Inheritance litigation is often the last battle in a war that’s been going on for a long time, especially in cases involving financial exploitation of the elderly. However, my experience is that all too often remedies designed specifically to attack this kind of pre-death wrongdoing get ignored by probate litigators (whose focus is usually on post-death claims). That may be changing.

I’ve previously written about recent efforts to beef up criminal prosecutions of elder financial exploitation in Florida (see here, here). But what about civil remedies for those crimes? Yup, we’ve got those too. They’re found in F.S. 415.1111, and they played a central role in a recent high profile case out of Tampa that resulted in a $34 million FINRA award against Morgan Stanley, as reported in Finra panel orders Morgan Stanley to pay $34 million to estate of former Home Shopping Network chief. Here’s an excerpt:

A Finra arbitration panel awarded more than $34 million to the estate of Roy M. Speer, the co-founder of the Home Shopping Network, in its claim against Morgan Stanley for churning Mr. Speer’s account.

The all-public arbitration panel ruled that Morgan Stanley, broker Ami Forte and branch manager Terry McCoy were jointly liable for unauthorized trading, breach of fiduciary duty/constructive fraud, negligence, negligent supervision and unjust enrichment.

The arbitrators also found that Morgan Stanley violated a Florida law against exploitation of vulnerable adults. It awarded $32.8 million in compensatory damages to Lynnda Speer, Mr. Speer’s widow and representative of the estate, as well as $1.5 million to reimburse costs incurred during the arbitration process, which spanned 13 months and involved 142 hearing sessions.

If you’re a probate litigator, you owe it to yourself and your clients to get to know F.S. 415.1111 (which explicitly authorizes punitive damages). And to do that you’ll want to start by reading an excellent article published by the attorneys on the winning side of the Speer case entitled Be Alert for Financial Exploitation of the Elderly. Here’s an excerpt:

Since the end of World War II, the greatest accumulation of wealth in the history of the world has been amassed in the U.S. We are now witnessing the greatest transfer of wealth ever encountered. Survivors of the greatest generation (those born in the 1920s and 1930s) will leave behind $12 trillion, and the baby boomers will transfer more than $30 trillion — all in the next two to three decades. Because much of this money will be transferred more than once, as the members of each generation die off, some estimates predict that over $60 trillion will be transferred over the next few decades.

This financial accumulation and wealth transfer is not limited to the oft-reported top 1 percent. Credible reports currently estimate the number of millionaires in the U.S. to be between 11 million and 15.6 million, with the number growing by about 400,000 per year. At the upper range of these extremes, nearly 6.5 percent of the U.S. population has achieved millionaire status. It is reasonable to assume nearly every practicing attorney in Florida has millionaire clients, and will face issues regarding the transfer of wealth from these clients to the next generation. The aging of many in this millionaire class creates a sea of opportunities for exploitation of the elderly by financial advisors, relatives, con-men and women, and outright thieves.

The irresistible lure of money has given rise not only to a sophisticated and legitimate industry of financial advisory services and tax planners, but also a nefarious underworld populated by various types of predators, some of whom may be affiliated with large, legitimate investment firms. There are several areas of financial vulnerability for older adults who are dealing with even moderate wealth. In addition to end-of-life medical expenses, the elderly are vulnerable to those who attempt to take their money by fraud or deceit, and by those who exert undue influence over the elderly person’s testamentary intent.

We can most certainly expect a continued increase in classic will contest cases. In addition, Florida lawyers will see an increase in the number of cases arising out of the pre-death financial exploitation of the elderly. Civil remedies under Florida’s Adult Protective Services statutes, codified in F.S. Ch. 415, can be an effective weapon in seeking redress for this exploitation. This article discusses some of the vulnerabilities of the elderly and potential civil legal remedies to financial exploitation.

But wait, there’s more!

After reading this post elder-law litigator extraordinaire Shannon Miller pointed out there are other — perhaps even more powerful — tools available for those fighting against financial exploitation of the elderly. I previously interviewed Shannon in connection with her work on the 2014 legislative revamp of F.S. 825.103, which criminalizes financial exploitation of the elderly (see here).

Shannon reminded me of F.S. 772.11, the civil flip side of F.S. 825.103. Under F.S. 772.11 you can sue a perpetrator for treble damages plus attorneys fees if there’s clear and convincing evidence that your client’s been injured in any fashion by reason of any violation of F.S. 825.103(1).

Shannon said litigators involved in these types of cases should also keep their eyes on CS/HB 1059, which is currently under consideration by the Florida legislature. Among other reforms, this bill would create a new cause of action authorizing immediate 15-day freeze orders of contested assets in elder abuse cases. Here’s an excerpt from the legislative staff analysis for the bill (which has yet to pass):

CS/HB 1059 creates a cause of action for an injunction for protection against the exploitation of a vulnerable adult. The bill defines the term “vulnerable adult” to have the same meaning as provided in the APSA, and defines the term “exploitation” to mean the same as it does under s. 825.103, F.S. The cause of action does not require that a party be represented by an attorney, nor is a party prohibited from filing an action if another cause of action is currently pending between the parties. The bill provides that a petition can be filed by any of the following individuals:

  • A vulnerable adult in imminent danger of being exploited or their guardian;
  • A person or organization acting on behalf of the vulnerable adult with the consent of that person or that person’s guardian; or
  • A person who simultaneously files a petition for determination of incapacity and appointment of an emergency temporary guardian.

A person’s right to petition for an injunction is not affected by the fact that the person has left a residence or household to avoid exploitation of the vulnerable adult. Moreover, the petition may be filed in the circuit court in which the vulnerable adult resides.

In the event a guardianship proceeding is pending at the time of filing, then the petition must be filed in that proceeding. There is no minimum requirement of residency to petition, nor is there a requirement for actual exploitation to have occurred for an injunction to be issued.

Kelly v. Lindenau, — So.3d —-, 2017 WL 2180970 (Fla. 2d DCA May 17, 2017)

If you or your attorney make a mistake when drafting your revocable trust, and there’s “clear and convincing evidence” that the mistake is contrary to your testamentary intent, we’ve got a fix for that, and it’s found in F.S. 736.0415.

