it all); or if your divorcing client doesn’t get around to rewriting his or her will or revocable trust, no problem, ex-spouses are automatically cut out of each other’s estate planning documents (see F.S. 732.507(2) and F.S. 736.1105); and what about beneficiary designation forms for ex-spouses? We’ve got a statutory fix for that one too (see here).
This is all basic stuff for Florida lawyers, and therein lies the trap. It’s really easy to assume (unconsciously) that these rules are universal; they’re not. None of this post-divorce law is relevant if the property at issue isn’t governed by Florida law, which is always the case when you’re talking about real estate located in another jurisdiction. And that’s exactly what happened in the Ebanks case linked-to above.
In this case a married couple (Arthur and Diane Ebanks) owned valuable waterfront property in the Cayman Islands as joint tenants with rights of survivorship. In Florida this would have been tenants by the entireties property. Not so in the Cayman Islands; that form of joint ownership simply doesn’t exist under Cayman Islands law.
When the couple divorced they entered into a marital settlement agreement that contemplated a sale of the Cayman Islands property, but according to the 2d DCA, the “Ebankses’ marital settlement agreement did not address what would happen to the Cayman Islands properties if one of them predeceased the other. Nor did the dissolution judgment speak to this issue.”
So what happened when Arthur died and the property hadn’t been sold? Diane got it all. And did any of Florida’s post-divorce savings statutes save the day? Nope, so saith the 2d DCA:
By operation of Florida statute, a tenancy by the entireties becomes a tenancy in common upon the divorce of the owners. § 689.15, Fla. Stat. (2012); Davis v. Dieujuste, 496 So.2d 806, 809 (Fla.1986). The statute makes no such provision in the case of joint tenancies with rights of survivorship. Of course, there being no ownership by the entireties in the Cayman Islands, that country has no law dissolving an entireties estate upon the owners’ divorce.
Thus, under . . . Cayman Islands law, the three disputed parcels became Diana’s sole property when Arthur died. Accordingly, after Arthur’s death Diana filed with the registrar of lands in the Cayman Islands the required documentation . . . to reflect that ownership of the properties was now vested in Diana alone.
Could this outcome have been avoided by agreement or a little post-divorce cleanup work? Yes. All Arthur and Diane had to do was change the way they held title to the Cayman Islands property post divorce, which is easy to do at nominal cost.
Significantly, neither the final judgment nor the settlement agreement required the Ebankses to alter the tenancy in which the properties were held from a joint proprietorship to a proprietorship in common, nor did any evidence establish that either of them ever contemplated doing so. Cf. Crawford v. Barker, 64 So.3d 1246, 1257 (Fla.2011) (noting that when a marital settlement agreement does not mandate a party to change the beneficiary of an asset, the original designated beneficiary is entitled to the property). This easily could have been accomplished simply by filing form RL 18, at a cost of approximately $60.97 U.S. per property.
Lesson learned? International divorce/probate is a team sport:
There are two big takeaways from this case. First, if you’re a divorce lawyer and the couple owns property internationally, do yourself and your clients a favor: always assume someone’s going to die before your marital settlement agreement’s fully satisfied . . . and plan accordingly.
Second, no matter how smart you think you are, you can’t do it all. If your Florida divorce or probate proceeding somehow involves an issue driven by the property law of some foreign jurisdiction (an increasingly common occurrence), your team’s going to need to include international counsel. The incremental expense is usually well worth the cost savings in the long run (as this case demonstrates).
And if you’re looking for an easy way to meet top international lawyers (and just about anyone else who makes a living working with international private clients), your best bet is to join your nearest STEP branch. I’ve been a member of the STEP Miami Branch for some time. If you have any interest whatsoever in international trusts and estates matters, STEP is where you want to be.