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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.

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Choice-of-law problems involving marital property are relatively uncommon, but when they do come up it’s probably going to be in a probate proceeding. Even for Florida practitioners long accustomed to litigating cross-border matters (both domestic and international) these cases can be challenging. As explained by Prof. Finch in Choice-of-Law and Property, “[i]n the probate context, a court may be called on to identify the various marital domiciles of the deceased and his or her spouse and the appropriate domicile at the time a property transaction occurred. Such identification, in conjunction with the doctrine of tracing, will be necessary to disentangle the various property interests retained by each spouse.”

This variety of choice-of-law case usually involves enforcement of a surviving spouse’s testamentary community property rights carried over from one of our nine U.S. community property states — but not always. The general concepts apply to any form of spousal testamentary property right from anywhere on the planet. Here a Florida court was asked to enforce testamentary marital property rights arising under Articles 225 and 227 of the Turkish Civil Code and referred to by the court as “Tenkiz Davisi”.

Case Study

Tatlici v. Tatlici, — So.3d —-, 2023 WL 7361551 (Fla. 4th DCA November 8, 2023)

This case involved the estate of Mehmet Salih Tatlici, a Turkish businessman who “became one of the wealthiest people in the world in the 1980s and passed away in England in 2009, [leaving] behind an estate that is subject to more than a hundred lawsuits.” Florida’s received its fair share of that litigation.

In this particular branch of the Tatlici litigation highway a Florida administrator ad litem was appointed on behalf of the decedent’s estate. In that capacity the ad litem filed suit seeking to enforce the estate’s property rights against the decedent’s widow and second son based on the Turkish law of Tenkiz Davisi.

Appellant filed suit as the administrator ad litem of the decedent’s estate for the purpose of filing claims on the estate’s behalf against the widow and second son. See § 733.308, Fla. Stat. (2012); Fla. Prob. R. 5.120(a). When a court appoints an administrator ad litem, “[t]he appointee becomes solely responsible to the estate for the administration of that portion of its affairs entrusted to him by the court, and thus supplants in that regard the authority of the personal representative, who continues to be responsible for the administration of all other aspects of the estate’s business.” Woolf v. Reed, 389 So. 2d 1026, 1028 (Fla. 3d DCA 1980). Thus, as administrator ad litem, appellant had authority to file suit to recover monies owed to the estate, which was what appellant sought in the contribution claim—to recover the decedent’s contributions to certain Florida assets to which the estate was entitled under Turkish law. In essence, the claim is akin to a suit for an accounting of the monies the decedent paid for the purchase and upkeep of the properties.

Are Turkish testamentary marital property rights enforceable in Florida? YES

On the eve of trial the judge inexplicably dismissed the foreign marital-property-rights claim finding that “Turkish Law did not create a Florida civil cause of action.” Wrong answer said the 4th DCA. Here’s why:

That the contribution action is based upon the estate’s substantive right to such relief under Turkish law does not preclude its enforcement in an action for a money judgment in Florida. The right to contribution from the widow for assets acquired in her name is governed by the law of parties’ domicile when that right was acquired. See Quintana v. Ordono, 195 So. 2d 577, 579 (Fla. 3d DCA 1967) (one spouse’s interests “in movables acquired by the other during the marriage are determined by the law of the domicile of the parties when the movables are acquired”) (citation omitted), cert. discharged, 202 So. 2d 178 (Fla. 1967); In re Estate of Nicole Santos, 648 So. 2d 277, 281 (Fla. 4th DCA 1995) (same).

Here, the estate seeks money to compensate it for the decedent’s contributions to property; it does not seek the property itself. In In re Siegel’s Estate, 350 So. 2d 89 (Fla. 4th DCA 1977), we held that a note and mortgage were movables, and the law of the decedent holder’s domicile should apply to its disposition, because the note and mortgage did not create an estate in land. Id. at 91. Similarly here, the decedent’s right of contribution in the widow’s assets does not create an estate in land. Therefore, the assets are movables and, as such, are governed by the laws of Turkey, the domicile of both the decedent and his widow.

Thus, Turkish law applies to the claim for contribution. Application of Turkish law was admitted by the default, as was the estate’s right to seek contribution for the decedent’s payments in the acquisition and maintenance of the properties. Accordingly, the trial court erred in dismissing the claim.

What’s the takeaway?

In Florida the administration of an estate is governed by the law of the decedent’s domicile at the time of death. That’s the domicile we all focus on as probate practitioners. This focus ignores a decedent’s marital domicile — a distinct species of domicile that’s never even mentioned in Florida’s probate statutes or rules. That’s a trap for the unwary. Why? Because a decedent’s marital domicile — which in today’s highly mobile society often changes multiple times over the course of a lifetime — can dramatically reshape the ultimate disposition of an estate if at any time in the past that domicile was in a foreign jurisdiction — such as Turkey (or Texas) — with very different spousal testamentary property rights to what we’re accustomed to in Florida. And yes, those non-Florida-law spousal testamentary property rights can be litigated in Florida.

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In probate proceedings how assets are titled is a big deal. While I may walk around thinking that the assets of my single-member LLC are all mine, they’re really not. What I actually “own” or hold title to is my LLC membership interest, and it’s the LLC that in turn owns or holds title to the underlying assets. That title distinction usually doesn’t matter for tax purposes, and sometimes doesn’t matter for asset protection purposes, but always matters for probate purposes (same probate rule applies for single-shareholder corporations).

Case Study

Ezeamama v. In re Estate of Chibugo, — So.3d —-, 2024 WL 1894863 (Fla. 3d DCA May 01, 2024)

In this case the decedent owned a single-member LLC, which in turn held title to real property that was mortgaged. When she died the mortgage holder filed a creditor claim against her estate to enforce its mortgage (which probably wasn’t necessary, so says F.S. 733.710(3)). For some reason the estate’s personal representative (PR) thought it would be a good idea to ask the probate judge to rule on whether the LLC’s real estate was an estate asset. According to both the PR and the creditor the real estate’s not a probate asset. So if everyone with an economic stake in the question is agreed, problem solved? Nope, the probate judge ruled the other way, concluding that the LLC was automatically dissolved when the sole owner died, so yeah, the LLC’s property is part of the probate estate. Who was right? Not the probate judge, so says the 3d DCA.

