Johnson v. Townsend, — So.3d —- 2018 WL 5291297 (Fla. 4th DCA October 24, 2018)
Florida remains the largest recipient of state-to-state migration in the US, and the top choice among retirees. A percentage of those transplants are going to be married couples that moved to Florida directly from a community property state or may have lived in a community property state at some time during their marriage. How big a percentage? Bigger than you might think.
There are nine community property states in the US, including our two most populous states: California and Texas. Additionally, Alaska is an elective community property state, and of the five inhabited US territories, Puerto Rico and Guam are community property jurisdictions. That’s a lot of people. But it doesn’t end there.
You also need to keep in mind that married couples moving to Florida from foreign civil law jurisdictions (think all of Latin America) usually bring along with them some kind of community property rights. For an excellent article discussing those issues you’ll want to read Transnational Probate and Estates: Procedural Strategy in Light of Latin American Law and Practices.
Florida Uniform Disposition of Community Property Rights at Death Act (FUDCRPDA)
OK, so even if community property is common, why should we care? Because when one of those community property transplants dies in Florida, the surviving spouse’s testamentary community property rights don’t go away, they’re preserved by the Florida Uniform Disposition of Community Property Rights at Death Act (“FUDCRPDA”) (see F.S. sections 732.216 to 732.228); Florida’s version of the Uniform Disposition of Community Property Rights at Death Act (which has been adopted in 17 states).
For more on FUDCRPDA and how it’s supposed to work, you’ll want to read Playing Both Sides of the Florida Community Property Street?, by Richard Warner, one of the smartest probate practitioners and most provocative commentators in Florida.
But here’s the problem: because Florida isn’t a community property state, community property is an issue most Florida probate attorneys never think about, which means it might be a while before anyone gets around to looking into whether a surviving spouse has any community property rights worth filing a FUDCRPDA claim to preserve. Does this lack of awareness matter? Yes. Why? Because community property claims in Florida probate proceedings are forfeited if they’re not made before the statutory filing deadline. So what’s the filing deadline? According to the 4th DCA, it’s sooner than you might think.
Case Study: Texas + Florida = FUDCPRDA Claim
The linked-to case above involves a married couple that moved to Florida from Texas (a community property state). When husband died in January 2015, he was survived by his wife and children from a prior marriage. In March 2015 the decedent’s will was admitted to probate and his wife was appointed personal representative. In September 2017 (two years and eight-and-a-half months after the decedent’s death), surviving spouse filed a FUDCPRDA claim, described as follows by the 4th DCA:
The wife’s petition, filed pursuant to sections 732.216–.228, Florida Statutes (2015) (known as the “Florida Uniform Disposition of Community Property Rights at Death Act”) sought to confirm and effectuate her vested 50% community property interest in an investment asset acquired and titled in the decedent’s name while the decedent and the wife were domiciled in Texas, a community property state. See § 732.219, Fla. Stat. (2015) (“Upon the death of a married person, one-half of the property to which ss. 732.216–732.228 apply is the property of the surviving spouse and is not subject to testamentary disposition by the decedent or distribution under the laws of succession of this state.”).
The decedent’s daughters objected, claiming wife’s FUDCPRDA claim was time barred. So what’s the deadline for filing a community property claim? Good question; FUDCPRDA doesn’t tell us, you need to look elsewhere.
If a surviving spouse is going to make an elective share claim, F.S. 732.2135(1) tells us exactly what the deadline is for filing that kind of claim. By contrast, FUDCPRDA doesn’t have any explicit filing deadlines. Wife argued there are none (which makes sense if she was simply perfecting existing property rights to non-estate assets she already owned). Daughters argued wife’s community property claim is a form of creditor claim, so the filing deadlines for probate creditor claims apply (which makes sense if we view a FUDCPRDA claim as creating new property rights to estate assets owned by the decedent).
Is a surviving spouse’s community-property claim subject to the filing deadlines for probate “creditor” claims? YES
Daughters won the definitional argument: community property claims = creditor claims: creditor deadlines apply.
[W]e agree with the daughters’ argument that the wife’s petition to determine her community property interest is a “claim” as that term is defined in section 731.201(4). Section 731.201(4) defines a “claim” as
a liability of the decedent, whether arising in contract, tort, or otherwise, and funeral expense. The term does not include an expense of administration or estate, inheritance, succession, or other death taxes.
(emphasis added). The wife’s community property interest is “a liability of the decedent.” Although the decedent’s possession of the community property in his name may have created a resulting trust, see [Quintana v. Ordono, 195 So.2d 577, 580 (Fla. 3d DCA 1967)] (“A resulting trust is generally found to exist in transactions affecting community property in noncommunity property states where a husband buys property in his own name.”), upon the decedent’s death, his estate became liable to the wife for her community property interest. Thus, upon the decedent’s death, the wife’s community property interest was a claim which the wife had to pursue.
And once the daughters won the definitional argument, the outcome was inevitable: wife’s claim was time barred:
Upon the decedent’s death, the wife had the ability to perfect her community property interest by seeking an order of the probate court pursuant to section 732.223. Because the wife’s community property interest was a “claim” as defined in section 731.201(4), the wife had three months after the time she published the notice to creditors to file her claim according to section 733.702(1), and in any event had two years after the decedent’s death to file her claim according to section 733.710(1). The wife did neither. As a result, the circuit court properly found that the wife’s untimely claim (in the form of her petition) was barred, and that no exception to the statutory deadlines existed. Ruling otherwise would have left no deadline by which the wife had to file a petition to perfect her community property interest, contrary to section 733.710(1).
So what are testamentary community property rights in Florida?
The only way to make sense of how the 4th DCA ruled in this case is to think of a FUDCPRDA claim as a form of testamentary marital right that’s forfeited if not pursued (like an elective share claim), not an adjudication of existing property rights to non-estate assets surviving spouse already owns. The 4th DCA crystallized the competing property rights views animating this case by granting wife’s motion to certify to the Florida Supreme Court the following question of great public importance:
We deny appellant’s motion for rehearing and/or rehearing en banc. However, we grant appellant’s motion to certify to the Florida Supreme Court the following question of great public importance:
Whether a surviving spouse’s vested community property rights are part of the deceased spouse’s probate estate making them subject to the estate’s claims procedures, or are fully owned by the surviving spouse and therefore not subject to the estate’s claims procedures.
As explained in the petitioner’s jurisdictional brief filed with the Florida Supreme Court, this is a matter of “great public importance” the court will hopefully agree to address.
FUDCPRDA Claim + Probate Creditor Deadlines = Trap for the unwary:
The ultra-short filing deadlines for creditor claims are intentionally designed to cut off potential claimants as soon as possible, which means you need to be thinking about them from day one. The “notice to creditors” mandated by F.S. 733.2121 makes sure everyone is acutely aware of these deadlines. And when it comes to marital rights, like elective share claims, the applicable statutes again give us explicit filing deadlines. FUDCPRDA doesn’t explicitly set a filing deadline, you need to infer it from the limitations periods applicable to “creditor” claims. This is a huge trap for the unwary. You’ve been warned …