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It’s not uncommon for a trusts and estates litigator to wake up the morning after reaching a settlement wondering if she or he overlooked a significant tax issue. Why? Because virtually every action taken in this kind of case, from the drafting of the complaint to the settling of the lawsuit has some kind of transfer tax or income tax ramification. These tax issues can be significant, but are often a secondary focus for the parties and attorneys involved. That’s a mistake.

For example, assume you have a case in which the decedent’s estate is subject to estate tax, and you negotiated a settlement in which your clients receive $3 million from the estate based on the decedent’s contract to make a will that’s enforceable under F.S. 732.701. Depending on how that claim is framed, either your clients are going to receive their money income-tax free under the exception for gifts and inheritances found in IRC 102, or the estate’s going to receive an estate-tax deduction under IRC 2053 for “claims against the estate.” Either way, the top marginal tax rate is going to be 40% or close to it, which means how this $3 million payment is treated for tax purposes may translate into one side or the other getting a tax bill of over $1 million or a tax deduction of over $1 million. So yeah, the stakes are high.

Is the settlement subject to income tax?

From an income-tax perspective, the test for determining if your clients are going to pay income tax on their settlement payment is the “origin of the claim” doctrine. If you represent the claimants and you want to make sure they get their money tax free, you need to draft your complaint with this tax issue in mind. As explained in Tax Issues When Settling a Trust or Estate Dispute: A Guide for the Litigator:

The “origin of the claim” doctrine requires that tax consequences be based upon the facts presented. The IRS has explained that the initial pleading is the most persuasive evidence of the tax treatment of an amount subsequently recovered by way of settlement. Therefore, in preparing the initial pleading, the attorney should rely on the strongest theory under state law that supports the client’s claim and achieves favorable tax results.

Is the settlement deductible for estate tax purposes?

From an estate-tax perspective, whether your estate’s going to receive a deduction for a settlement payment is usually governed by the “claims against the estate” test found in IRC 2053. If the settlement arises out of a claim based on the decedent’s contractual obligation to leave an inheritance, getting a tax deduction is far from certain.

The case everyone used to rely on in this scenario is Estate of Kosow v. Commissioner, 45 F.3d 1524 (11th Cir. 1995), in which the court held that a contract to leave property to a particular person pursuant to a divorce settlement can cause the entire balance of the decedent’s estate to be deductible for transfer tax purposes as long as the consideration for the promise to ultimately leave property to that person was full and adequate compared to the property rights given away pursuant to the contract. The problem with Kosow is that it involved an usual set of facts that may not provide much guidance for future tax payers. As explained in this wide-ranging article summarizing all of the potential tax traps lurking underneath even the simplest estate litigation settlement agreement:

Kosow arose in an unusual setting. In that case, the executor of the estate subject to the divorce obligation was able to establish, many years after the divorce, the nature and extent of the property rights relinquished, their relative value to the inheritance rights established years earlier, and, therefore, the likelihood of full and adequate consideration for the agreed bequest occurring many years later. While that theoretical possibility usually exists in marital settlement cases, it would be a mistake to conclude that any such promise, particularly when made in favor of a third-party beneficiary who is a natural object of the decedent’s bounty, will always support a claim that effectively causes the promisor’s estate to be exempt from estate tax. Moreover, while not raised in Kosow, where one party agrees to accept a lesser amount in a divorce in exchange for a promise by the other party to leave property to children or others, the party accepting less will presumably have made a gift of the forgone amount (or of the value of the future gift) to the children or other persons at the time of the divorce. See, e.g., Rev. Rul. 79-363, 1979-2 CB 345.

Kosow was decided almost thirty years ago. We now have a new case to dissect when trying to unravel this tax knot. It’s the Spizzirri case, and the news is not good for those hoping for a repeat of the tax deduction allowed in Kosow.

Case Study

Estate of Spizzirri v. Commissioner of Internal Revenue, — F.4th —-, 2025 WL 1419545 (11th Cir. May 16, 2025)

This case involved a $3 million payment made to the decedent’s stepchildren pursuant to the terms of a marital agreement he entered into with his spouse. The stepchildren filed claims against the estate seeking this payment, and based on that claim the estate paid them and deducted the payment under IRC 2053 as a “claim” against the estate. The IRS denied the deduction and the tax issue was litigated. Underscoring the you-can’t-have-it-both-ways nature of this tax issue, the 11th Circuit went out of its way to note — twice! — that there was no evidence that the claimants paid income tax on the payment.

The estate did not call any of Spizzirri’s stepchildren as witnesses, nor did it introduce any evidence that they had reported the payments as taxable income. … The estate also failed to call the stepchildren as witnesses though it could have asked them whether they reported the payments as income.

In other words, if this payment was a valid claim against the estate that’s deductible for estate tax purposes, then someone should have paid income tax on it. If no one paid income taxes that fact is going to weigh heavily against an estate tax deduction. You can’t have it both ways.

Is a contractually required inheritance payment deductible for estate tax purposes? NO

Against this backdrop, the 11th Circuit made short work of the estate’s claimed tax deduction, noting that all five factors listed in the Treasury Regulations for cases involving inheritance payments made pursuant to contracts involving “family” transfers weighed against allowing the claimed tax deduction. So sayeth the 11th Circuit:

The “bona fide” requirement in section 2053(c)(1)(A) bars a deduction for a claim “to the extent it is founded on a transfer that is essentially donative in character (a mere cloak for a gift or bequest).” Treas. Reg. § 20.2053-1(b)(2)(i) (2009). In transactions between family members, “a testator is mo[re] likely to be making a bequest … than repaying a real contractual obligation.” Huntington, 16 F.3d at 466. So we “subject [those transactions] to particular scrutiny, even when they apparently are supported by monetary consideration.” Id. Because Spizzirri’s stepchildren were “lineal descendants of … [his] spouse,” we apply the same “particular scrutiny” to the estate’s payments to the stepchildren that we do to transactions between family members. See Treas. Reg. § 20.2053-1(b)(2)(iii)(A) (defining “[f]amily members” as including the “spouse of the decedent” and “lineal descendants” of “the decedent’s spouse”).