Are assets of a decedent’s single-member LLC assets of her probate estate? NO

First, the 3d DCA reminded us all — again — that just because an LLC’s owned 100% by a decedent doesn’t mean its underlying assets are assets of the probate estate; they remain one step removed. So saith the 3d DCA:

In Gettinger v. Gettinger, 165 So. 2d 757, 757 (Fla. 1964), the Florida Supreme Court held that “the affairs of a corporation, even though substantially owned by a decedent, cannot be administered by decedent’s executor as assets of the decedent’s estate.”[FN4] The fact that the Decedent owned the LLC in full does not change this result. See BankAtlantic v. Estate of Glatzer, 61 So. 3d 1222, 1223 (Fla. 3d DCA 2011) (“In [Gettinger], the Supreme Court of Florida held that ‘the affairs of a corporation, even though substantially owned by a decedent, cannot be administered by decedent’s executor as assets of the decedent’s estate.’ In this case, ‘substantially’ is 100%, and the result is identical.”). Thus, assets owned by a single-member entity are not estate assets. See id. (“[T]he stock of the professional association is an asset of the Estate, but the funds of the professional association are a step removed from the Estate.”).

[FN 4]: Although the case at hand deals with an LLC rather than a corporation, the same principle is applicable: an LLC is an entity separate from its members, just as a corporation is separate from its shareholders. See Joel W. Mohrman & Robert J. Caldwell, 1 Handling Business Tort Cases § 6:3 (2015 ed., June 2020 Update) (“[J]ust like the corporation, … an LLC is treated as a separate legal entity apart from its members.”); see also Palma v. S. Fla. Pulmonary & Critical Care, LLC, 307 So. 3d 860, 866 (Fla. 3d DCA 2020) (“[A]n LLC is an autonomous legal entity, separate and distinct from its members.”).

Does a single-member LLC automatically dissolve when the owner dies? NO

OK, so the assets of your LLC aren’t assets of your probate estate, but what if your death causes your LLC to dissolve, wouldn’t that drop its assets back into your probate estate? Sure, if that’s what happened under Florida law. But it doesn’t. When you (the LLC’s owner) die you’re automatically “dissociated” from your LLC — but the LLC doesn’t “dissolve” — its legal existence continues. In other words, your single-member LLC outlives you. So saith the 3d DCA:

Though the death of an LLC member is an event causing dissociation, dissolution is not automatic; rather, the LLC must be formally dissolved. Section 605.0602(7)(a), Florida Statutes (2023), provides that “[a] person is dissociated as a member if … [t]he individual dies ….” Upon “[t]he passage of 90 consecutive days during which the company has no members” the LLC “is dissolved and its activities and affairs must be wound up ….” § 605.0701(3), Fla. Stat. (2023). Upon the occurrence of an event causing dissolution, set forth in section 605.0701(1)-(3), the LLC “shall deliver for filing articles of dissolution.” § 605.0707(1). Then, “the [LLC] shall cease conducting its business and shall continue solely for the purpose of winding up its affairs ….” § 605.0707(4).

Accordingly, when the Decedent died on March 23, 2023, she was dissociated from the LLC under section 605.0602(7)(a). Not until ninety days after she passed—well after the probate court’s April 6, 2023 denial of the Motion to Determine Assets—did it become an event causing dissolution under section 605.0701. Section 605.0707 then requires the LLC to be dissolved by filing articles of dissolution. Still, the LLC continues for certain purposes, such as winding up. Id.

What’s the takeaway?

Florida’s expressed public policy, and the natural inclination of well-meaning judges, is to do what you can to promote the “speedy settlement of estates” and “the payment of claims and the distribution to the beneficiaries” in a timely fashion. Pezzi v. Brown, 697 So. 2d 883, 886 (Fla. 4th DCA 1997). We can all agree unnecessary delay is a bad thing. On the other hand, this laudable goal sometimes bumps up against other important priorities, like respecting jurisdictional boundaries in court proceedings. The value of those boundaries may not be immediately apparent, but they matter. Courts have immense power; for all sorts of good reasons that power needs to be exercised in as limited a fashion as possible. Jurisdictional boundaries are one of the guardrails that furthers this important public policy.

Which brings me to the second takeaway. My experience is that parties ask probate judges to rule on lots of questions that don’t really require a court order — with sometimes unintended consequences. We’re all human (and our court system’s overworked and underfunded), so it’s important to recognize that just because you ask your judge to follow what you know to be the correct legal rule doesn’t mean you’re going to get the answer you want. In this case the only two parties we’re made aware of with an economic stake in the administration of the estate — the PR and the creditor — both asked the judge to rule one way (if they’re agreed, why was an order even needed?). The 3d DCA tells us the judge decided on his own to rule the other way (which turned out to be the wrong legal ruling). Bottom line, no matter how “correct” you might be on the law don’t ask your judge to decide a question you and the other interested parties can resolve by agreement. You might not like the answer you get.

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Advancements in assisted reproductive technology have created a class of heirs that would have been unimaginable to prior generations: children both conceived and born after one, or maybe even both, of their genetic parents has died. Falling under the general umbrella term of “posthumous conception,” they are the product of scientific breakthroughs dramatically extending the amount of time the average human has to reproduce (live births have been reported using embryos frozen for over 30 years).

As the science of assisted reproductive technology fundamentally redefines what it means to be an “afterborn heir,” courts find themselves grappling with the inheritance rights of posthumously conceived children, including as beneficiaries of trusts and as intestate heirs. In a case of first impression we now have an opinion of the Florida supreme court ruling for the first time on whether a posthumously conceived child was “provided for” under a pre-deceased father’s will.

Inheritance rights of posthumously conceived children

Under Florida law the only way a posthumously conceived child can inherit from his or her parent’s estate is if the child was “provided for” in the parent’s will; they’re categorically excluded as intestate heirs. We get to this outcome based on two statutes. First, there’s F.S. 732.106, which tells us that afterborn intestate heirs only include children conceived before a parent’s death.