And because the statute’s “remedial” in nature, we learned in Megiel-Rollo v. Megiel that courts should err on the side of granting access to it whenever possible — no matter how big the drafting error might be (see here).

But there are limits to the mistakes F.S. 736.0415 can fix. For example, you can’t use this statute to give someone an after-the-fact “do over” just because things don’t pan out as expected when their trust was first signed — as the parties in Morey v. Everbank learned (see here). And what about innocuous technical defects in a signing ceremony (e.g., two witnesses are present, but only one signs the document)? Can you use F.S. 736.0415 to work around that problem? That’s the question at the heart of this case.

Case Study:

Back in 2006, while he was still living in Illinois, a man named Ralph created a revocable trust that provided for his wife and children. According to the 2d DCA, “The trust was validly executed pursuant to Illinois law.” After Ralph’s wife died he moved to Bradenton, Florida, met a new woman (Lindenau), and lived with her in a house he purchased in 2009. In 2014 Ralph hired his Illinois attorney to amend his trust so that Lindenau would get the Bradenton house upon his death. Ralph died in 2015. Lindenau claimed the house, Ralph’s children said no.

According to the 2d DCA, “There is no dispute that Ralph’s intent was to leave the Bradenton house to Lindenau.” So what’s the problem? Think execution formalities.

While Ralph’s Illinois lawyer may have done a fine a job under Illinois law, he blew Florida’s special execution rules for revocable trusts including “testamentary” provisions. Although the amendment was signed by Ralph in the presence of two witnesses, only one of the witnesses signed it. That’s a problem under Florida law.

Execution formalities required for non-Florida revocable trusts:

Under Florida law trusts don’t always have to be in writing; in fact F.S. 736.0407 tells us that under certain circumstances oral trusts work just fine. And if your trust’s executed somewhere else (like Illinois), F.S. 736.0403(1) tells us it’s generally going to be valid in Florida if it’s valid back home. But that last rule is subject to some big limitations, including Florida’s special execution rules for revocable trusts having “testamentary” provisions. In those cases F.S. 736.0403(2)(b) tells us your non-Florida revocable trust has to comply with Floria’s execution formalities for wills — no matter what the rule might be back home. Here’s how the 2d DCA explained this last point:

In Florida, the testamentary aspects of a revocable trust are invalid unless the trust document is executed by the settlor of the trust with the same formalities as are required for the execution of a will. § 736.0403(2)(b), Fla. Stat. (2014). In turn, the portion of the Florida Probate Code that addresses the execution of wills requires that wills must be signed in the presence of two attesting witnesses and that those attesting witnesses must themselves sign the will in the presence of the testator and of each other. § 732.502(1)(b)-(c), Fla. Stat. (2014). Consequently, a trust—or an amendment thereto—must be signed by the settlor in the presence of two attesting witnesses and those witnesses must also sign the trust or any amendments in the presence of the settlor and of each other. These requirements are strictly construed. Cf. Allen v. Dalk, 826 So.2d 245, 247 (Fla. 2002) (explaining that strict compliance with statutory requirements for execution of a will is mandated in order to create a valid will and recognizing that absent the requisite formalities, a will “will not be admitted to probate”).

Can you reform a trust to cure innocuous technical defects in a signing ceremony? NO

One of Ralph’s children was his successor trustee. After her father’s death she challenged the trust amendment gifting Ralph’s Bradenton, Florida home to Lindenau. Lindenau admitted the amendment wasn’t properly witnessed, but countered with two defenses: reformation and constructive trust.

As her fist line of defense Lindenau argued for reformation under F.S. 736.0415 to work around the execution problem. She won this argument at the trial court level, but struck out on appeal. According to the 2d DCA, the statute can be used to fix drafting mistakes in an otherwise valid trust, but it can’t be used to validate an improperly executed document.

Section 736.0415 provides in relevant part that the terms of a trust can be reformed “to conform … to the settlor’s intent if it is proved by clear and convincing evidence that both the accomplishment of the settlor’s intent and the terms of the trust were affected by a mistake of fact or law, whether in expression or inducement.” Aside from the issue of the settlor’s intent, the statute thus focuses on the terms of the trust, not the execution of it. See also Megiel–Rollo, 162 So.3d at 1094 (quoting Morey v. Everbank, 93 So.3d 482, 489 (Fla. 1st DCA 2012), for the proposition that reformation is used to correct a “mistake in the form of expression or articulation” such as where a trust includes a term that “misstates the donor’s intention[,] fails to include a term that was intended to be included[,] or includes a term that was not intended to be included”). Indeed, in discussing Florida’s liberal policy regarding reformation, this court has acknowledged that the remedy is used “to cause the instrument to reflect the true agreement of the parties when the terms of the agreement have not been clearly expressed in the instrument because of [a] mutual mistake or inadvertence.” Id. at 1097 (emphasis added) (quoting Tri–Cty. Prod. Distrs., Inc. v. Ne. Prod. Credit Ass’n, 160 So.2d 46, 49 (Fla. 1st DCA 1963)). But here, the terms of the second amendment are clear that Ralph intended to leave the Bradenton house to Lindenau. Thus there were no terms of the trust that needed reformation. Rather, Lindenau sought reformation to remedy an error in the execution of the second amendment. But by the statute’s terms, reformation is only available to remedy mistakes that affect “both the accomplishment of the settlor’s intent and the terms of the trust.” § 736.0415.

Can an implied constructive trust rescue your invalidly executed trust agreement? NO

When the facts irrefutably demonstrate that strict compliance with our execution formalities will defeat a person’s testamentary intent (as in this case!), you’re probably going to get some sympathy from your judge. And sometimes that’s enough. It worked at the trial-court level in this case, and it also seems to have worked in In re Estate of Tolin, 622 So.2d 988 (Fla. 1993), in which the Florida Supreme Court held that a constructive trust should be imposed where the testator failed to validly revoke a codicil to a will because he mistakenly destroyed a copy rather than the original document.