To guide our evaluation of intrafamily transfers, the Treasury Regulations list five factors that suggest a transfer was contracted bona fide. Id. § 20.2053-1(b)(2)(ii). First, “[t]he transaction underlying the claim … occurs in the ordinary course of business, is negotiated at arm’s length, and is free from donative intent.” Id. § 20.2053-1(b)(2)(ii)(A). Second, the claim “is not related to an expectation or claim of inheritance.” Id. § 20.2053-1(b)(2)(ii)(B). Third, the claim “originates pursuant to an agreement between the decedent and the family member.” Id. § 20.2053-1(b)(2)(ii)(C). Fourth, “[p]erformance by the claimant” stems from “an agreement between the decedent and the family member.” Id. § 20.2053-1(b)(2)(ii)(D). Fifth, “[a]ll amounts paid in satisfaction or settlement of a claim or expense are reported by each party for Federal income and employment tax purposes … in a manner that is consistent with the reported nature of the claim or expense.” Id. § 20.2053-1(b)(2)(ii)(E).

Each factor weighs against finding that the payments to Spizzirri’s stepchildren were contracted bona fide.

What’s the takeaway?

If you’re involved in a case based on a contract claim for an inheritance payment, you need to keep in mind that just because this is a creditor “claim” subject to Florida’s ultra-short limitations periods for probate creditor claims, doesn’t mean it’s also a “claim” for federal estate-tax deduction purposes under IRC 2053. This distinction between the definition of the word “claim” for state probate law purposes and the definition of same word for federal tax law purposes is a huge trap for the unwary. Don’t fall victim to this trap. Forewarned is forearmed. And there’s no better case for teasing out these state-vs-federal law distinctions then the 11th Circuit’s opinion in Spizzirri. This case is a must read for trusts and estates litigators.

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One of the big selling points for settling disputes is finality: you may not have gotten everything you wanted, but at least it’s over. The value of finality is especially high in the technically demanding and emotionally charged world of inheritance litigation. But to deliver on that promise you need to consider the special rules governing settlement agreements between beneficiaries and their fiduciaries. These rules tell us how to both conduct these negotiations and then draft these agreements to make sure they’re not undone.

Fiduciary settlement agreements

The general rule is that litigants deal with each other at arm’s length when settling disputes, so a settlement agreement can’t be invalidated because one side misleads the other or makes false representations during a mediation conference.

Not so when one side’s a personal representative or trustee and the other’s a beneficiary. In those cases the fact that a litigant owes fiduciary duties to another — even while being sued — changes everything. For example, if your client’s a trustee negotiating a settlement with a beneficiary, the burden is on you to make sure [1] your beneficiary has full knowledge of all material facts related to the deal and [2] that the deal’s “fair and reasonable” (from the beneficiary’s point of view).

What about fraudulent inducement claims?

Fraud in the inducement occurs when a person tricks another into signing an agreement to one’s disadvantage by using fraudulent statements and representations. A beneficiary that’s fraudulently induced to sign a settlement agreement can ask a court to void it, sending everyone back to court. Settlement agreements involving personal representatives or trustees are especially vulnerable to getting voided (rescinded) on fraudulent inducement grounds because a beneficiary is legally entitled to rely on the good faith of his or her fiduciary. To make sure your settlement agreement survives this line of attack you need to do two things.

First, start with the obvious: make sure no one’s fraudulently inducing anyone to do anything. Here are the elements of a fraudulent inducement claim as explained in an excellent Florida Bar Journal article entitled The ELR and Fraudulent Inducement Claims:

Fraud in the inducement requires proof of: 1) a false statement of material fact; 2) that the defendant knew or should have known was false; 3) that was made to induce the plaintiff to enter into a contract; and 4) that proximately caused injury to the plaintiff when acting in reliance on the misrepresentation.

Second, make sure your agreement includes a clause expressly waiving fraud as a ground for rescission of the agreement. In other words, as the personal representative in the Udell case learned, if your beneficiary wants out of her or his settlement agreement, a general all purpose global release clause won’t cut it; your contract also has to include a specific fraud waiver.

Case Study

Udell v. Udell, 397 So.3d 1050 (Fla. 4th DCA November 27, 2024)

This case involved a trust that was funded with the proceeds of a wrongful-death claim. The wrongful-death claim was settled by the decedent’s personal representative. This personal representative is also the trustee of a life-time trust for the estate’s sole beneficiary. The beneficiary of the estate and trust grew dissatisfied with the settlement, so he hired an attorney to secure additional funds from the trust. Those negotiations resulted in a settlement agreement between the trustee and the beneficiary.

Eight months later the parties were back in court. The beneficiary alleged that he’d been defrauded based upon the trustee’s failure to disclose material facts related to their deal. The trustee cried foul, pointing to the waiver contained in the agreement signed by the beneficiary — negotiated with the aid of separate independent counsel. Generally speaking this defense should have worked. In this case it didn’t: because of the trustee’s fiduciary duties.

How to conduct these negotiations

First, if the trustee didn’t fully disclose all of the related material facts, as alleged by the beneficiary, he’s breached his fiduciary duties, which means he’s guilty of fraud on this basis alone. So saith the 4th DCA:

Further, “[i]n any transaction with a beneficiary, a fiduciary has an obligation to make full disclosure to the beneficiary of all material facts.” First Union Nat’l Bank v. Turney, 824 So. 2d 172, 188 (Fla. 1st DCA 2001). Breaches of this duty of disclosure have been held to be fraud. Id. at 188–89 (citing Donahue v. Davis, 68 So. 2d 163, 171 (Fla. 1953)).

This rule informs how you need to conduct these negotiations. Think: full disclosure and objective fairness.

