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This is the second installment of the 2021 legislative update. It covers a broad range of bread and butter statutory changes that could have a big impact on our day-to-day practice, but may not get the kind of publicity and notice they otherwise deserve.

Part 1 covers two major new additions to our Trust Code intended to bolster Florida’s competitiveness in the high stakes trust business marketplace. And part 3 covers a suite of interrelated new statutory changes intended to protect senior citizens from exploitation as well as reporting on Florida’s distinction as the first state in the nation to adopt an “eldercaring coordination” law.

[1] Attorneys need to provide prior written notice if they intend on charging a fee based on the probate statutory fee schedule.

If there’s anyone out there that still believes the Probate Code’s attorney’s fee statute (F.S. 733.6171) or its Trust-Code equivalent (F.S. 736.1007) establishes a fee that’s “set” or otherwise “blessed” by Florida law, 2021 is the year that finally puts that myth to rest. At my firm we’ve never relied on the statutory fee schedule (we bill hourly) and on more than one occasion I’ve seen it abused, including this noteworthy example.

And apparently I’m not the only one that’s not a big fan of statutory fees schedules. Earlier this year Sen. Aaron Bean, R-Jacksonville, proposed legislation that would have completely eliminated the statutory fee schedule. As reported by the Florida Bar News in Bill would end guidelines on estate administration attorney fees:

“Is it appropriate to put prices at all in statute? I say no,” Bean said. “Where there is no prescribed fee, there is a public negotiation and the consumer benefits as they are able to negotiate such a fee….

“To those attorneys who do this type of work, they’re going to have a conversation with their prospective client that says, ‘You don’t have to pick me and the fee is not prescribed in law.’”

“You’re trying to create a market approach to fees that are not tied to a percentage or value of an estate?” asked Sen. Darryl Rouson, D-St. Petersburg.

“That was our initial mission, to take that out,” Bean replied. “I’ve now come to the realization we don’t need to put fees in at all. Let the consumer negotiate the fees.”

This effort ran into stiff opposition from the Bar’s Real Property, Probate and Trust Law Section. The final compromise bill kept the fee schedule in the statute, but it’s now only applicable if the attorney provides prior written disclosures making clear that the fee schedule’s not mandatory, that the PR or trustee doesn’t have to hire the same attorney who drafted the will or trust, and that the client’s entitled to a detailed hourly billing summary even if the fee schedule’s going to be used.

Here’s the new disclosure requirement for personal representatives (contained in F.S. 733.6171), there’s a similar new notice provision for trustees in F.S. 736.1007.

(b) An attorney representing a personal representative in an estate administration who intends to charge a fee based upon the schedule set forth in subsection (3) shall make the following disclosures in writing to the personal representative:

1. There is not a mandatory statutory attorney fee for estate administration.
2. The attorney fee is not required to be based on the size of the estate, and the presumed reasonable fee provided in subsection (3) may not be appropriate in all estate administrations.
3. The fee is subject to negotiation between the personal representative and the attorney.
4. The selection of the attorney is made at the discretion of the personal representative, who is not required to select the attorney who prepared the will.
5. The personal representative shall be entitled to a summary of ordinary and extraordinary services rendered for the fees agreed upon at the conclusion of the representation. The summary shall be provided by counsel and shall consist of the total hours devoted to the representation or a detailed summary of the services performed during the representation.
(c) The attorney shall obtain the personal representative’s timely signature acknowledging the disclosures.
(d) If the attorney does not make the disclosures required by this section, the attorney may not be paid for legal services without prior court approval of the fees or the written consent of all interested parties.

[2] Does Florida’s post-divorce automatic revocation rule for Wills and Trusts apply to fiancés? It does now.

In 1951 Florida added a provision to its Probate Code automatically cutting divorced spouses out of each others’ wills (F.S. 732.507(2)). In 1989 a similar provision was added to our Trust Code (F.S. 736.1105(2)). And in 2012 the post-divorce automatic revocation rule was extended to non-probate transfers, such as pay-on-death payments from life insurance policies, annuities, employee benefit plans, and IRAs (F.S. 732.703).

All three statutes were intended to address the same problem. But there was a glitch. As originally enacted, the older post-divorce revocation rules for Wills and Trusts only applied if the marriage predated the operative document. In other words, if you included your fiancé in your will, then married her, then divorced her, the rule didn’t apply, as the parties learned the hard way in the Gordon v. Fishman case. The more recent post-divorce revocation rule for non-probate transfers didn’t have this loophole.

The older revocation rules for Wills and Trusts have now been amended to track the newer non-probate transfers rule. All three now apply regardless of whether the operative document was signed before or after the marriage. Here’s how amended F.S. 732.507(2) now reads (a similar change was made to F.S. 736.1105(2)):

Any provision of a will that affects the testator’s spouse is void upon dissolution of the marriage of the testator and the spouse, whether the marriage occurred before or after the execution of such will. Upon dissolution of marriage, the will shall be construed as if the spouse died at the time of the dissolution of marriage.

[3] Are restricted depository accounts required in all probate proceedings? Not anymore.

In some Florida counties there’s a blanket policy requiring the deposit of all liquid assets in a restricted depository account. Here’s the problem with those policies: under F.S. 69.031 a restricted depository account is  meant to be an extraordinary remedy used on a case-by-case basis, as recently explained in Goodstein v. Goodstein, 263 So.3d 78, 80 (Fla. 4th DCA 2019):

According to section 69.031(1):

When it is expedient in the judgment of any court having jurisdiction of any estate in process of administration by any guardian, curator, executor, administrator, trustee, receiver, or other officer, because the size of the bond required of the officer is burdensome or for other cause, the court may order part or all of the personal assets of the estate placed with a bank, trust company, or savings and loan association … designated by the court ….