But a lot’s changed since 1993. In today’s world the last thing any appellate judge wants is to get accused of legislating from the bench. So what does that mean? When in doubt, statutory execution formalities are going to trump testamentary intent, no matter how clearly the facts (and equities) may favor the contested document (as happened in a more recent Florida Supreme Court case: Aldrich v. Basile, see here). And — surprise! — that’s exactly what happened here.

We decline to hold that a constructive trust should be imposed in this case. We acknowledge that the court in Tolin used the constructive trust remedy to work around the invalid revocation of a codicil because the testator’s intent was clear and because a third party would otherwise benefit from the testator’s mistake at the expense of the intended beneficiary. Further, we are mindful of the facts that, as in Tolin, Ralph’s intent is clear in this case and a reversal of the final judgment will result in a benefit to Ralph’s estate (i.e., to Jill, Jeff, and Judy) at the expense of Lindenau. However, there was no dispute in Tolin about the validity of the original will or codicil. And in [Allen v. Dalk, 826 So.2d 245 (Fla. 2002)], the court expressly distinguished Tolin and declined to extend it beyond its facts. Allen, 826 So.2d at 248. Instead, the court in Allen refused to impose a constructive trust because the testator had failed to comply with a “major requirement for a validly executed will” (i.e., the testator’s signing of it) and thus “[a]n order imposing a constructive trust under these facts would only serve to validate an invalid will.” Id.

Read in conjunction, Tolin and Allen make it clear that while the imposition of a constructive trust might be appropriate where a will (and thus a trust) has been validly executed, that remedy is not appropriate where there is an error in the execution of the document. We conclude that that distinction should be extended to cases such as this one where an amendment to a trust was not validly executed. Because there was no valid, enforceable amendment, the imposition of a constructive trust on the Bradenton house “would only serve to validate an invalid” amendment. Allen, 826 So.2d at 248.

Florida-Supreme-Court-Seal-300

The Florida Supreme Court’s Mediator Ethics Advisory Committee (MEAC) has been issuing formal advisory ethics opinions to certified and court-appointed mediators since 1994. MEAC opinions deal with mediation-related ethics questions governed primarily by Florida’s Rules for Certified and Court-Appointed Mediators (effective January 1, 2017).

In addition to an active litigation practice, I also have an active mediation practice and am certified by the Florida Supreme Court as a Circuit Civil Mediator (certification # 32893 R). Click here for my mediator’s pledge.

I’ve found the MEAC opinions to be a valuable resource in my mediation practice, and would recommend them to anyone who professionally mediates in this state. To that end, below is my summary of the MEAC opinions for 2017. Each summary is hyper-linked to a copy of the original source document.

Summary: A mediator may not refer a party to a specific lawyer or not-for-profit advocacy group when contacted by the party after a mediation. Such a referral would be inconsistent with the mediator’s duty to maintain impartiality throughout the mediation process.

Opinion: A mediator’s impartiality is essential to the mediation process and must be maintained throughout the entire process. Rule 10.330(a), Florida Rules for Certified and Court-Appointed Mediators, states:

Generally. A mediator shall maintain impartiality throughout the mediation process.
Impartiality means freedom from favoritism or bias in word, action, or appearance, and
includes a commitment to assist all parties, as opposed to any one individual.

There is no rule which prohibits a mediator from speaking to a party after a mediation; however, the mediator must continue to provide information in a manner “consistent with standards of impartiality” under rule 10.370(a). In order to refrain from “bias in word, action, or appearance” and continue the “commitment to assist all parties, as opposed to any one individual,” rule 10.330(a), the mediator in the question presented may continue to advise a party of their right to seek independent legal counsel as set forth in rule I0.370(b) after a mediation, but should not recommend a specific lawyer or not-for-profit advocacy group. A specific referral would be inconsistent with the mediator’ s duty to maintain impartiality throughout the mediation process as it would be assisting one individual. The mediator’s continuing duty to remain impartial is confirmed by rule 10.620, Integrity and Impartiality, “A mediator shall not accept any engagement, provide any service, or perform any act that would compromise the mediator’s integrity or impartiality.”

Summary: A mediator shall not schedule a mediation in a manner that does not provide adequate time for the parties to fully exercise their right of self-determination. The process must allow for the mediation to be adjourned and reconvened to complete the mediation if the parties so choose. A mediator must respond in a manner consistent with the Rules for Certified and Court Appointed Mediators when asked by pro se parties to provide information. A mediator may assist the party in filling out Florida Supreme Court approved forms, but must ensure that the information provided for the forms is from the party whom they are assisting.

Opinion: Rule 10.400 states that a mediator is responsible for safeguarding the mediation process and the Committee Notes to the rule describe rules 10.400 – 10.430, pertaining to the mediator’s responsibilities to the mediation process, as containing a mandate for adequate time for mediation sessions, and the process for adjournment.

A party’s right to self-determination is essential to the mediation process and must be maintained throughout the entire process. Rule 10.430, Florida Rules for Certified and Court Appointed Mediators, states:

“A mediator shall schedule a mediation in a manner that provides adequate time for the
parties to exercise their right of self-determination.”

Under rule 10.420(b)(l), one of the mediator’s responsibilities is to offer the parties the option of adjourning the mediation to return on another day for an additional session if they so choose. This choice is part of the parties’ right of self-determination and would apply to the scenario described herein.

There is no rule that states a specific amount of time must be delegated for a mediation session. Some mediations take longer than others due to any number of factors, including the complexity of the issues and the parties to the case. It would not be correct to say that a mediation cannot be completed in two hours, or any specific amount of time, and conversely it would not be correct to say a mediation must be completed in two hours, or any specific amount of time. Rule 10.430 requires that the parties be provided adequate time to exercise their right of self-determination; therefore, it must be the party’s exercise of self-determination that dictates the time required to mediate and not the mediator or a person/entity responsible for scheduling the mediation.