How to draft these agreements

Second, the absence of an express waiver of fraud in the agreement means the beneficiary is free to litigate this claim. In other words, no matter how broad the agreement’s general waiver clause might be, if it doesn’t contain these magic words you’re going to be dragged back into court. So saith the 4th DCA:

“[O]ur supreme court has spoken clearly that no contract provision can preclude rescission on the basis of fraud in the inducement unless the contract provision explicitly states that fraud is not a ground for rescission.” Mantilla v. Fabian, 284 So. 3d 575, 575 (Fla. 4th DCA 2019) (per curiam) (alteration in original) (quoting Lower Fees, Inc. v. Bankrate, Inc., 74 So. 3d 517, 520 (Fla. 4th DCA 2011)). If a party “want[s] to contractually avoid a fraud claim, it should [ ] specifically state[ ] that in the contract[.]” Lower Fees, Inc., 74 So. 3d at 520. “Though a party may waive any right to which he is legally entitled, [including a right] secured by contract … such a proposition does not apply where there is an allegation of fraud.” D & M Jupiter, Inc. v. Friedopfer, 853 So. 2d 485, 488 (Fla. 4th DCA 2003). Applying this law to the Private Agreement and the waivers in the estate before it, all signed by appellant, none contained a specific release or waiver for fraud.

This rule informs how you need to draft these agreements. Think: contract provision explicitly stating that fraud is not a ground for rescission.

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In 2022 the Florida Rules of Appellate Procedure changed to allow district courts of appeal to review orders granting or denying leave to amend to add a claim for punitive damages by interlocutory appeal. That rule change has triggered a flood of appellate decisions clarifying the pleading and evidentiary requirements necessary to claim punitive damages in all sorts of cases, including cases against trustees for breach of fiduciary duty.

When can you claim punitive damages?

If you’re looking for a quick primer on the procedural rules underlying claims for punitive damages, I recommend an excellent article by Kimberly Berman and Gabrielle Wright entitled Where Are We Now? Punitive Damages Claims in Fla. 2 Years Post-Interlocutory Review Rule Change. Here’s an excerpt:

To pursue a claim for punitive damages, litigants must comply with the pleading requirements set forth in Florida Rule of Civil Procedure 1.190(a) and (f) and Section 768.72, Florida Statutes. Rule 1.190(a) requires litigants to obtain court approval before amending a claim to request punitive damages.

Rule 1.090(f) provides that a motion for leave to amend a pleading to assert a claim for punitive damages shall make a reasonable showing, by evidence in the record or evidence to be proffered by the claimant, that provides a reasonable basis for recovery of such damages. The motion to amend can be filed separately and before the supporting evidence or proffer, but each shall be served on all parties at least 20 days before the hearing.

Section 768.72(1) provides that no claim for punitive damages shall be permitted unless there is a reasonable showing by evidence in the record or proffered by the claimant, which would provide a reasonable basis for recovery of such damages. Subsection 2 further provides that a defendant may be held liable for punitive damages only if the trier of fact, based on clear and convincing evidence, finds that the defendant was personally guilty of intentional misconduct or gross negligence.

Does a trustee’s breach of fiduciary duty — without evidence of fraud or malice — warrant punitive damages? NO

Wells Fargo Bank, N.A. v. Gopher, 397 So.3d 1033 (Fla. 4th DCA October 30, 2024)

In this case the trial court found a reasonable basis for the plaintiffs to recover punitive damages based on Wells Fargo allegedly breaching its fiduciary duties and charging more than $7 million in unauthorized and undisclosed fees while acting as a trustee. Even assuming this claim is true, a breach of fiduciary duty isn’t enough to warrant punitive damages. The plaintiff needs to also proffer evidence of fraud, malice, or other misconduct by the trustee. That didn’t happen here, so no punitives for you! So saith the 4th DCA:

Wells Fargo allegedly violated its fiduciary duties by charging fees not properly disclosed on a fee schedule. However, a breach of a fiduciary duty, alone, does not create an automatic right to plead punitive damages. Rather, the plaintiff also must proffer evidence of fraud, malice, or other misconduct that would justify punitive damages. See Air Ambulance Pros., Inc. v. Thin Air, 809 So. 2d 28, 31 (Fla. 4th DCA 2002) (reversing punitive damage award because, although the jury found a breach of a fiduciary duty, the plaintiff did not present any evidence of fraud, malice, or other culpable misconduct). Here, the plaintiffs did not proffer any such evidence.

Similarly, the plaintiff did not proffer any evidence that any “managing agent” of Wells Fargo participated in or condoned the improper charging of the fee. Napleton’s N. Palm Auto Park, Inc. v. Agosto, 364 So. 3d 1103, 1106–07 (Fla. 4th DCA 2023). As a result, the plaintiffs did not proffer a reasonable evidentiary basis to find employer or corporate liability for punitive damages. § 768.72(3), Fla. Stat. (2023).

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If you make your living in and around our probate courts you’ll want to understand the pressures our state court judges are subject to, which are mostly driven by the volume of cases they juggle with a fraction of the resources available to our better funded federal courts. And to get a sense of that volume, you’ll want to read the annual statistical guide for trial courts published by Florida’s Office of the State Courts Administrator (OSCA).

But first some context. According to the FY 2023-24 Probate Court Statistical Reference Guide, probate court filings peaked in FY 21/22, and have trended downward since then. Not sure why that’s happening, but it’s worth noting.

And according to the FY 2023-24 Statistical Reference Guide, over 1 in 5 of all circuit court filings in Florida still happen in one of our probate courts. That’s a lot of work for probate practitioners. Perhaps not surprisingly, the Real Property, Probate and Trust Law Section is the largest section of The Florida Bar.

By the way, the level of familiarity our probate judges have with the different types of cases they deal with is also important to consider, as reported in the FY 2023-24 Probate Court Statistical Reference Guide. For example, it may come as a surprise to many “trusts and estates” practitioners to learn that only a little over half (52.5%) of probate court filings actually fall under the “probate” category, and that for many probate judges trust cases will seem like exotic creatures, representing only half of one percent (0.5%) of overall probate court filings across the state.

How busy are our probate judges?

This chart is my creation. The goal is to get a sense of how busy our probate judges are by taking the “cases filed” data reported in the FY 2023-24 Probate Court Statistical Reference Guide for three of Florida’s largest circuits/counties — (Miami-Dade (11th Cir), Broward (17th Cir), and Palm Beach (15th Cir) — and dividing those figures by the total number of dedicated probate judges for each of these circuits reported in the FY 2023-24 Overall Statistics.