732.106 Afterborn heirs.—Heirs of the decedent conceived before his or her death, but born thereafter, inherit intestate property as if they had been born in the decedent’s lifetime.

Second, there’s F.S. 742.17(4), which tells us that a posthumously conceived child may inherit from his or her parent if “the child has been provided for by the decedent’s will.”

742.17 Disposition of eggs, sperm, or preembryos; rights of inheritance. … (4) A child conceived from the eggs or sperm of a person or persons who died before the transfer of their eggs, sperm, or preembryos to a woman’s body shall not be eligible for a claim against the decedent’s estate unless the child has been provided for by the decedent’s will.

By the way, note that the line of demarcation under F.S. 742.17(4) isn’t the date of “conception” (a slippery term given today’s evolving technology), but is instead the date of “transfer” to a woman’s body of the decedent’s “eggs, sperm, or preembryos.” While the date of conception may be open to interpretation, the date of transfer is not. (Excellent statutory drafting.)

Case Study

Steele v. Commissioner of Social Security, — So.3d —-, 2024 WL 630219 (Fla. February 15, 2024)

This case involved a claim for federal Social Security Survivor benefits for a posthumously conceived child. The child’s father was a Florida resident at the time of his death, so the case turns on the child’s inheritance rights under Florida law. Here are the key background facts as provided by the court:

Philip and Kathleen Steele married in 1997. During their marriage, they had a son—conceived through in vitro fertilization. Following his son’s birth, Mr. Steele submitted additional sperm samples to a fertility clinic.

Thereafter, with the assistance of a lawyer, Mr. Steele prepared a will. At the outset, Mr. Steele defined his family to encompass his spouse, his living children, and any later-born or adopted children. Elsewhere in the will, Mr. Steele addressed the disposition of his property. He devised to his wife all tangible personal property, the homestead property, and the residue of his estate. If, however, his wife died before him, his children “then living” would inherit his tangible personal property.

Mr. Steele died roughly a year and a half after executing the will. Following Mr. Steele’s death, P.S.S. was conceived by in vitro fertilization using Mr. Steele’s deposited sperm samples.

What does the phrase “provided for” mean?

This case required the Florida supreme court to construe the statutory text of F.S. 742.17(4) to determine if the statue’s use of the phrase “provided for” means the pre-deceased parent’s will (a) simply addressed the possible contingency of a posthumously conceived child or if (b) the statute’s use of this phrase means the child has to actually inherit something under the will.

As I’ve previously noted, we’re living through a “textualist moment” in Florida’s courts, a point our supreme court emphasized once again in this case as follows:

As expressed in our cases involving statutory interpretation, we are committed to the supremacy-of-text principle—that is, “[t]he words of a governing text are of paramount concern” to us, and “what they convey, in their context, is what the text means.” Coates v. R.J. Reynolds Tobacco Co., 365 So. 3d 353, 354 (Fla. 2023) (alteration in original) (quoting Levy v. Levy, 326 So. 3d 678, 681 (Fla. 2021)). In applying this principle, we begin with the text of the statute …

Against this backdrop the court concluded that “provided for” means you have to actually inherit something under the will.

Therefore, based on our analysis above, we conclude that “provided for” in section 742.17(4) means that the testator actually left something to the posthumously conceived child through the will. Or, put another way, the child must have some inheritance right under the will. As part of this requirement, the will must show that the testator contemplated the possibility of a child being conceived following his or her death.

Did the decedent’s will “provide for” his posthumously conceived child? NO

It’s common for wills to address a testator’s then-living children as well as the possible contingency of later born children. Is that kind of generic reference to after-born children enough to encompass a posthumously conceived child? Nope, so saith the court:

No part of the will acknowledges the possibility of children being conceived after Mr. Steele’s death. To be sure, the will references afterborn or adopted children. But that mention of later-born children, as we read Mr. Steele’s will, refers most naturally to children born after his will was drafted but conceived before his death, i.e., when the dispositional portions of the will create vested rights. See § 732.514, Fla. Stat. (2019); see also § 732.106, Fla. Stat. (2019) (defining afterborn heirs in a similar fashion). Thus, this reference to later-born children would not cover P.S.S., who was conceived after Mr. Steele’s death.

But, even if we found that post-death conception was in some generic sense contemplated by Mr. Steele, P.S.S. could not have received anything under the will. Mr. Steele’s will conveyed all relevant property to Ms. Steele. In the event that Ms. Steele had died before Mr. Steele, the tangible personal property would have been distributed to his “then living children.” By its terms, this fallback provision only applied to children living at the time Mr. Steele died and necessarily excluded any posthumously conceived children, like P.S.S. Therefore, as it was impossible for P.S.S. to inherit anything from the will, it is clear that Mr. Steele did not provide for P.S.S. as contemplated by section 742.17(4).

Class gifts and posthumously conceived children

The pressing question raised by this case, and others like it, is how should we draft and construe class-gift clauses in a world that now includes posthumously conceived children. That isn’t a statutory construction question, it’s a drafting and will/trust interpretation question. Here’s how Prof. Pennell framed the class-gift problem as applied to posthumously conceived children in his write up of the Capato case:

If D leaves DNA in the freezer and that DNA is used postmortem with the requisite permission to produce a child, it seems relatively clear that D intended that child to be a beneficiary of D’s estate. But what about relatives of the DNA provider? Assume, for example, that the provider’s ancestor created a trust for the provider’s benefit for life, remainder to the provider’s descendants. Does the settlor intend to give anyone (the provider’s surviving spouse or anyone else) a blank check to create more remainder beneficiaries? That question was answered in the affirmative by In re Martin B. (Sur. Ct. 2007), 841 N.Y.S.2d 207.

