2020 was another busy year on the legislative front. The vehicles for changes to our probate and trust codes were CH/HB 505, CS/HB 1439 and CS/HB 1089. The last bill is an interesting tax measure involving “grantor trusts” that deserves its own stand-alone post. Here’s my summary of the non-tax legislation I found most significant.

[1] Attorneys need signed written consents to write themselves into their client’s wills or trusts as personal representatives or trustees:

In the estate planning world there are two conflict-of-interest scenarios that have the greatest potential for causing the most trouble. The first is writing yourself into your client’s will or trust as a beneficiary. The “gift to lawyer” conflict is explicitly addressed in ethics rule 4-1.8(c), which was codified in 2013 in F.S. 732.806.

The second high-risk conflict scenario is writing yourself into your client’s will or trust as a personal representative (“PR”) or trustee. These can be high paying jobs. And just because you’re serving as PR or trustee doesn’t mean you can’t also bill for your separate work as attorney for the estate. This particular brand of “self dealing” is covered in the commentary to rule 4-1.8, which strongly suggests there’s an ethics violation in the absence of informed consent, confirmed in writing by the client:

This rule does not prohibit a lawyer or a partner or associate of the lawyer from serving as personal representative of the client’s estate or in another potentially lucrative fiduciary position in connection with a client’s estate planning. A lawyer may prepare a document that appoints the lawyer or a person related to the lawyer to a fiduciary office if the client is properly informed, the appointment does not violate rule 4-1.7, the appointment is not the product of undue influence or improper solicitation by the lawyer, and the client gives informed consent, confirmed in writing. In obtaining the client’s informed consent to the conflict, the lawyer should advise the client in writing concerning who is eligible to serve as a fiduciary, that a person who serves as a fiduciary is entitled to compensation, and that the lawyer may be eligible to receive compensation for serving as a fiduciary in addition to any attorney’s fees that the lawyer or the lawyer’s firm may earn for serving as a lawyer for the fiduciary.

My firm’s policy is to avoid serving as PR or trustee for our clients — whenever possible.  There are situations, however, when clients need this assistance. The problem is there are some attorneys who ALWAYS solicit this business and ALWAYS write themselves in as PRs and trustees for their clients, a practice that’s long been a focus of criticism (I wrote about it back in 2006).

We now have a statuary fix. A client’s informed consent, confirmed in writing, is no longer a suggestion, it’s now mandated in new F.S. 733.617(8) for attorneys serving as PRs, and in new F.S. 736.0708(4) for attorneys serving as trustees. Here’s how the Legislative Analysis explains the intended effect of these new statutes:

For these disclosures to be sufficient, the testator must execute a written statement acknowledging that the disclosures were made prior to the will or trust’s execution. The written acknowledgment must be in a separate writing from the will or trust, but it may be annexed to the will or trust. The written acknowledgment may be executed before or after the execution of the will or trust.

The statutes do not affect the validity of the instrument and do not disqualify the named fiduciary from serving. Thus, the attorney can serve without a signed acknowledgment. However, the service will be without compensation to the fiduciary.

And here’s the statutorily-mandated form of “written acknowledgment” for wills in new F.S. 733.617(8) . (The mandated acknowledgment for trusts in new F.S. 736.0708(4) is virtually identical.)

I,   (Name)  , declare that:

I have designated my attorney, an attorney employed in the same law firm as my attorney, or a person related to my attorney as a nominated personal representative in my will or codicil dated   (insert date)  .

Before executing the will or codicil, I was informed that:

1. Subject to certain statutory limitations, most family members, regardless of their residence, and any other individuals who are residents of Florida, including friends and corporate fiduciaries, are eligible to serve as a personal representative.

2. Any person, including an attorney, who serves as a personal representative is entitled to receive reasonable compensation for serving as a personal representative.

3. Compensation payable to the personal representative is in addition to any attorney fees payable to the attorney or the attorney’s firm for legal services rendered to the personal representative.

(Signature)

(Testator)

(Insert date)

[2] Personal representatives and conflict-of-interest transactions:

Personal representatives are fiduciaries, which means they’re subject to all the duties generally applicable to trustees, including the duty to avoid conflicts of interest. The specter of a conflict of interest appears any time a personal representative seeks to sell an estate asset to himself or engage in any other business transaction that could potentially benefit him at the expense of the beneficiaries of the estate.