Miami-Dade (11th Cir)Broward (17th Cir)Palm Beach (15th Cir)
Probate5,0434,521 5,117 
Baker Act4,421 3,9922,058 
Substance Abuse1,157948 716 
Other Social Cases1,815374 229
Guardianship868612  589
Trusts40 52129 
Total 13,34410,499 8,838 
Probate Judges4.83.02.0
Total/Judge2,7803,4994,419

What’s it all mean?

In Miami-Dade – on average – each probate judge took on 2,780 new cases in FY 2023-24, while in Broward the average was higher at 3,499/judge, and in Palm Beach it was the highest at 4,419/judge. Keep in mind these figures don’t take into account each probate judge’s existing case load or other administrative duties. These caseload figures may be appropriate for uncontested proceedings, but when it comes to that small % of contested estate matters that are litigated these numbers (confirmed by personal experience) make two points glaringly clear to me.

First, as planners we should “privatize” the dispute resolution process

We aren’t doing our jobs as planners if we don’t anticipate — and plan accordingly for — the structural limitations inherent to an overworked and underfunded public court system. One important aspect of that kind of planning should be opting out of the public dispute-resolution system (our courts) and into a private dispute-resolution mechanism (arbitration) whenever possible. And how do you do that? Include mandatory arbitration clauses in all of your wills and trusts. These clauses are enforceable by statute in Florida. I’m a big fan of this approach (see here, here, here, here).

Sample clauses are often the best way to understand in concrete terms how a general concept gets applied in the real world. Two of the Florida attorneys instrumental in passage of Florida’s statute expressly authorizing arbitration clauses in wills and trusts, Bruce M. Stone and Robert W. Goldman, also co-authored a 2005 ACTEC article providing sample arbitration clauses entitled Resolving Disputes with Ease and Grace. And here’s an excerpt from this article that echoes my thoughts on why an overworked and underfunded public court system weighs in favor of private arbitration:

What is now a choice to agree to arbitrate or to require arbitration may become a practical necessity. To have this vision, one need only look to one’s own jurisdiction and the yearly budget disputes between governors and their legislatures as they make difficult spending choices. The “third branch of government” is not an uncommon target. Within that debate, social and political considerations mandate that our leaders use their limited resources to fund criminal, juvenile, and family justice long before they reach estates and trusts. As judicial resources dwindle or shift to a more pressing use, it is apodictic that already slothful judicial resolutions of trust and estate litigation will slow even further.

Second, as litigators we should anticipate the “cold judge” factor

We aren’t doing our jobs as litigators if we don’t anticipate — and plan accordingly for — the “cold judge” factor; which needs to be weighed heavily every time you ask a court system designed to handle uncontested proceedings on a mass-production basis to adjudicate a complex dispute or basically rule on any technically demanding issue that can’t be disposed of in the few minutes allotted to the average court hearing. And how do you plan for the “cold judge” factor? Read Persuading a Cold Judge. Here’s an excerpt:

Begin at the beginning. In every court appearance, there are six basic queries to answer for a judge:

  1. Who are you?
  2. Who is with you, and whom are you representing?
  3. What is the controversy, in one sentence?
  4. Why are you here today?
  5. What outcome or relief do you want?
  6. Why should you get it?

This last query is most often forgotten. Indeed, these six essential queries are a good beginning even when you are dealing with a warm judge. Consider putting them on a PowerPoint slide, a handout in the form of an “executive summary,” or a demonstrative exhibit to project through Elmo or other presentation technology.

A judge in a suburban district told me that the one thing I could do to assist his judging was to begin succinctly by telling him what was before the court, remind him of the nature of the case, and tell him what action I wanted the court to take and why I thought I had the right to that action. Once I did this for him, he would be ready to listen to my argument. This particular judge told me that he has so many cases that he can’t read the motions before the hearing, and if he has read them, it was so long ago that he couldn’t recall what he’d read. He has no legal assistant to write memos for him; he does his own legal research, and if you cited more than 10 cases for him to read, he couldn’t do it. He likes being a judge and wants to do the best job he can, but he is forced to come into hearings and trials cold. So, help him be the good judge he wants to be and the quality of his decisions will be your reward.

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Dan Seigel is an experienced trusts and estates litigator who just published an article in the Florida Bar Journal entitled Creative Strategies for Defending Cases Involving Tortious Interference With Inheritance Expectation Claims. Dan’s article is a must read for practitioners. It’s both thorough on the legal theories underlying these cases and practically focused on converting those abstract concepts into concrete tools litigators can use in real life. Good stuff, highly recommended. Here’s an excerpt:

Over the last few years, an increasing number of cases have been filed in which plaintiffs assert a claim for tortious interference with inheritance expectation (TI) to recover assets that are not distributed under the operative will or revocable trust. This upward trend does not appear to be waning. The reasons for the proliferation of such claims include, but are not limited to, the ability to potentially expedite tort claims (which effectively bypass the estate or trust administration), minimize the number of necessary parties to the litigation, and obtain the right to a jury trial. These factors often have the effect of increasing the settlement value of a plaintiffs case.

TI is a relatively new tort, and few cases have actually made it to a jury trial. Thus, little case law exists with respect to many of these issues. For example, few cases analyze whether a judge must resolve equitable claims when a plaintiff requests a jury trial seeking monetary damages arising from the same facts as the equitable claims.

Unlike cases involving equitable claims, cases involving TI claims present opportunities for motions and other creative strategies. This article discusses several strategies that a defense practitioner should consider pursuing during the pendency of these cases.

…

Invariably, a plaintiff will attempt to increase the value of the TI claim by: 1) having a jury adjudicate equitable claims that are traditionally determined by a judge; 2) having the issue of damages adjudicated simultaneously with liability; and 3) introducing inflammatory and arguably irrelevant evidence in front of jurors. The attorney defending a TI claim should utilize all available motion practice and litigation strategies to ensure that the defendant is not disadvantaged at trial and to obtain the best possible result.

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In today’s world the vast majority of inherited wealth gets transferred from one generation to the next via nonprobate “will substitutes” that are not subject to the costs and delays of a court-supervised probate proceeding, are not controlled by a person’s will, and are not governed by our probate code. Referred to as the nonprobate revolution, it’s a trend that’s been accelerating for decades. And joint accounts are one of the most common will substitutes out there.