The question whether a provider intends for a posthumously conceived child to be treated as their own is easier than the question whether an ancestor intends for someone else to be able to use the DNA to create more beneficiaries of the ancestor’s trust. Indeed, if clients were asked the question, “would you want your daughter-in-law to be able to make herself pregnant with your son’s frozen sperm, to create more beneficiaries of your trust,” would their answers predictably be the same as if they were asked “do you want your son-in-law to be able to withdraw your daughter’s frozen egg (or their frozen embryo) and find a surrogate mother to make more beneficiaries of your trust”? There is likely no way to predict a typical client’s reaction to either question, nor to predict whether any client’s response would distinguish between a daughter-in-law using the son’s sperm and bearing the child herself as opposed to a son-in-law finding a surrogate mother to carry the daughter’s child. . . .

As all this shakes out, it may be wise for estate planners to draft for these issues, to articulate their clients’ intent in each regard. Particularly because state law is in flux, because one-size-fits-all legislation may not reflect a client’s intent, and because conflict of laws issues may inform a court’s reliance on the law of a different state.

Until, as Prof. Pennell puts it, “all this shakes out,” there’s only one way to deliver a semblance of certainty to estate planning clients (as well as giving voice to their personal values): good drafting. When it comes to good drafting, no man’s an island. I don’t care how good you are, it never hurts to read what other thoughtful trusts and estates lawyers are drafting. One such attorney is Bruce Stone, who published a short piece entitled Drafting for Flexibility in Dynasty Trusts in which he provides sample trust language addressing class gifts to posthumously conceived children. Bruce’s clause probably won’t be the last word in drafting for this contingency, but it’s a solid start. Stay tuned for more …

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If you make your living writing wills and trusts, or administering them, or litigating them, you live in a world dominated by words; be they contained in a client’s personal estate planning documents or the public statutes and court opinions governing their application.

And as practitioners we all rely on informal heuristics we’ve picked up along the way for figuring out what those words are supposed to mean when used in a particular context. This pragmatic approach is fine as long as no one’s asking a judge to weigh in. Once the question lands in court, you need to advocate for a particular interpretation, and to do that you’ll want to know something about the “supremacy-of-text principle.” It’s a formalized approach for making sense of legal texts that’s all the rage among Florida’s judiciary, starting at the top with our supreme court and working its way down to every new trial court judge reporting in for his or her first day on the job.

Florida Judicial College on Judicial Interpretation of Statutes and Contracts

All Florida judges new to the bench are required to complete the Florida Judicial College program during their first year of judicial service following selection to the bench. Taught by the state’s most experienced trial and appellate court judges, the College’s curriculum includes a 203-page presentation entitled Judicial Interpretation of Statutes and Contracts. This is basically a handbook for judges applying the supremacy-of-text principle, and it’s a must read for anyone working in today’s Florida court system.

In What the Textualist Revolution in Florida Jurisprudence Means for Practitioners, appellate attorney Nicholas McNamara does a great job of putting this textualist moment in context as well as suggesting related practice pointers. Another must read. Here’s an excerpt:

Justice Kagan famously remarked in 2015 that “we’re all textualists now.”[1] She was speaking about the federal judiciary, where the late Justice Scalia’s brand of textualism has come to dominate. But here in Florida, not only is textualism dominant, it is arguably[2] mandatory for practitioners since the Florida Supreme Court declared its adherence to “the supremacy-of-text principle” in Advisory Opinion to the Governor re: Implementation of Amendment 4, the Voting Restoration Amendment, 288 So. 3d 1070 (Fla. 2020). According to that principle, “[t]he words of a governing text are of paramount concern, and what they convey, in their context, is what the text means.”[3]

This language is quoted from what has become the seminal treatise on textualism: Antonin Scalia and Bryan Garner’s Reading Law: The Interpretation of Legal Texts. It is hardly an exaggeration to say that Reading Law has achieved blackletter status in this state. Indeed, as of February 23 of this year, this work has been cited no less than 171 times by Florida’s appellate courts since its 2012 publication. That being the case, it behooves the Florida practitioner — regardless of his or her opinions on textualism’s merits — to become acquainted with its doctrines and methodologies. This column provides a few practical pointers on advocacy in the current textualist moment.

Against this backdrop McNamara provides the following practice pointers:

  • Do Not Argue What the Legislature Intended; Argue What the Text Means
  • Learn How To Use Dictionaries Properly
  • Acquaint Yourself with Canons of Construction

The best way to put this good advice into practice the next time you find yourself getting ready to argue for a particular interpretation of a word or phrase in a will, trust or statute, is to read the same handbook your judge is reading: Judicial Interpretation of Statutes and Contracts.

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In Florida a couple’s marital property rights are based on the common law’s “separate property” regime. According to the IRS, the “theory underlying common law is that each spouse is a separate individual with separate legal and property rights.”

There’s a competing marital-property-rights regime known as “community property” that, as reported by the IRS, has been adopted by nine U.S. states (including California and Texas, our two most populous states). These nine community-property states have a combined population of over a hundred million people, or about 30% of the entire U.S. population. And that’s not counting Puerto Rico, the largest U.S. territory, which is also a community property jurisdiction.

That’s a lot of people; many of whom are going to retire — and ultimately die — in Florida (the nation’s perennial number one retirement destination). Anytime a married couple moves to Florida from any of these community-property jurisdictions they bring with them all of their testamentary rights in property that was community property prior to their change of domicile (as well as in property substituted therefor). That’s why these property rights matter to Florida probate practitioners.

The theory underlying community property is analogous to that of a partnership. In Commissioner v. Chase Manhattan Bank, the court summarized the origins and basic principles of the community property system in a case originating in Texas (a community-property jurisdiction):

The community property system comes from the custom of the women of the Visigoths and other Germanic tribes sharing the fighting and the spoils of war with their men; it owes its strength to the civilized view that marriage is a full partnership. Husband and wife are equal partners. Each has a present, vested half interest in all community property. All property accumulated during marriage is community property, unless it is received by gift, devise, or inheritance. … Thus, on death or divorce the community is divided equally. Neither spouse has testamentary disposition over the other’s half of the community. The wife has complete testamentary disposition over her half and may leave it even to her paramour.

Why should Florida probate attorneys care about community property rights?