Rule 10.370(a) provides that “a mediator may provide information that the mediator is qualified by training or experience to provide.” The mediator is constrained by rule 10.370(c) which states “a mediator shall not offer a personal or professional opinion intended to coerce the parties, unduly influence the parties, decide the dispute, or direct resolution of any issue.” Consistent with MEAC Opinions 2000-009, 2001-003, and 2009-007, a mediator may assist prose litigants with filling out forms approved by the Florida Supreme Court, however, the information submitted on the forms must come from the party whom the mediator is assisting. In the example provided, it would be appropriate for the mediator to provide a source for the
definition of a contingent asset, which in this case would be the Florida Supreme Court Long Form Financial Affidavit’s instructions, Step 4, the definition of “possible assets.” However, it would not be appropriate under the rules for the mediator to determine or advise the party whether an asset is a contingent asset.

Summary: A mediator’s business practices regarding fees and expenses must be consistent with rule 10.380 and the other standards of ethical conduct in the Florida Rules for Certified and Court Appointed Mediators. Any change in the terms and conditions of the fees and expenses must be agreed upon by the parties so as to be consistent with self-determination and impartiality.

Opinion: At the outset, it is important to note the general principle regarding mediation fees and costs stated in rule 10.380(a), Florida Rules for Certified and Court-Appointed Mediators, that “a mediator holds a position of trust.” “The public’s use, understanding, and satisfaction with mediation can only be achieved if mediators embrace the highest ethical principles,” rule 10.200. The parties’ trust is established by their experiences with the mediator.

The MEAC believes any change to the terms and conditions of fees and costs after the parties have received the mediator’s written explanation of them should only occur if the mediator proposes the revisions with enough advance notice to allow the pat1ies a reasonable amount of time to make an informed and voluntary decision regarding the revisions or opt to choose another mediator. Allowing the parties such time will: safeguard the parties’ trust in the mediator; protect their self-determination and avoid any appearance of coercion by the mediator, rules 10.220, 10.300, 10.310(b); avoid the appearance of partiality in the event that the change could appear to favor one party, rule 10.330(a); and maintain equal bargaining power between Mediator Ethics Advisory Committee Opinion 2017-004 the mediator and the parties regarding the fees and costs, rule 10.410. The mediator’s conduct prior to the beginning of mediation sets the tone for the entire process.

The situation posed in the second question highlights the ethical issues raised by the mediator changing the terms of the fee and cost payment after the parties have received the mediator’s written explanation. Changing the terms and conditions upon arrival of the parties at mediation may create an environment in which the pat1ies may believe that they are being improperly influenced or coerced to agree to the new terms and conditions, and they have no choice but to do so or incur the cost (lost salary for time away from work, transportation, child care, etc.) and time delay of scheduling mediation with another mediator. Additional pressure to agree may be experienced by the parties if they have an upcoming court date which does not permit them to choose a different mediator. The parties arrive at mediation relying on the terms and conditions they have received. Creating an environment in which the parties are asked to make a decision about new fee and cost terms and conditions quickly, perceive that they have no choice, or feel like they do not have equal bargaining power with the mediator, is likely to break their trust in the mediator and affect their satisfaction with the mediation process. As with any issue presented at mediation, the rules mentioned above require that the parties must be allowed sufficient time to make an informed and voluntary decision regarding the changes, including, if needed, time to negotiate the changes.

It is not permissible for the mediator, without the informed and voluntary consent of all parties to unilaterally change the parties’ pro rata share of the mediator’s fees as doing so would violate the parties’ rights to self-determination and fail to maintain the mediator’s impartiality as explained above.

The mediator may not condition their performance on one of the parties or lawyers agreeing to pay the other party’s share of the mediator’s fee in the event that the other party fails to pay unless the mediator has provided the parties or their lawyers with a written explanation of this condition prior to mediation as required by rule 10.380(c) and the parties have agreed to it as required by 10.380(c)(4). If the mediator made such a condition without meeting the requirements of the rule, the mediator would be failing to maintain their impartiality, rule 10.330(a), and creating a conflict of interest under rule 10.340(a) by favoring the party who is not responsible for their own fee.

Summary: A mediator’s business practices as to fees must reflect the principle of impartiality and be consistent with rule 10.380, Florida Rules for Certified and Court-Appointed Mediators.

Opinion: A mediator’s responsibility to the parties includes the ethical principle that “a mediator’s business practices should reflect fairness, integrity and impartiality,” rule 10.300, Florida Rules for Certified and Court-Appointed Mediators. Rule 10.330 requires that a mediator “maintain impartiality throughout the mediation process,” and defines “impartiality” as freedom from favoritism or bias in word, action, or appearance,” including “a commitment to assist all parties, as opposed to any one individual.”

Under the scenario presented, if the parties are dissatisfied with the mediator’s performance at mediation (even for a case that settles), it is permissible for the mediator to waive their mediator’s fee as to all parties. However, if one party is dissatisfied with the mediator’s performance, it is not permissible for the mediator to waive their fee as to the dissatisfied party and still charge the other party as doing so would violate the mediator’s impartiality by favoring and assisting one party. Unless the mediator’s fee is waived as to all parties, the mediator’s business practice is not consistent with rules 10.330, and 10.380(b)(3) and (c)(4).

In the scenario described, the MEAC does not believe that waiving the mediator’s fee for both parties based on their dissatisfaction with the mediation process is a violation of rule 10.380(t) as doing so is not based on the outcome of the process, but the parties’ opinion of the process regardless of the outcome.

Summary: A mediator may report “agreement,” “no agreement,” or “partial agreement” to the court without comment or recommendation. No other descriptors or modifiers may be used in the mediator report unless the parties have consented to them in writing.

Opinion: After review of previous MEAC opinions and analysis of the various rules of procedure regarding reporting the outcome of a mediation, the MEAC retracts its 2014-002 opinion and any other opinion inconsistent with this opinion. The committee interprets the rules to allow a mediator to report “agreement,” “no agreement,” or “partial agreement” to the court, without comment or recommendation.