Joint Accounts vs. Convenience Accounts

The fact that you don’t need to hire an attorney to create a joint account makes them cheap and easy to use, but it also means that lots of people create them thinking all they’re doing is giving a family member access to their bank account to help them manage their finances, not ownership to all of it when they die. This second kind of account is known as a “convenience account” and it’s a common disability planning tool for elderly parents relying on one of their children for assistance with their finances.

The key distinction between joint accounts and convenience accounts is that there’s no right of survivorship for convenience accounts, so after mom or dad dies the money goes to their probate estate, not to the convenience signer.

Convenience accounts are statutorily authorized in Florida by F.S. 655.80, which defines a “convenience account” as “a deposit account, other than a certificate of deposit, in the name of one individual (principal), in which one or more other individuals have been designated as agents with the right to make deposits to and to withdraw funds from or draw checks on such account.”

Bank signature cards

As probate practitioners, usually all we have to do is review an account’s signature card to figure out what kind of account we’re dealing with. If the signature card says “joint account,” the inquiry usually ends there. The funds go to the survivor as a nonprobate transfer.

But what if we’re aware of facts strongly indicating that what the decedent really intended was a convenience account, not a joint account. Are we allowed to look outside the four corners of the bank’s signature card to comply with the decedent’s intent? That question was at the heart of the Larkins case.

Case Study

Larkins v. Mendez, — So.3d —-, 2023 WL 3485303 (Fla. 3d DCA May 17, 2023)

In this case the decedent, a widower, had three sons, only one of which lived locally. A few years after his wife died the decedent added his one local son to a bank account by signing a new signature card and checking the box marked “multiple-party account with right of survivorship.” And while there was a place on the signature card for the account to be designated as a “convenience account,” that designation box wasn’t selected. Both decedent and local son signed the card.

After the decedent died there was a dispute over the nature of the bank account. The trial court was asked to decide if it was a joint account (going to only one surviving son) or a convenience account (going to all three sons in equal shares as beneficiaries of the estate). After a four-day bench trial the trial court ruled it was a convenience account.

But why even have a trial if the signature card says it’s a joint account? Because F.S. 655.79 tells us that all a signature card does is create a rebuttable presumption as to the decedent’s intent, and that presumption can be overcome by clear and convincing evidence of contrary intent. In other words, the signature card’s a starting point, not the end of the story.

Can you look outside the four corners of an account’s signature card? YES

On appeal the losing side argued the trial court was barred as a matter of law from looking outside of the four corners of the account’s signature card to determine what kind of account it is. In other words, a court can’t consider parol evidence when deciding a joint-account case under F.S. 655.79. If that were the rule, the statute’s rebuttable-presumption standard would be nonsensical. So that’s not the rule, so saith the 3d DCA.

We reject Larkins, Jr.’s argument that the probate court erred by admitting and relying on parol evidence. Caputo v. Nouskhajian, 871 So. 2d 266, 269 (Fla. 5th DCA 2004) (holding that parol evidence is admissible to overcome the presumption that a decedent’s joint bank account is held with a right of survivorship). To ascertain Decedent’s intent as to whether the bank account was a convenience account, the probate court appropriately relied upon the extensive testimony of Decedent’s son Eric Larkins; the testimony of the Decedent’s neighbor who visited Decedent before his death and took contemporaneous notes of their conversation; and bank records showing how Larkins, Jr. handled the bank account both before and after his father died.

But you’ll need clear and convincing evidence to overcome a signature card

So we’re not limited to the four corners of the signature card when litigating one of these cases. But the signature card isn’t meaningless, you need “clear and convincing” evidence to overcome it’s account designation. That’s a higher, much more demanding standard of proof than what’s usually required in civil cases. Here’s how the 3d DCA defined that standard of proof:

Clear and convincing evidence is defined as evidence “that is precise, explicit, lacking in confusion, and of such weight that it produces a firm belief or conviction, without hesitation, about the matter in issue.” In re Standard Jury Instructions in Civil Cases – Report No. 09-01, 35 So. 3d 666, 726 (Fla. 2010); see Edwards v. State, 257 So. 3d 586, 588 (Fla. 1st DCA 2018).

So did the winning side meet its burden of proof in this case? Yup, so saith the 3d DCA:

This properly admitted and considered evidence constitutes clear and convincing proof that Decedent intended, and Larkins, Jr. understood, that the account be a convenience account, rather than a joint account with a right of survivorship, as provided on the October 17, 2006 signature card. We, therefore, affirm the account order.

What’s the takeaway?

Facts matter. No matter how much we all crave certainty, you can’t assume a signature card’s going to control how a decedent’s bank account gets distributed if there’s a dispute. Like wills, signature cards can be challenged on undue influence and fraud grounds. What’s often overlooked is that signature cards can also be challenged as simply being a mistake; as in, the decedent checked the wrong box, it’s not what he intended. By the way, there’s a similar remedy available under Florida law to fix drafting mistakes in trust agreements.

But fixing mistakes (read: re-writing documents after the fact) goes against the grain of abiding by the plain meaning of unambiguous testamentary instruments, so the law requires “clear and convincing” evidence of the mistake — a heightened level of proof we don’t often see in cases where the most important witness (the guy who signed the signature card and funded the account) — is dead. In other words, these are circumstantial evidence cases. The Larkins opinion gives us a rare case study demonstrating what circumstantial “clear and convincing” evidence looks like in real life. This is gold for practitioners.

What’s a “will substitute” and why are joint accounts a classic example

I’m a big fan of Prof. Langbien’s Nonprobate Revolution article, which was first published over forty years ago in 1984, and is referenced at the beginning of this post. The probate-avoidance trends Langbien spotted and wrote about then have only accelerated over the ensuing decades. As a probate practitioner, once you know what you’re looking at, you’ll realize these will substitutes are everywhere. So for those of you wondering what exactly is meant by a “will substitute,” and why joint accounts are a classic example, here’s an excerpt from the Langbien article that does a good job of explaining this point.