A couple’s pre-existing community-property rights are statutorily preserved when they move to this state by the Florida Uniform Disposition of Community Property Rights at Death Act (“FUDCPRDA”). That’s Florida’s version of the Uniform Disposition of Community Property Rights at Death Act, which was superseded by the new Uniform Community Property Disposition at Death Act (“UCPDDA”).

So does any of this conflicts-of-law theory matter in real life? Oh yeah, just ask the Johnson v. Townsend litigants. As demonstrated in that case, even though these “imported” marital property rights can dramatically reshape the ultimate disposition of a Florida probate estate they’re often overlooked by local practitioners who generally lack the training and experience necessary to spot these non-Florida community-property issues … until it’s too late.

The new Uniform Community Property Disposition at Death Act (UCPDDA)

OK, so as Florida practitioners we can’t ignore the possibility of non-Florida community-property rights upending our Florida probate proceedings. And we know FUDCPRDA is intended to make sure we don’t fall into that trap. But is FUDCPRDA still up to the task? That act’s based on a uniform law promulgated in 1971. That’s over 50 years ago. Nixon was president in 1971. A lot’s changed since then, including the “nonprobate revolution”, which transformed the trusts-and-estates world.

Enter the new and improved UCPDDA, promulgated in 2021. According to the Uniform Law Commission (ULC) we all need to run out and adopt this new uniform act for the following reasons:

  • The UCPDDA protects property rights for married couples. The United States has two different systems of property law. Nine states and two U.S. territories treat all property acquired by a married couple during their marriage as community property – the remaining states do not. The UCPDDA ensures spouses will retain their rights in community property even if they relocate to a non-community property state.
  • The UCPDDA prevents unnecessary litigation. If the legal status of a married couple’s property is unclear at the time the first spouse dies, disputes between potential recipients can arise. The UCPDDA clarifies the status of property with a set of default rules that apply unless the couple made other arrangements in their estate plan. Clear rules lead to fewer disputes and help preserve court resources.
  • The UCPDDA modernizes the law. The increased popularity of nonprobate transfers and the recognition of same-sex marriage have made obsolete many older statutes in non-community property states governing the disposition of community property. The UCPDDA addresses these issues in a manner consistent with modern estate planning practices.
  • The UCPDDA is flexible. Every couple’s situation is different. The UCPDDA allows married couples to make their own plans for property distribution by deferring to valid pre-marital and post-marital agreements between spouses. The UCPDDA’s default rules apply only if the couple has not made their own arrangements.
  • The UCPDDA is more necessary than ever. In our increasingly mobile world, many couples live in multiple states over the course of their marriage. Therefore, these couples will often acquire a mix of community property and non-community property, complicating the distribution to heirs when one spouse dies. The UCPDDA provides clear and effective rules that will prevent distributions of property to persons who are not entitled to receive it.

Florida Uniform Disposition of Community Property Rights at Death Act: Time for an Update?

The ULC pitch sounds reasonable in theory, but does it hold up to the kind of real-world scrutiny required to vet any new uniform act before it’s adopted as law and let loose on the populace? To answer that question we need experienced and thoughtful practitioners who are willing to both volunteer their expertise and engage in the kind of rigorous, intellectual work needed to do that job. Enter Anthony Guettler and Patrick Lannon, two of the smartest estate planners I know.

Anthony and Patrick recently published Florida Uniform Disposition of Community Property Rights at Death Act: Time for an Update? This article is a must read for anyone dealing with a community-property issue, be it as planner or litigator. Why? Because you can’t really understand this body of law without considering why we got to where we are now and how the law is evolving (or should evolve) to meet tomorrow’s challenges. Anthony and Patrick’s article does that. Here’s an excerpt:

Immigration into Florida from other states and countries continues apace, and Florida property continues to be an attractive investment opportunity for outsiders. As attorneys rush to help the recent arrivals and outside investors adjust to our legal landscape, it is a worthwhile effort to consider how Florida law may be modernized and expanded to accommodate the legal baggage that these immigrants and investors bring with them. The need for review and modernization is particularly relevant in the often-overlooked area of marital property rights. …

In 1992, Florida adopted the Florida Uniform Disposition of Community Property Rights at Death Act (“FUDCPRDA”). This Act, which has seen only minor revisions since its passage, offers some much-needed guidance regarding division upon death of community property assets. … In 2021, the National Conference of Commissioners on Uniform State Laws promulgated a new and improved Uniform Community Property Disposition at Death Act (“UCPDDA”). UCPDDA offers an expanded roadmap for treatment of community property and provides guidance on questions, which are currently unclear under Florida law. …

Community property rights will likely never fit comfortably within Florida’s separate property marital property regime, and FUDCPRDA contains only guidance for Florida advisors. UCPDDA offers great insight into ways that Florida law could be expanded and modernized. A thorough review and at least a partial adoption of UCPDDA will likely provide great comfort to Floridians who have immigrated from community property jurisdictions, community property investors, and attorneys advising with respect to community property.

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There are all sorts of reasons for why you may want to litigate your case in federal court. As explained in an excellent blog post by NY commercial litigator Will Newman:

Litigants often prefer federal court for several reasons. Many believe the judges are better. Federal courts also usually have fewer cases and more resources, and so they may handle cases more quickly than state courts. Federal courts may have broader jury pools that span multiple counties than state courts, which may limit their juries to residents of one particular county. And federal courts may be less political than state courts, since federal judges are not elected, are hard to remove from office, and are often not as connected to local political organizations as state judges.

But many litigants prefer state court. They may want a specific jury pool of county residents or a local judge who may be more sympathetic to the case than strangers from further away. Or they may prefer the procedures in state court, which may require the case proceed differently than in federal court. These differences may be a permissive attitude towards delays, an accelerated discovery schedule, or different discovery or disclosure rules altogether. They may also observe differences in how state and federal courts may interpret the same law and prefer the state court’s interpretation.

For trusts and estates litigators the key point is that federal court is a very real possibility for many of our cases if we can overcome two jurisdictional hurdles.