Further, as is stated in Florida Rule of Civil Procedure 1.730(a) and Family Law Rule of Procedure 12.740(f)(3), in civil and family law cases only, with the consent of the parties, the mediator’s report may also identify any pending motions or outstanding legal issues, discovery process, or other action by any party which, if resolved or completed, would facilitate the possibility of a settlement. To report anything additional without agreement of the parties, or add descriptors or modifiers to “agreement,” “no agreement,” or “partial agreement,” would be providing information to the court, an action which is prohibited by the Mediation Confidentiality and Privilege Act, sections 44.401-405, Florida Statutes. However, these rules do not restrict the parties from including in the written agreement their consent to the inclusion of additional language, descriptors, or modifiers in the mediator’s report.

Summary: If a mediator is a party in case A, it would be a clear conflict of interest which would compromise the mediator’s impartiality for the mediator to mediate case B which involves the mediator’s attorney and the attorney and opposing party in case A.

Opinion: According to the scenario presented, Mr. Smith is a party in the Miami-Dade County cases and it appears that Law Firm CDE represents him in those cases. Law Firm ABC represents Business XYZ which is the opposing party to Mr. Smith in a case. Due to Mr. Smith’s relationships with the law firms ABC and CDE and Business XYZ, his own attorney and the attorney and opposing party in the Miami-Dade County cases, his serving as a mediator for those parties would compromise or appear to compromise his impartiality, a violation of rule 10.330(a), Florida Rules for Certified and Court-Appointed Mediators. It would also create a clear and non-waivable conflict of interest under rule 10.340(a), Florida Rules for Certified and
Court-Appointed Mediators.

The situation described by the inquirer in Scenario B is essentially identical to that described in Scenario A due to the fact that a bankruptcy trustee is a party in a bankruptcy case. The opinions expressed by the writer of the question that “the mediator has done things to the detriment of the debtor as trustee in the Middle District because she did not appreciate the behavior of Law Firm CDE in the Southern” and that the mediator is “a powerful” party with influence in another district” are not relevant to the MEAC’s disposition of the question, nor does the MEAC base its opinion on them. As in scenario A, in scenario B, the mediator is a party – the trustee – in cases involving Law Firms ABC and CDE and Business XYZ; therefore, the mediator cannot ethically mediate for the law firms and Business XYZ in other cases for the reasons stated in the answer to Scenario A above.

Summary: Prior consultation with a party to a mediation by a member of the mediator’s law firm requires disclosure by the mediator, but is a waivable if the parties agree.

Opinion: MEAC Opinions are based on the facts presented in the question. Rule 10.340(a)-(c), Florida Rules for Certified and Court-Appointed Mediators, states:

(a) Generally. A mediator shall not mediate a matter that presents a clear or undisclosed conflict of interest. A conflict of interest arises when any relationship between the mediator and the mediation participants or the subject matter of the dispute compromises or appears to compromise the mediator’s impartiality.

(b) Burden of Disclosure. The burden of disclosure of any potential conflict of interest rests on the mediator. Disclosure shall be made as soon as practical after the mediator becomes aware of the interest or relationship giving rise to the potential conflict of interest.

(c) Effect of Disclosure. After appropriate disclosure, the mediator may serve if all parties agree. However, if a conflict of interest clearly impairs a mediator’s impartiality, the mediator shall withdraw regardless of the express agreement of the parties.

In MEAC Opinion 2011-014 the committee stated that the factors of the particular case determine whether a conflict can be waived by the parties. In the case presented, the law firm did not engage in representation involving the party to the mediation and the mediator had no contact with the party who consulted with the attorneys at the firm so a clear conflict of interest is absent under subdivision (a) of the rule, however, the mediator must disclose the matter to the parties involved in the mediation according to subdivision (b), and the potential conflict is waivable if agreed to by the parties under subdivision (c). The circumstances written of here may reasonably be regarded as allowing the mediator to maintain impartiality under rule 10.330(a), Florida Rules for Certified and Court-Appointed Mediators, if the parties agree the consultation does not compromise the mediator’s impartiality.

Flanzer v. Kaplan, — So.3d —- 2017 WL 5759041 (Fla. 2d DCA November 29, 2017)

Your favorite probate lawyer calls; she’s got a potential trust case for you, but isn’t sure if it’s time barred.

You’d think something as basic as knowing how long you have to file a lawsuit would be simple to figure out. And you’d be wrong. Why? Because trust cases are almost always based on “equitable” law, which means they don’t fit neatly into our statutes of limitations (found in F.S. Ch. 95).

For example, if you’re going to sue a trustee for some kind of breach of trust, the general rule is that you’ve got 4 years to file your lawsuit, but depending on the particular facts of your case, your actual filing deadline could vary wildly: from a low of 6 months to a high of 40 years! (see here, here).

And if you’re challenging the validity of a trust based on undue influence (the most common line of attack), your limitations period is again usually going to be 4 years, but it could be up to 12 years depending on whether or not the “delayed discovery doctrine” applies to your case.

Florida’s delayed discovery doctrine:

The delayed discovery doctrine generally provides that a cause of action does not accrue until the plaintiff either knows or reasonably should know of the tortious act giving rise to the cause of action. This doctrine’s been codified in F.S. 95.031(2)(a) as follows:

An action founded upon fraud under s. 95.11(3), including constructive fraud, must be begun within the period prescribed in this chapter, with the period running from the time the facts giving rise to the cause of action were discovered or should have been discovered with the exercise of due diligence, instead of running from any date prescribed elsewhere in s. 95.11(3), but in any event an action for fraud under s. 95.11(3) must be begun within 12 years after the date of the commission of the alleged fraud, regardless of the date the fraud was or should have been discovered.

The delayed-discovery doctrine is an exception to the general rule, and it usually only applies to fraud and products liability claims. The question at issue in this appeal is whether the exception can also apply to undue influence claims.

Case Study:

This case involves an irrevocable trust created in 2005 by philanthropists Gloria and Louis Flanzer. The fact that it’s an irrevocable trust is important. Most trust cases involve revocable trusts; and F.S. 736.0207(2) tells us you can’t litigate a revocable trust until it becomes irrevocable, which is usually upon the settlor’s death. In this case, because the subject trust started off as an irrevocable trust, it was subject to challenge from its date of inception. But that’s not what happened.