(Emphasis added).

The emphasized language makes it clear and unambiguous that a blanket policy providing for a depository to be used in all probate cases is improper.

F.S. 69.031 has now been amended by adding the following sentence to require the court, in situations where a restricted depository account’s been ordered, to vacate or terminate its order if the estate’s personal representative posts and maintains a bond for the value of the estate’s assets or in some other reasonable amount determined by the court.

Notwithstanding the foregoing, in probate proceedings and in accordance with s. 733.402, the court shall allow the officer at any time to elect to post and maintain bond for the value of the personal property, or such other reasonable amount determined by the court, whereupon the court shall vacate or terminate any order establishing the depository.

[4] Benefit of 6-month limitations period extended to trust directors and a trustee’s directors, officers, and employees.

Under F.S. 736.1008 a trustee can shorten the limitations period for a breach of trust claim to only 6 months “with respect to a matter that was adequately disclosed in a trust disclosure document” (think: trust accounting). This is a big deal.

The limitations period for a breach of trust action is usually 4 years. F.S. 736.1008 doesn’t explicitly say you have 4 years to sue (that would be too easy), instead it gets you to a 4-year limitations period by cross referencing to “the applicable limitations period provided in chapter 95.” Because a breach of trust is a form of intentional tort, the applicable limitations period is found in F.S. 95.11(3)(o), which is 4 years.

Now back to the new legislation. F.S. 736.1008‘s been amended to extend the benefits of the shortened 6-month limitations period to trust directors acting under our new Uniform Directed Trust Act and also to a corporate trustee’s directors, officers, and employees. The trust-director change is accomplished by adding the words “trust director” after every reference to a trustee, and the second change was accomplished by adding the following new sentence to the statute:

(7) Any claim barred against a trustee or trust director under this section is also barred against the directors, officers, and employees acting for the trustee or trust director.

[5] Homestead property and revocable trusts.

The Legislative Staff Analysis does a great job of explaining this year’s homestead statutory changes. The following is drawn almost exclusively from that source.

Although there is reasonable legal certainty about the rights of creditors and a decedent’s family when homestead property is devised by a will, there’s less certainty when homestead property’s devised by a revocable trust. Florida law is clear that the constitutional restrictions on the devise of homestead property apply to homestead property held in a revocable trust. However, it is unclear whether the protection from forced sale carries over to the property owner’s heirs when the heirs inherit the property through a revocable trust.

In particular, there is uncertainty as to the homestead exemption’s application to the trustee’s right to sell real property subject to the trust’s terms and pay valid claims against the decedent’s estate out of trust assets.

Florida courts attempting to address this uncertainty have reached opposite results. In Elmowitz v. Estate of Zimmerman, 647 So.2d 1064 (Fla. 3d DCA 1994), the 3d DCA held that the devise of homestead property through a revocable trust’s residuary clause caused the homestead exemption to be lost, and thus to not pass to the trust’s beneficiaries; however, a footnote indicates that had the property been specifically devised under the revocable trust the exemption may have passed to the beneficiary. In HCA Gulf Coast Hospital v. Estate of Downing, 594 So.2d 774 (Fla. 1st DCA 1992), the 1st DCA looked to the devise’s substance, rather than its form, to find that the homestead exemption for property devised through a trust for the benefit of the decedent’s adult daughter passed to the daughter, as she would have otherwise been entitled to claim homestead protection had title passed to her by will or intestacy. Similarly, in Engelke v. Engelke, 921 So.2d 693 (Fla. 4th DCA 2006), the 4th DCA found that a settlor’s interest in homestead property held in a revocable trust was constitutionally protected homestead which could not be used to pay the estate’s claims and expenses.

Two legislative changes were made this year to address all this uncertainty:

The first change is procedural. F.S. 736.0201 was amended to authorize a proceeding to determine the homestead status of real property owned by a trust to be filed in the probate proceeding for the settlor’s estate if the settlor was treated as the owner of the interest held in the trust under F.S. 732.4015, with such a proceeding to be governed by the Florida Probate Rules.

The second change is substantive. New F.S. 736.1109 was created to provide that, for a revocable or testamentary trust:

  • If a devise of homestead property under a trust violates the homestead devise limitations in article X, section 4(c) of the Florida Constitution, title shall pass as provided under F.S. 732.401 at the moment of death. In other words, immediately upon the decedent’s death, title to the homestead property will pass to the decedent’s heirs, not the trustee, and the heirs that receive the property will be determined according to a slightly modified version of the intestate rules of succession. Thus, if there is no surviving descendant of the decedent, the decedent’s spouse receives the entire intestate estate, but if the decedent is survived by a spouse and at least one descendant, the surviving spouse takes a life estate in the homestead, with a vested remainder to the descendants in being at the time of the decedent’s death.
  • A power of sale or general direction to pay debts, expenses, and claims within the trust instrument does not subject an interest in protected homestead property to the claims of a decedent’s creditors, administration expenses, or obligations of a decedent’s estate.
  • If a trust directs the sale of property that would otherwise qualify as protected homestead, and the property is not subject to the constitutional limitations on the devise of homestead, title will remain vested in the trustee and subject to the trust’s provisions.

My sources:

With the exception of the attorney’s fee-schedule amendments, all of the legislation covered in this post was contained in HB 609, and explained in the bill’s corresponding Legislative Staff Analysis. The fee schedule change was contained in HB 625, and explained in the bill’s corresponding Legislative Staff Analysis. These are all good resources for anyone wanting to do a deeper dive into any of the legislation discussed above.