First, you’re not getting your inheritance case adjudicated in federal court if you can’t establish diversity jurisdiction under the special — and distinct — rules applied to trustees and personal representatives. Second, think “probate exception”. You’re not getting your inheritance case adjudicated in federal court if you can’t get past this roadblock to a federal court’s diversity jurisdiction.

What’s the “probate exception” and why should trusts and estates litigators care?

According to the U.S. Supreme Court’s 2006 decision in Marshall v. Marshall the probate exception to a federal court’s diversity jurisdiction applies only if a federal judge is being asked to: (1) probate a will, (2) administer a decedent’s estate, or (3) interfere with property already in the custody of a probate court. Marshall dramatically narrowed the probate-exception bar, opening the door to “federalized” inheritance litigation to an extent previously unimagined. Following Marshall, federal courts have continued to grapple with how narrowly or broadly to interpret the new ground rules, including in the two Florida cases discussed below.

Case Study No. 1

Can you ask a federal judge to administer a guardianship estate? NO

Baker, Donelson v. Chopin, 2022 WL 4090841 (11th Cir. September 07, 2022)

The backstory to this case involves an ugly guardianship battle for control of the care — and vast fortune — of the widow of automobile tycoon Henry Ford II. The widow’s daughter ultimately lost that guardianship case and appealed. All of this played out in Florida’s state court system.

While the guardianship-case appeal was pending the daughter filed a request with the guardianship court for a formal determination of entitlement to fees and costs for her counsel. F.S. 744.108 tells us this kind of a fee determination is “part of the guardianship administration process.”

The guardianship court stayed consideration of daughter’s fee request until the conclusion of the pending appeal. While that appeal was pending the widow died. Widow’s daughter then sued the estate in federal court seeking a ruling on her pending claim for guardianship fees. The estate sought to have the case dismissed on the grounds that this kind of fee claim was part of the guardianship administration process, which triggers the probate exception to the court’s federal diversity jurisdiction. At the hearing the federal trial judge observed he was being asked to step into the guardianship court’s shoes.

But for me to even know what amount is appropriate, I would essentially be doing the work of the probate court or the guardianship court in surveying all of the work that was done over the lengthy trial, et cetera.

Against this backdrop it probably surprised no one when the federal trial judge dismissed the case. Did the trial judge get this one right? Yup, so saith the 11th Circuit:

We conclude that the instant case falls within the probate exception. We conclude that determination of Baker Donelson’s claim for attorney’s fees is part of the guardianship administration process, and therefore falls within the second category of cases which the case law indicates is subject to the probate exception—i.e. cases in which the federal court is called upon “to administer an estate.” Florida Statute section 744.108(8) expressly provides “When court proceedings are instituted to review or determine a guardian’s or an attorney’s fees under subsection (2), such proceedings are part of the guardianship administration process.” Moreover, sections 744.108(1) and (2) clearly contemplate that the court which should determine entitlement to attorney’s fees and the amount thereof is the court which appointed the guardian—that is Probate Judge Suskauer in this case. This only makes common sense. …

Moreover, the Florida law contemplates that entitlement to attorney’s fees and the amount thereof should take into account the benefit to the ward provided by the services. Zepeda v. Klein, 698 So.2d 329, 330 (Fla. 4th DCA 1997). The guardianship court actually administering the estate is clearly the most appropriate court to evaluate the benefit to the ward resulting from the attorney’s services—i.e. to continue to handle this part of the administration of the estate.

Case Study No. 2

Can you ask a federal judge to adjudicate a creditor claim v. a probate estate? YES

Moore & Co., P.A. v. Kallop, 17-CV-24181-DPG, 2020 WL 4505645 (S.D. Fla. Aug. 5, 2020)

This case involved another attorney’s fee claim asserted against a probate estate, but this time the case turned on an alleged breach of contract. There’s nothing about a breach-of-contract claim that would involve a federal judge in the administration of an estate. However, at the end of that kind of case the plaintiff could be awarded a judgment against the estate’s assets (converting the plaintiff into a “creditor” of the estate). Does that count as “administering” an estate? Usually not, here’s why:

[F]ederal courts have the authority to “entertain suits to determine the rights of creditors, legatees, heirs, and other claimants against a decedent’s estate, ‘so long as the federal court does not interfere with the probate proceedings.’ ” Marshall, 547 U.S. at 310–11 (emphasis in original) (quoting Markham v. Allen, 326 U.S. 490, 494 (1946)). The Eleventh Circuit describes the scope of the probate exception as follows:

[A] creditor may obtain a federal judgment that he has a valid claim against the estate for one thousand dollars, or a devisee may obtain a declaratory judgment that a probated will entitles him to twenty percent of the net estate. What the federal court may not do, however, is to order payment of the creditor’s thousand dollars, because that would be an assumption of control over property under probate.

Stuart, 757 F. App’x at 809 (quoting Turton v. Turton, 644 F.2d 344, 347 (5th Cir. 1981)).

OK, so most creditor claims don’t trigger the probate exception because they don’t require a federal court to involve itself in the internal workings of the estate-administration process. Once your federal case is completed the best you can hope for is a judgment against the estate. After that it’s up to the probate judge to decide if and when that judgement is ever satisfied with assets of the estate. So is that what happened here? Yup, probate exception wasn’t triggered, so saith the court:

The Court does not find that the probate exception bars it from exercising jurisdiction over this case. While the resolution of this action in Plaintiff’s favor might result in a judgment against Decedent’s estate, “[t]he probate exception does not foreclose a creditor from obtaining a federal judgment that the creditor has a valid claim against the estate for a certain amount.” Mich. Tech. Fund, 680 F.2d at 740. Plaintiff claims that it is owed money for legal services rendered before Decedent’s death. Should Plaintiff prevail on its claims, it would stand as a creditor of the estate. Plaintiff would then, like any other creditor, submit its judgment to the Probate Court. Accordingly, Defendant’s motion to dismiss on the basis of the probate exception is denied.

Interpleader and federal jurisdiction: A more welcoming door to federal court

The two cases discussed above both dealt with existing estate proceedings, one a guardianship estate and the other a probate estate. This is familiar territory for most trusts and estates litigators. Perhaps not surprisingly, these estate cases receive most of our attention. That focus is outdated.