The settlors’ daughter waited 10 years (after her parents had both passed away) to file suit challenging the validity of the trust on undue influence grounds. All sides agreed the generally-applicable limitations period was 4 years:

The parties agree that under chapter 95 the limitations period applicable to [plaintiff’s] action is four years. See § 95.11(3). Indeed, a review of section 95.11 reveals that undue influence claims can only fall under subsection 95.11(3)(j), “[a] legal or equitable action founded on fraud.” See Peacock v. Du Bois, 90 Fla. 162, 105 So. 321, 322 (1925) (“Fraud and undue influence are not, strictly speaking, synonymous, though undue influence has been classified as either a species of fraud or a kind of duress, and in either instance is treated as fraud in general.”); In re Guardianship of Rekasis, 545 So.2d 471, 473 (Fla. 2d DCA 1989) (describing undue influence as a “species of fraud” and holding that statute of limitations on undue influence claim did not begin to run until the influence terminated or someone on Rekasis’ behalf became aware of the influence).

Applying a 4-year limitations period, the trial judge ruled the 2015 undue-influence claim (filed 10 years after the 2005 irrevocable trust was first created) was time barred and dismissed it. Whether or not the trial judge got this one right depends on whether or not Florida’s delayed discovery doctrine applies to this case, which could potentially extend the filing deadline from 4 to 12 years (through 2017).

Does Florida’s delayed discovery doctrine apply to undue influence claims? YES

And whether or not the delayed discovery doctrine applies depends on whether or not undue influence claims are “founded upon fraud” (in which case the doctrine applies). Trial judge said they’re NOT, 2d DCA said YES they are. 2d DCA wins; the doctrine applies. Here’s why:

On appeal, [plaintiff] argues that since courts treat undue influence as a species of fraud, undue influence is therefore subject to the delayed discovery doctrine. The Trustees challenge the application of section 95.031(2)(a) by emphasizing the elements that distinguish fraud and undue influence claims. They argue that such distinctions place undue influence claims outside the meaning of actions “founded upon fraud.” We disagree.

To be sure, undue influence claims and fraud claims are distinct causes of action. See GEICO Gen. Ins. Co. v. Hoy, 136 So.3d 647, 651 (Fla. 2d DCA 2013) (enumerating elements of fraud in the inducement); Greenberg v. Van Dam, 833 So.2d 810, 812 (Fla. 3d DCA 2002) (enumerating elements of undue influence). But the uses of the prepositions “founded upon fraud” and “founded on fraud” in sections 95.031(2)(a) and 95.011(3)(j), respectively, plainly countenance a broader class of claims than merely actions alleging fraud in general. As such, we see no reason why section 95.031(2)(a) would not apply to [plaintiff’s] claim—provided that [plaintiff] otherwise satisfies the requirements of that section. The Trustees point to no other legal authority supporting the circuit court’s conclusion that [plaintiff] must have challenged the philanthropic trust within four years of its becoming irrevocable. We therefore reverse the dismissal of Count V of [plaintiff’s] complaint and remand for further proceedings.

Illustration by Doug Thompson

If you’re litigating an inheritance case, chances are someone’s going to allege the person whose wealth is being disputed either lacked testamentary capacity and/or was the victim of undue influence. In both instances the issue of cognitive capacity is front and center, which means you’re probably in for some kind of battle of the experts.

Effectively cross examining expert witnesses doesn’t happen by accident; you need to have a strategy going in. But you don’t have to reinvent the wheel. There’s lots of good advice floating around out there on how to do this right. So where to turn?

Over the years I’ve found the ABA’s Litigation Journal to be a rich source of solid practical advice (here’s a favorite). So when I ran across an excellent article in the Fall 2017 issue entitled Effective Strategies for Cross-Examining an Expert Witness by veteran litigators Thomas C. O’brien and David D. O’brien, I made sure to hold on to it. Here’s an excerpt:

The truth is that most attorneys—even experienced advocates— lose ground when cross-examining an expert. This problem frequently boils down to poor strategy. Too often, lawyers who are prepared and know how to cross-examine fail because they pursue the wrong tack. They delude themselves into believing that they can actually win an argument with an expert on the subject matter of the expert’s opinion. This rarely succeeds.

However, there are ways to gain ground without launching a full frontal assault in the expert’s field of knowledge. With the right approach, cross-examination of an expert is not only a survivable event but also an opportunity to advance your case and score points with the jury. The following cross-examination strategies present both a low risk of danger and high potential for reward. While none guarantee success, they may significantly increase your odds of confronting an expert witness and living to tell the tale.

And here’s a list of the different strategies described in the article:

  1. The Résumé Attack: Challenging an Expert’s Credentials
  2. The Flagpole Strategy: Using the Expert to Advance Favorable Facts
  3. The Procedural Challenge: Identifying Departures from Established Protocol
  4. The Knowledge Test: Highlighting an Expert’s Lack of Information
  5. The Hired Gun Attack: Showing Bias, Interest, or Prejudice
  6. The House of Cards Strategy: Undermining an Expert’s Key Assumptions
  7. The Go-for-Broke Strategy: Mounting a Direct Attack

Good stuff, and a worthy addition to any litigator’s toolbox.

Stephenson v. Prudential Ins. Co. of Am., 2016 WL 6568085 (M.D. Fla. Nov. 4, 2016)

If you murder someone, you can’t collect on their life insurance policy. This is one of several iterations of the common-law “slayer rule” that’s codified in F.S. 732.802; a statute that gets litigated way more often than most people would guess (see here, here, here). But just because you kill someone doesn’t mean our slayer statute gets triggered. The killing has to be both “intentional” and “unlawful”.

F.S. 732.802(3): “A named beneficiary of a bond, life insurance policy, or other contractual arrangement who unlawfully and intentionally kills the principal obligee or the person upon whose life the policy is issued is not entitled to any benefit under the bond, policy, or other contractual arrangement; and it becomes payable as though the killer had predeceased the decedent.”