Four main will substitutes constitute the core of the nonprobate system: life insurance, pension accounts, joint accounts, and revocable trusts. When properly created, each is functionally indistinguishable from a will – each reserves to the owner complete lifetime dominion, including the power to name and to change beneficiaries until death. These devices I shall call “pure” will substitutes, in contradistinction to “imperfect” will substitutes (primarily joint tenancies), which more closely resemble completed lifetime transfers. The four pure will substitutes may also be described as mass will substitutes: they are marketed by financial intermediaries using standard form instruments with fil-in-the-blank beneficiary designations.

The typical American of middle- or upper-middle-class means employs many will substitutes. The precise mix of will and will substitutes varies with individual circumstances – age, family, employment, wealth, and legal sophistication. It would not be unusual for someone in mid-life to have a dozen or more will substitutes in force, whether or not he had a will. …

More commonly, the joint bank account – whether savings or checking – is manipulated to do the work of a will. In theory, joint accounts differ from other pure will substitutes: they look more like gifts than like wills. When the owner of property arranges to take title jointly, he supposedly creates a present interest in his donee-cotenant. In the prototypical joint tenancy of realty, the donee receives an interest equal to the donor’s, and the donor loses the power to revoke the transfer. Moreover, the commonality-of-use rule requires that the cotenants act together in order to transfer the realty. Joint accounts of personalty, however, “differ from the true joint tenancies as defined in [real] property law, for by the privilege of withdrawal either [cotenant] may consume the account.” Accordingly, a depositor may name a cotenant on a bank account but deal with the account as though it were his own. The cotenant may not even know that he has been designated. Depending on his contract with the bank, the depositor may revoke and alter cotenancy designations as freely as he would beneficiary designations under any of the other will substitutes. He may also achieve the same result by closing the account, withdrawing the funds, and opening another account as he pleases. In this way, joint accounts may be used to approximate the incidents of a will; the cotenancy designation is effectively revocable and ambulatory.

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I’m a long-time subscriber of Miami Judge Milton Hirsch’s thoughtfully written “Constitutional Calendar” email list. (Email him at milton.hirsch@gmail.com if you want to subscribe, which I highly recommend). Judge Hirsch recently wrote about The Difficulty of Crossing a Field, a short story by Civil War vet Ambrose Bierce about a plantation owner in 1854 walking across a field and simply vanishing into thin air. It was first published in 1900. The probate court in the story was tasked with adjudicating the missing man’s death in the absence of “competent” witness testimony (which Judge Hirsch links to an interesting 14th Amendment reference involving the witness testimony of enslaved Americans).

In today’s world it’s harder to just vanish — but it does still happen. And when it does, as a probate practitioner you’ll want to be familiar with F.S. 731.103(3), which authorizes the legal establishment of a missing person’s death by direct or circumstantial evidence (then allowing the estate to be administered).

Now back to Judge Hirsch’s commentary. He starts by introducing Bierce’s short story as follows:

American journalist and author Ambrose Bierce wrote, among a great many other things, an exceedingly short short story entitled, “The Difficulty of Crossing a Field.”

Judge Hirsch then shares the story in its entirety as follows:

One morning in July, 1854, a planter named Williamson, living six miles from Selma, Alabama, was sitting with his wife and a child on the veranda of his dwelling. Immediately in front of the house was a lawn, perhaps fifty yards in extent between the house and public road, or, as it was called, the “pike.” Beyond this road lay a close-cropped pasture of some ten acres, level and without a tree, rock, or any natural or artificial object on its surface. At the time there was not even a domestic animal in the field. In another field, beyond the pasture, a dozen slaves were at work under an overseer.

Throwing away the stump of a cigar, the planter rose, saying: “I forgot to tell Andrew about those horses.” Andrew was the overseer.

Williamson strolled leisurely down the gravel walk, plucking a flower as he went, passed across the road and into the pasture, pausing a moment as he closed the gate leading into it, to greet a passing neighbor, Armour Wren, who lived on an adjoining plantation. Mr. Wren was in an open carriage with his son James, a lad of thirteen. When he had driven some two hundred yards from the point of meeting, Mr. Wren said to his son: “I forgot to tell Mr. Williamson about those horses.”

Mr. Wren had sold to Mr. Williamson some horses, which were to have been sent for that day, but for some reason not now remembered it would be inconvenient to deliver them until the morrow. The coachman was directed to drive back, and as the vehicle turned Williamson was seen by all three, walking leisurely across the pasture. At that moment one of the coach horses stumbled and came near falling. It had no more than fairly recovered itself when James Wren cried: “Why, father, what has become of Mr. Williamson?”

It is not the purpose of this narrative to answer that question.

Mr. Wren’s strange account of the matter, given under oath in the course of legal proceedings relating to the Williamson estate, here follows:

“My son’s exclamation caused me to look toward the spot where I had seen the deceased [sic] an instant before, but he was not there, nor was he anywhere visible. I cannot say that at the moment I was greatly startled, or realized the gravity of the occurrence, though I thought it singular. My son, however, was greatly astonished and kept repeating his question in different forms until we arrived at the gate. My black boy Sam was similarly affected, even in a greater degree, but I reckon more by my son’s manner than by anything he had himself observed. [This sentence in the testimony was stricken out.] As we got out of the carriage at the gate of the field, and while Sam was hanging [sic] the team to the fence, Mrs. Williamson, with her child in her arms and followed by several servants, came running down the walk in great excitement, crying: ‘He is gone, he is gone! O God! what an awful thing!’ and many other such exclamations, which I do not distinctly recollect. I got from them the impression that they related to something more – than the mere disappearance of her husband, even if that had occurred before her eyes. Her manner was wild, but not more so, I think, than was natural under the circumstances. I have no reason to think she had at that time lost her mind. I have never since seen nor heard of Mr. Williamson.”

This testimony, as might have been expected, was corroborated in almost every particular by the only other eye-witness (if that is a proper term) – the lad James. Mrs. Williamson had lost her reason and the servants [meaning enslaved persons] were, of course, not competent to testify. The boy James Wren had declared at first that he saw the disappearance, but there is nothing of this in his testimony given in court. None of the field hands working in the field to which Williamson was going had seen him at all, and the most rigorous search of the entire plantation and adjoining country failed to supply a clew. The most monstrous and grotesque fictions, originating with the blacks, were current in that part of the State for many years, and probably are to this day; but what has been here related is all that is certainly known of the matter. The courts decided that Williamson was dead, and his estate was distributed according to law.