Today, life insurance and other beneficiary-designated non-probate assets such as annuities, pay-on-death accounts, and retirement planning accounts have become the dominant testamentary transfer mechanism for most middle class families (trusts remain favored by the wealthy). As reported in A Fair Presumption: Why Florida Needs a Divorce Revocation Statute for Beneficiary-Designated Nonprobate Assets:

Life insurance and other nonprobate assets such as annuities, pay-on-death accounts, and retirement planning accounts have become increasingly popular as estate planning tools. In 2004, Americans purchased $3.1 trillion in new life insurance coverage, a ten percent increase from just ten years before. Purchases made by Floridians accounted for nearly $154 million of this national total. At the end of 2004, there was $17.5 trillion in life insurance policy coverage in the United States.

So it’s not surprising that trusts and estates litigators are often involved in inheritance cases revolving entirely around life insurance proceeds and other non-probate assets having nothing to do with a contested estate. These non-probate cases often play out as interpleader actions, and usually in federal court. That’s not by accident.

The doors to federal court are especially welcoming for these cases under 28 U.S.C. § 1335, a special-purpose federal interpleader statute making it easier to invoke federal jurisdiction than in a typical diversity jurisdiction case. As explained in Interpleader and federal jurisdiction: A more welcoming door to federal court:

Many federal civil litigators are familiar with interpleader under Rule 22 of the Federal Rules of Civil Procedure, but the interpleader statute, 28 U.S.C. § 1335, exists independent of Rule 22. … [The interpleader statute] provides its own basis for federal jurisdiction. Rule 22 does not confer jurisdiction, and a party that uses Rule 22 interpleader still needs to establish jurisdiction on some other basis — usually diversity under 28 U.S.C. § 1332(a). But the interpleader statute provides jurisdiction and venue requirements that are more liberal than the familiar diversity jurisdiction statute: The amount-in-controversy requirement is only $500 rather than $75,000, and it requires only “minimal diversity” — meaning that there are at least two adverse claimants in the suit that are not citizens of the same state — rather than the familiar “complete diversity” requirement under 28 U.S.C. § 1332(a).

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If you’re going to sue a decedent’s probate estate, the first question you’ll need to ask yourself is if your lawsuit is going to be subject to Florida’s ultra-short limitations periods for probate creditor claims. And to answer that question you’ll need to figure out if the relief you’re seeking falls under the broad statutory definition for probate creditor “claims” found in F.S. 731.201(4), which provides as follows:

“Claim” means 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.

When you’re reading this definition it’s important to note the type of claims that are categorically excluded. In other words, if you’re suing the estate to recover “an expense of administration” or if you’re suing the estate to recover unpaid “estate, inheritance, succession, or other death taxes,” you’re not litigating a Florida probate creditor claim.

Are real property title disputes probate creditor “claims”? YES

But what if you’re suing the estate to dispute ownership of real property titled in a decedent’s name? Is that a probate creditor “claim”? If Florida had adopted the Uniform Probate Code’s definition of “claim” the answer would be simple: it’s not a creditor claim because all title disputes are categorically excluded from the definition of “claim” found in UPC sect. 1-201(6), which provides in relevant part as follows:

“Claims,” in respect to estates of decedents and protected persons, includes liabilities of the decedent or protected person, whether arising in contract, in tort, or otherwise … The term does not include … demands or disputes regarding title of a decedent … to specific assets alleged to be included in the estate.

Since Florida’s definition of “claim” is silent on the issue of real property title disputes you might be tempted to argue they’re not included in the definition and therefore your lawsuit isn’t subject to the creditor-claim filing deadlines. And you’d be wrong.

Case Study

Ford v. In Re Estate of Ford, — So.3d —-, 2023 WL 5249664 (Fla. 3d DCA August 16, 2023)

In this case the claimant filed a statement of claim against the estate disputing, on equitable grounds, ownership of four items of real property titled in the decedent’s name. The probate court denied the claim finding “that the relief sought by Mr. Ford is not a probate claim against the Estate.” Wrong answer; real property title disputes are creditor claims. So saith the 3d DCA:

[T]he probate court found that the relief sought by Billy was not a probate claim against the estate. The statement of claim provides that Billy sought the “return of the properties via equitable relief.” On appeal, Billy cites to Arwood v. Sloan, 560 So. 2d 1251 (Fla. 3rd DCA 1990), for the proposition that probate claims can involve issues of disputed ownership in real property. In Arwood, “Plaintiff filed a claim against Decedent’s probate estate, claiming that the real property, funds in the bank, and other assets in Decedent’s name, were his sole property, and that title to the same had been placed in Decedent’s name for his convenience.” Id. at 1251. Billy also cites to Sanchez v. Sanchez De Davila, 547 So. 2d 943 (Fla. 3rd DCA 1989), in which the parties claimed injunctive relief to enjoin distribution of funds. Id. at 944. The probate claim involved the question of ownership of approximately $2,000,000 held in trust bank accounts. Id. We therefore find that the trial court erred as Billy’s claim for equitable relief involving the disputed ownership of the four real properties is not outside the purview of probate claims.

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Florida’s new Community Property Trust Act is the subject of two excellent Florida Bar Journal articles by Orlando attorney Joseph Percopo (see here and here). But nothing quite beats an insider’s view on new legislation from the person primarily responsible for its development and passage, which in this case is Naples attorney Travis Hayes.

And it’s against that backdrop that I had the good fortune to attend the recent ATO conference where Travis shared his unique insights for estate planners considering this new tool. I was so impressed with Travis’ thoughtful explanations, practical advice, and sample trust clauses (always gold for practitioners), that I asked if I could help spread the word by posting his written materials on the blog. Being the good guy that he is, Travis graciously agreed.

Here’s an excerpt from Travis’ presentation entitled To Share and Share Alike: an Examination of the Treatment of Community Property in Florida and the new Florida Community Property Trust Act, which I highly recommend.