But what if the personal representative doesn’t want to sell an estate asset to himself or a corporation he owns, but instead plans on selling to some entity owned by his wife (or agent or attorney). Is this one-step-removed work around OK? As a matter of logic, one would assume we’d all agree it’s not. But it’s always easier to simply point to a statute than trying to convince your judge that your “logic” is better than your opponent’s “logic.” Which is why CH/HB 505 amended F.S. 733.610 to explicitly expand the statute’s reach to address all forms of conflicts. The underlined text is what’s new.

Any sale or encumbrance to the personal representative or the personal representative’s spouse, agent, or attorney, or any corporation, other entity, or trust in which the personal representative, or the personal representative’s spouse, agent, or attorney, has a substantial beneficial or ownership interest, or any transaction that is affected by a conflict of interest on the part of the personal representative, is voidable by any interested person except one who has consented after fair disclosure, unless …

[3] Service of “formal notice” does NOT equal personal jurisdiction:

Non-residents can’t be pulled into Florida litigation if they don’t have the kind of “minimum contacts” with this state necessary to satisfy our long-arm statute requirements under F.S. 48.193, and the constitutional due process requirements articulated by our supreme court in Venetian Salami Co. v. Parthenais, 554 So.2d 499 (Fla. 1989). This is basic stuff. And as previously explained by 3d DCA, these jurisdictional rules have always applied in Florida probate proceedings.

Unfortunately, the less than artfully drafted language of 731.301(2) muddied the waters on what should have been an obvious point, leading some to believe “formal notice” is enough to subject non-residents to a Florida court’s personal jurisdiction (it’s not). CH/HB 505 amended 731.301(2), adding the following sentence, hopefully avoiding future confusion on this important jurisdictional issue.

The court does not acquire personal jurisdiction over a person by service of formal notice.

As explained in the bill’s Legislative Analysis, if you want to assert personal jurisdiction over a non-resident litigant, including in contested probate and trust proceedings, formal notice won’t cut it; you have to serve a summons in accordance with all of the requirements of Ch. 48, just like in any other kind of litigation here in Florida.

[4] A “notice of administration” now has to put parties on notice they might forfeit their chance to challenge a trust if they don’t also challenge the settlor’s will:

As explained by the 4th DCA in its Pasquale decision, if a revocable trust is incorporated by reference into the settlor’s pour-over will (which almost always happens), you can’t challenge the validity of the trust without also challenging the validity of the will.

According to the Legislative Analysis, this interplay between will and trust contests, “may confuse a beneficiary as he or she may also receive a trust limitation notice stating there is a six month deadline to object to the trust in addition to a notice of administration stating there is a three month deadline to object to the will.” In an effort to avoid this confusion, CH/HB 505 amended F.S. 733.212 to add the following additional disclosure requirement for probate notices of administration:

(f) That, under certain circumstances and by failing to contest the will, the recipient of the notice of administration may be waiving his or her right to contest the validity of a trust or other writing incorporated by reference into a will.

[5] New tools for very small estates:

We’ve all had those calls from a friend or family member about someone who passed away with a few thousand dollars in a bank account that now needs to be probated. The attorney’s fees for that work can often exceed the value of the account. Well, we now have two new alternatives to formal administration designed specifically for these scenarios.

CS/HB 1439 amended F.S. 655.059(2)(b) (authorizing greater informal disclosure from banks to a decedent’s family) and created new F.S. 735.303 and F.S. 735.304. Here’s how the bill’s Legislative Analysis described the intended effect of these new statutory tools.

The bill amends s. 655.059, F.S., to correct the citation to the Gramm-Leach-Bliley Act and to provide additional exceptions to the general rule that a financial institution’s books and records relating to deposit accounts must be kept confidential by the financial institution. …

The bill creates s. 735.303, F.S., to authorize certain family members of a decedent to present a sworn affidavit to a financial institution in this state and receive up to $1,000 from “qualified accounts”, defined as a depository account or certificate of deposit held by a financial institution in the sole name of the decedent without a pay-on-death or any other survivor designation. The bill does not require a court proceeding, order, or judgment in order for the family member to receive the funds. …

The bill creates s. 735.304, F.S., to provide another form of disposition of personal property without administration for intestate property in small estates. It allows a beneficiary of an intestate decedent to file an affidavit with the court to request distribution of certain assets of the decedent. …