What’s the takeaway?

Judge Hirsch then shared the following parting thoughts, which are especially interesting coming from a working state court judge who served for some time in Miami’s probate division:

How Bierce’s fictional probate court “decided that Williamson was dead” in the absence of witnesses is unnecessary to relate. But Mrs. Williamson would have been incompetent to testify because she had lost her mind; and the “servants” (meaning slaves) would have been incompetent to testify by reason of their status: Black people were, as a matter of law, incompetent to testify in 1854 Alabama, and in a great many other places. That was rectified – well, it was intended to be rectified – by the 14th Amendment.

In October of 1913 Bierce, then age 71, went to Mexico to report on, or get involved in, the Mexican Revolution. He was traveling with Pancho Villa’s army on December 27, 1913, when he wrote a letter to an old friend, Blanche Partington. The letter concluded, “As to me, I leave here tomorrow for an unknown destination.”

He was never seen or heard from again. Like the fictional Mr. Williamson, he vanished without a trace.

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Our probate code uses the “interested person” concept to ensure that anyone who has a stake in a particular decision made during the course of an estate’s administration receives notice and an opportunity to be heard before a probate judge rules. F.S. 731.201(23) defines an “interested person” in generic terms as follows:

[A]ny person who may reasonably be expected to be affected by the outcome of the particular proceeding involved. … The meaning, as it relates to particular persons, may vary from time to time and must be determined according to the particular purpose of, and matter involved in, any proceedings.

Interested Persons in Probate Proceedings

You basically can’t administer an estate if you’re not constantly thinking about who the “interested persons” are. For example, a person’s status as an interested person determines whether she or he has standing to commence a probate proceeding by filing a petition for administration (F.S. 733.202), or contest a will that someone else is trying to probate (F.S. 733.109(1)), or contest a personal representative’s fees (F.S. 733.617(7)), or contest a personal representative’s attorney’s fees (F.S. 733.6171(5)). A person’s status as an interested person also determines whether she or he is entitled to receive interim probate accountings (Fla. Prob. R. 5.345) and a personal representative’s petition for discharge and final probate accounting (Fla. Prob. R. 5.400).

Trusts in Probate Proceedings

One of the basic building blocks of modern estate planning is the use of testamentary trusts and revocable trusts. Which means it’s extremely common to find yourself administering a probate estate in which your primary — if not only beneficiary — is the decedent’s trust. Against this backdrop, as probate practitioners we’re often called upon to determine if the trustees or beneficiaries of a decedent’s trust are “interested persons” of the probate estate. Appellate decisions involving this question are rare. We now have two new appellate court rulings providing guidance on this common scenario, both of which are must reads for probate practitioners.

Case Study #1: Are beneficiaries of a decedent’s testamentary trust “interested persons” of his probate estate? YES

Carmel v. Fleischer, — So.3d —-, 2024 WL 3057578 (Fla. 4th DCA June 20, 2024)

In this case a beneficiary of the decedent’s testamentary trust contested the personal representative’s petition for discharge. According to the 4th DCA, the objecting trust beneficiary “seeks to prevent the testamentary trust for his benefit from being dissipated.” Nonetheless, the probate judge ruled he wasn’t an interested person, and dismissed his claims for lack of standing. Wrong answer says the 4th DCA. Here’s why:

In Richardson v. Richardson, 524 So.2d 1126 (Fla. 5th DCA 1988), the court applied section 731.201(23) to determine that a contingent beneficiary of a testamentary trust is an interested person under the probate code. Id. at 1127. The Fifth District reversed an order granting the personal representative’s motion to strike a beneficiary’s objection to the final accounting and petition for discharge, stating:

Appellant is a contingent beneficiary under the two testamentary trusts. Although his interest may never “vest in possession or enjoyment,” it is already “vested in interest” and in legal contemplation. Such legal interest may reasonably be expected to be affected if the personal representative has not properly administered the decendents’ estate and does not deliver to the testamentary trusts all of the assets to which the trusts are entitled under the will. Therefore appellant is “an interested person” within the meaning of those words as defined in section 731.201(21), Florida Statutes, and Fla. R. P. &G.P. 5.190(21) and is entitled to object to the personal representative’s final accounting and discharge.

Id. (footnote omitted) (emphasis added).

We agreed with Richardson in In re Estate of Watkins, 572 So.2d 1014, 1015 (Fla. 4th DCA 1991). There, a son who was a contingent beneficiary of a trust under the will, petitioned for revocation of probate, contending that his mother-who was a beneficiary of a testamentary trust as well as personal representative of the estate-had committed fraud in the procurement of the will. Id. We held that the son, as a contingent beneficiary, was an interested person who had standing to seek revocation of probate. Id.

Case Study #2: Are trustees of a decedent’s revocable trust “interested persons” of his probate estate? YES

Wilson v. In re: Estate of Loftin, — So.3d —-, 2024 WL 4219383 (Fla. 3d DCA September 18, 2024)

F.S. 731.201(23) defines an “interested person” in generic terms as “any person who may reasonably be expected to be affected by the outcome of the particular proceeding involved.” But there are some scenarios that are so common the statute goes on to tell us these parties are always interested persons. One such scenario involves trustees of revocable trusts where the issue is some expense that could deplete the assets of the trust. Here’s how that particular scenario is addressed in F.S. 731.201(23) as part of the statutory definition of “interested person”:

In any proceeding affecting the expenses of the administration and obligations of a decedent’s estate, or any claims described in s. 733.702(1), the trustee of a trust described in s. 733.707(3) is an interested person in the administration of the grantor’s estate.