A vastly increasing amount of married couples are moving to the State of Florida to take up residency. Due to the high growth in the number of people moving to Florida, the state’s population surpassed 20 million in 2015, and the state is adding over 1,000 people per day. And those statistics are from the pre-COVID population boom in Florida! In today’s ever-increasing mobile society, many of these couples may have come to Florida from a community property jurisdiction or may have acquired property in a community property jurisdiction at some point during their marriage.

With the increased emphasis on income tax planning caused by the higher estate and gift tax exemptions, as well as portability, many practitioners are revisiting the issue of “stepped-up” basis, which has favored joint owners who live in community property states. Passage of the Patient Protection and Affordable Care Act of 2010, the American Tax Payer Relief Act of 2012, and the Tax Cuts and Jobs Act of 2017 have made income tax planning, specifically with respect to capital gains, an issue to be brought to the forefront of any estate planning strategy, regardless of net worth. It has therefore become even more important for attorneys in Florida to be able to identify and determine the community property status of Florida couples’ assets, and to examine the treatment of community property for Florida residents under Florida law.

Florida has also now taken the monumental step of enacting legislation which will permit the creation of community property trusts in our state. This is a very significant development in the treatment of community property under Florida law. Every trusts and estates practitioner in Florida should be familiar with the provisions of the Florida Community Property Trust Act, what type of clients would benefit from the implementation and usage of Florida Community Property Trusts, and the situations in which Florida Community Property Trusts should be recommended and considered. If you want to dive right into the Florida Community Property Trust Act, the discussion of the Act is contained in Section VI of this outline. But first off, the outline contains a detailed discussion of community property and its current treatment under Florida law, as it is important to have a working knowledge of those subjects if you want to become a Florida Community Property Trust expert!

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As reported in A jury rules a handwritten will found under Aretha Franklin’s couch cushion is valid:

A jury in Michigan has ruled that a [2014] note handwritten by the late soul singer Aretha Franklin is valid as her will, according to The Associated Press. In 2019, Franklin’s niece found three handwritten documents around the singer’s home in suburban Detroit. One, dated 2014, was found underneath a couch cushion. Two of Franklin’s sons, Kecalf and Edward Franklin, argued through their lawyers that they wanted the latter note to override a separate will written in 2010.

This litigation would have never happened in Florida

Why? Because neither handwritten document was attested to by two witnesses. Some jurisdictions, including Michigan, will accept un-witnessed wills if they’re handwritten (holographic). Not Florida. If Aretha Franklin had died a resident of this state both un-witnessed wills would have been automatically rejected as a matter of law. She would have died intestate, which means her children would have split her estate equally by default.

This case is a prime example of the benefits of “channeling”

Most of us would be hard pressed to look at Ms. Franklin’s handwritten 2010 “will” or her handwritten 2014 “will”, both of which are barely legible — with crossed-out words and scribblings in the margins — and say with certainty, yeah, that’s a will. Fortunately, we rarely (if ever) have that problem in Florida. Why? Think: channeling.

One of the benefits of requiring execution formalities to be scrupulously complied with for a will to be legally enforced in Florida — such as the two-attesting-witnesses requirement of F.S. 732.502(1) — is that these requirements have the side effect of standardizing what most Florida wills look like. As a result, Florida wills are generally going to follow a standard format that’s easily identifiable.

Academics call this “channeling.” Here’s how the channeling effect is described in Wills Formalities in the Twenty-First Century:

The statutory requirements for formal wills serve useful ends. They take the vast array of testamentary things and channel them into a form that is readily recognizable as a will, thus easing the transfer of property at death. By imposing a standard form on testamentary writings, they enable probate courts to identify documents as wills solely on the basis of readily ascertainable formal criteria, thereby permitting probate to proceed in the vast majority of cases as a routine, bureaucratic process.

Because wills in Florida have to follow strict execution formalities and be attested by two witnesses, most are going to follow a standard format that’s easily identifiable. And that means you’re not going to find yourself pondering whether mom’s barely legible hand written notes with crossed-out words and scribblings in the margins that she hid under the sofa cushions years before she died is her will — which is basically what happened in the Aretha Franklin case.

Was the family acrimony caused by this will contest worth it?

The primary economic difference between the two competing wills appears to be who gets Ms. Franklin’s main home in Bloomfield Hills, valued at $1.1 million when she died. But both wills apparently equally split the estate’s music catalog. And that’s where almost all of the value of this estate lies. According to celebritynetworth.com:

Aretha’s royalty income in the years after her death has been $3-4 million per year. The value of her catalog and royalty income would likely push her actual net worth at death closer to $50 – $80 million.

A $1.1 million house is a rounding error compared to a $50 – $80 million music catalog. If the value of the catalog is split equally among the brothers under both wills, was a family fight over the house — with all the stress and acrimony that accompanies any will contest — really worth it?

By the way, if Ms. Franklin’s estate generates the royalty income that’s currently estimated she’ll be typical for artists of her stature — many of whom generate huge sums of wealth long after they’ve died, as gleefully reported by Forbes in its annual list of the highest paid dead celebrities. Here’s an excerpt from its 2022 list, as reported in The Highest-Paid Dead Celebrities Of 2022—A Writer Earns Half-A-Billion From The Great Beyond:

Seems not even the boneyard is immune from inflation. The 13 departed artists, athletes and entertainers on this year’s list of the top-earning dead celebrities earned a record $1.6 billion, making it a 72% increase over last year’s total. It’s by far the biggest 12-month haul since we started tracking graveyard earnings in 2001 – and, for the first time ever, the top five made more than $100 million each. …

Overall, the music of yesteryear is seen by investors as a reliable income stream. Nearly $700 million of the $1.6 billion in total earnings came from the estates of the nine musicians on the list, including David Bowie ($250 million), Michael Jackson ($75 million) and “Hallelujah” songwriter Leonard Cohen ($55 million). Some of those earnings came from one-time sales. The estate of Toto drummer Jeff Porcaro, for instance, sold his publishing and recording royalties for $25 million in November 2021. Others, like Beatles John Lennon and George Harrison remain mainstays on the list due to their annual recurring royalty streams.