But just because you “intentionally” kill someone, doesn’t mean it’s “unlawful”. For example, an individual may lawfully kill in self-defense, an executioner may lawfully kill with the sanction of the State, and a soldier may lawfully kill under the rules of combat. It’s this kind of killing that’s at issue in this case.

Case Study:

This case involves two men, McGriff and Rigby. They got into some kind of fight; Rigby allegedly swung at McGriff, and McGriff responded by doing something that caused Rigby to fall and hit his head. Rigby eventually died from his injuries. McGriff claimed he was acting in self defense. There were no witnesses.

McGriff was the beneficiary of Rigby’s $466,000 life insurance policy. Rigby’s estate contested McGriff’s claim to the insurance money, which caused the insurance company to freeze the account. McGriff then sued the insurance company in this federal action. Rigby’s probate proceeding continued on its own independent parallel track.

McGriff was investigated but never prosecuted. According to the State Attorney, because Rigby died and there were no witnesses, the State would be unable to “rebut all reasonable hypothesis of [McGriff’s] innocence.” So was that the end of the story? No. Under our slayer statute you don’t need a murder conviction for the rule to apply.

F.S. 732.802(5): “… In the absence of a conviction of murder in any degree, the court may determine by the greater weight of the evidence whether the killing was unlawful and intentional for purposes of this section.”

Self Defense = Lawful Killing = No Slayer Statue Violation:

McGriff admitted being the cause of Rigby’s death, but claimed he was acting in self defense. When you kill someone in self defense, that’s an “intentional” act, which means the first prong of the statue was triggered.

Killing in self-defense is considered an intentional act. See Congleton v. Sansom, 664 So. 2d 276, 280 (Fla. 1st DCA 1995). As such, the only issue before the Court is whether McGriff acted unlawfully.

So did the court buy McGriff’s self-defense claim? YES. Apparently there was a prior ruling by the state probate judge involving the same parties that concluded McGriff hadn’t acted unlawfully. Add that ruling to the State Attorney’s decision not to prosecute, and we can all see where this case was headed. Here’s how the federal judge explained her ruling against the slayer-statute claim:

There are no living witnesses to the altercation, and the evidence before the Court regarding the details of the altercation consist of the 911 call, police report, autopsy findings, and the State Attorney’s decision not to prosecute. The Court has considered the fact that McGriff gave conflicting versions of the incident when he called 911 and when the police arrived at the scene. The Court has also considered the other evidence submitted by Harding, including her affidavit that she believed that McGriff and Rigby had a troubled relationship and that McGriff considered Rigby his “sugar daddy.” However, the totality of the evidence before the Court does not prove that it is more likely than not that McGriff acted unlawfully when he pushed Rigby, rather than that he acted in self-defense. Given due consideration to the record before the Court, the Court concludes that Harding has not and cannot show that McGriff acted unlawfully when he pushed Rigby, and as such, the Slayer Statute does not apply. This Court notes that its determination that the Slayer Statute does not apply is consistent with the state probate court’s determination on the same set of facts with the same parties before it.

Note to readers:

The linked-to order was published last year. I try to report on cases as they’re published. I don’t always succeed. This blog post is part of an ongoing project to report on older cases I wasn’t able to get to previously.

My firm’s developed specialized experience in cross-border estate matters, and in connection with that work I’m a member of the Miami branch of the Society of Trust and Estate Practitioners (STEP), a worldwide association of trusts and estates professionals, and STEP’s litigation arm, referred to as the Contentious Trusts and Estates Global Special Interest Group.

I’ve now tossed my hat in the ring for one of the four open spots on the Contentious Trusts and Estates Global SIG Steering Committee. If you’re a member of the Contentious Trusts and Estates SIG, you should have received an e-mail asking you to vote. Please consider voting for me if you haven’t voted already. Voting closes this Friday, December 1, 2017.

There are four vacancies on the Contentious Trusts and Estates Global SIG Steering Committee; the four successful candidates to be invited to fill these vacancies will be the four candidates receiving the highest number of votes. In the event of a tied vote there will be further rounds of voting in accordance with the Society’s election code.

If you have any questions, please email SIGs@step.org.

Thanks!

In re Guardianship of Bloom, — So.3d —-, 2017 WL 2270124 (Fla. 2d DCA May 24, 2017)

If you’re the trustee of a trust, F.S. 736.0816(20) tells us you’re presumptively entitled to hire attorneys to help you do your job and to pay them a reasonable fee for their services. On the other hand, if you’re not the trustee, F.S. 736.1005(1) tells us the presumption’s the opposite: you’re not entitled to payment of your attorney’s fees with trust assets unless a judge concludes your attorneys “rendered services” to the trust, and all of the trust’s beneficiaries with a stake in the outcome have been given “notice” and an opportunity to be heard before the judge rules on your motion. The mechanics of that notice requirement are a bit ambiguous under the statute, which the 2d DCA does a good job of explaining/interpreting in this case.

Case Study:

In this case the settlor’s nephew, who is also a beneficiary and former personal representative of his uncle’s estate, found himself litigating against the successor trustee of his uncle’s trust. Nephew not only succeeded in getting the trustee’s writ of certiorari dismissed on appeal, the 2d DCA also granted his motion for appellate fees. And nephew scored another win when the trial court granted his motion to remove the trustee he’d been litigating against. This is the sort of work that doesn’t directly enhance the value of a trust fund (it doesn’t bring new dollars into the trust), but has been the basis for attorney’s fees under a probate statute applying the same exact “rendered services” test used in our trust code (see here).

At the trial court level the probate judge said no to nephew’s motion for fees based in part upon the conclusion that there’s “no statutory or contractual basis for attorney’s fees.” Wrong answer says 2d DCA.

[F.S. 736.1005(1)] was applicable here and could have provided a basis for [nephew] to recover his attorney’s fees… On that basis, we are constrained to reverse the circuit court’s order so that the court can now make a ruling on [nephew’s] statutory argument for fees.