You’d think that with this kind of clear statutory text you’d never have to waste time and money appealing the exact same fact scenario covered by the statute … and you’d be wrong. A probate judge ruled the trustee in this very scenario wasn’t an interested person. Wrong answer says the 3d DCA. Here’s why:

Thomas Wilson appeals two orders granting Jorian Loftin’s (“Jorian”) counsel’s petition for payment of Class 1 Administrative Expenses, which found Wilson lacked standing to object to the petition. We reverse, finding Wilson had standing to object to the petition as co-trustee of a revocable trust that is the residuary beneficiary of the estate. “Section 733.6171(5) of the Probate Code, which governs the compensation of attorneys for the personal representative, confers standing to object to a fee request upon an ‘interested person’ ….” Duff-Esformes v. Mukamal, 332 So. 3d 17, 19 (Fla. 3d DCA 2021) (citing § 733.6171(5), Fla. Stat. (2021)). An “interested person” is defined as “any person who may reasonably be expected to be affected by the outcome of the particular proceeding involved” and as the trustee of a trust in any proceeding affecting the expenses of the administration of a decedent’s estate. § 731.201(23), Fla. Stat. (2022). We conclude, based on the plain language of statutes, that Wilson had standing as co-trustee to object to the petition for attorney’s fees and costs filed by Jorian’s counsel.

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If you’re litigating a case and the defendant dies, the last thing you need is to get pulled into a side fight over who’s appointed personal representative (PR) of the defendant’s probate estate. On the other hand, no one wants to get their case dismissed for failing to comply with rule 1.260’s 90-day deadline for deceased litigants. Here’s the relevant portion of that rule:

Fl. R. Civ. P. 1.260 – SURVIVOR; SUBSTITUTION OF PARTIES

(a) Death. (1) If a party dies and the claim is not thereby extinguished, the court may order substitution of the proper parties. … Unless the motion for substitution is made within 90 days after noting the death is filed and served on all parties as provided in Rule of General Practice and Judicial Administration 2.516, the action shall be dismissed as to the deceased party.

90 days may sound like plenty of time to get a PR appointed and substituted in. And it usually is — assuming the defendant’s heirs are inclined to cooperate. But let’s say they’re not so inclined and they instead drag their feet for more than 90 days on getting a PR appointed.

Is that a sneaky way to win by default? Depends on how you read rule 1.260. If you read this rule as only requiring you to file your motion for substitution within 90 days, it doesn’t matter how long it takes to get a PR appointed, you’ve met your filing deadline. On other hand, if you read the rule as actually requiring a PR to be substituted in for a deceased defendant within 90 days, then there’s all sorts of room for bad-faith gamesmanship. So which is it?

Case Study

Green v. Polukoff, 377 So.3d 1175 (Fla. 4th DCA January 17, 2024)

This was a standard car-accident case — until it wasn’t. The defendant died during the pendency of the action. Defense counsel then filed a suggestion of death, triggering rule 1.260(a)(1)‘s 90-day deadline. Within 90 days the plaintiff filed a motion “pursuant to Florida Rule of Civil Procedure 1.260” for an order substituting in an attorney ad litem, guardian ad litem or administrator ad litem to represent to the deceased defendant. The trial court effectively ruled that none of these were viable options; if you want to litigate against a deceased party you need to sue his PR. And the trial court was right on this point.

But things took a wrong turn when the trial court went on to dismiss plaintiff’s case instead of abating it until such time that a PR was appointed and substituted in for the deceased party. So saith the 4th DCA:

Because Green timely filed a motion for substitution, the trial court could not dismiss the case under rule 1.260(a)(1). See Mattick v. Lisch, 304 So. 3d 32, 33 (Fla. 2d DCA 2018) (“[T]he motion to substitute was filed within ninety days of the suggestion of death. Thus, rule 1.260(a)(1) did not provide a basis for dismissal.”). The formal appointment of a personal representative is not a precondition to filing a motion to substitute. See Metcalfe, 952 So. 2d at 629–30; Eusepi, 937 So. 2d at 798; MR., 739 So. 2d at 119.

Since Green filed a timely motion for substitution, “[t]he action should have been abated until the estate or a proper legal representative had been substituted.” Mattick, 304 So. 3d at 33. 

Lesson learned?

In this case the 4th DCA tells us the plaintiff “attempted to open the [defendant’s] estate [for over a] year but was unable to do so.” There may be no way to get around that kind of delay, but that doesn’t mean your case is doomed. The text of rule 1.260 simply requires that the motion for substitution be filed within 90 days, not that the actual appointment of the PR and the substitution occur within 90 days. Once your motion’s filed, your trial judge should abate your case pending appointment and substitution of a PR — no matter how long that process takes.

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I was recently in a contested court hearing where a smart and thoughtful attorney and an equally smart and thoughtful trial court judge were arguing over the nature of a “constructive trust.” Is it a remedy or a cause of action? I thought I knew the answer to this deceptively simple question. Turns out I was wrong. It’s both.

Case Study

Brown v. Regan, — So.3d —-, 2023 WL 4094879 (Fla. 4th DCA June 21, 2023)

In this case summary judgment was reversed because the trial court judge failed to (1) specify the cause of action supporting a constructive trust as remedy or (2) detail the facts that establish the four elements of a constructive trust as cause of action. Apparently unable to determine from the record in what direction this case was headed, the 4th DCA provided helpful guidance for both. According to the appellate court a constructive trust can be both a remedy and a cause of action.

Constructive Trust: Remedy or Cause of Action?

As is so often the case, the right answer depends on how the case is framed. Sometimes a constructive trust is a remedy …

A moving party must prove an independent cause of action that would support a constructive trust as a remedy, such as “unjust enrichment resulting from fraud, undue influence, or breaches of fiduciary duty.” See Est. of Kester v. Rocco, 117 So. 3d 1196, 1201 (Fla. 1st DCA 2013) (holding a constructive trust will not be available when the record does not demonstrate an underlying cause of action).

And sometimes a constructive trust is a stand-alone cause of action …

A party may also establish a constructive trust as an independent cause of action by showing: “(1) a promise, express or implied, (2) transfer of the property and reliance thereon, (3) a confidential relationship and (4) unjust enrichment.” Provence v. Palm Beach Taverns, Inc., 676 So. 2d 1022, 1025 (Fla. 4th DCA 1996).

So saith the 4th DCA.