And here’s how the 2d DCA teed up the notice issue in this case:

Having concluded that [nephew’s] statutory argument to recover his fees requires further consideration by the circuit court, we pause to address a notification issue concerning his motion, as there was disagreement below about this issue and some clarification may be beneficial to the circuit court and the parties on remand. Section 736.1005(1) includes the following somewhat awkwardly crafted sentence regarding notice:

The attorney [who has rendered services to a trust] may apply to the court for an order awarding attorney fees and, after notice and service on the trustee and all beneficiaries entitled to an accounting under s. 736.0813, the court shall enter an order on the fee application.

Here’s the problem. When nephew filed his motion for fees he didn’t serve a copy of his motion on the trustee or the trust’s beneficiaries, which the probate judge pointed out was a problem.

[T]he circuit court observed during the hearing that the trustee and approximately forty named beneficiaries of Leon’s trust should have been provided prior notice of the hearing under this provision of the statute.

I’m guessing this oversight wasn’t intentional, but for whatever reason nephew’s counsel didn’t simply ask for a do-over after giving everyone notice. Instead, he doubled down, arguing that the statutory notice requirement applied before the judge ruled, not before the hearing on his motion.

[Nephew] disagreed with the circuit court’s reading. Instead, he posits that he need not have provided notice at the time he filed his motion, only sometime before the court entered its order on his motion—a view ostensibly supported by the compound-complex structure of this statute’s sentence and the presence of a dependent, adverbial clause (“after notice and service”) that, grammatically, would seem to relate only to the independent clause it precedes (“the court shall enter an order on the fee application”). … Thus, as [nephew] would have it, the court’s entry of an order on his fee application would be the operative deadline that implicates the statute’s requirement to furnish notice of that application.

Nice try, but no cigar. According to the 2d DCA, if you’re asking for attorney’s fees under F.S. 736.1005(1), you need to give notice to the trustee and the trust’s beneficiaries before you have your hearing, not sometime after the hearing but before the judge rules. Here’s how the 2d DCA parsed the operative statutory text to get to its common sense final ruling.

[Nephew’s proposed interpretation] is a rather peculiar way to read a notice provision. It also elides the real query—the precise ambiguity, if you will—that this section holds. Neither the statute’s sentence’s text, its structure, nor the rules of grammar provide a definitive answer to the temporal question: When, exactly, does notice under this statute have to be provided to these parties? We must look to rules of statutory construction for guidance. … Here, the principle of reading the notice provision in pari materia directs us to other parts of this compound-complex sentence that a grammatical convention, strictly applied, would otherwise avoid. … Within this very sentence, in the first independent clause, a precise point in time to utilize as a reference point is apparent—the attorney’s application for fees—a point that coincides precisely with when notices of hearings are ordinarily required. See Stevens v. Nationstar Mortg., LLC, 133 So.3d 628, 629 (Fla. 5th DCA 2014) (observing that the requirement that all filed pleadings and papers in court proceedings be served on each party or their counsel “is to satisfy the constitutional requirement of due process”); see also Fla. R. Jud. Admin. 2.516(a). That is how we construe this provision. Reading this statute’s sentence as a whole, in pari materia, we hold that an applicant for attorney’s fees under section 736.1005 must serve an application for attorney’s fees to the parties identified in the statute contemporaneously with the filing of the application with the court.

 

Smith v. Smith, — So.3d —-, 2017 WL 3774702 (Fla. August 31, 2017)

How do we protect the elderly from exploitation and abuse, without sacrificing our fundamental rights as we enter old age, like the constitutionally protected right to marry? That balancing act is incredibly difficult to pull off, especially in a state as large and diverse as ours, which not surprisingly (perhaps unavoidably) leads to instances of abuse and recurring cycles of legislative outrage/reform (see here, here).

The tension between the state’s parens patriae role in guardianship proceedings and Florida’s strong public policy favoring the preservation of our individual fundamental rights as we age (even for incapacitated wards), is front and center in F.S. 744.3215(2)(a), the ambiguous guardianship statute at the core of this hotly contested marriage case. But you can’t really understand how this dispute played out before three different courts unless you take a step back and consider the dynamics lurking under the surface, which got me thinking about framing.

Framing Effect:

If you think cases are decided solely on the basis of cold hard logic, you’re kidding yourself. Unconscious biases drive much of our decision making (which I’ve reported on here as applied to bench trials, here as applied to sentencing patterns, and here as applied to settlement negotiations). These biases can play a dominant role in how even the most abstract and non-emotional of issues are decided (including the proper construction of ambiguous guardianship statutes). In fact, the Nobel prize in economics just went to an economist who studies how “predictably irrational” we really are when it comes to making important decisions (see here).

In my opinion, how the Smith case was decided first by the trial judge, then by the 4th DCA, and now by the Florida Supreme Court, is largely attributable to one variable: the framing effect, a cognitive bias that leads people to react to the same choice in different ways depending on how it’s presented. Framing can be an incredibly powerful advocacy tool (see here, here). Now back to the statute.

Legislative History:

F.S. 744.3215(2)(a) was amended in 2006 to address what happens when an incapacitated adult’s right to contract is taken away for his or her own protection, but the right to marry (which is a form of contract) hasn’t also been removed. It’s not a common scenario, but it does happen, as it did in this case.

As amended, the statute now provides that when an incapacitated adult’s right to contract is removed, his or her right to marry isn’t automatically removed as well, but it does become “subject to court approval”. No one disputes court approval in this context is a good idea. But here’s the problem: the statute doesn’t say if court approval has to happen before the marriage is entered into or if it can also happen after the fact. That’s the statutory construction issue decided in this case. (Spoiler alert: FL Supreme Court held court approval after the marriage ceremony is OK too.)

According to the Legislative Staff Analysis for the 2006 amendment to F.S. 744.3215(2)(a), the statutory compromise between not being able to contract but still being able to marry subject to court approval, “reinforc[es] the significance of the right to marry”. The Staff Analysis also reported that the amended statute incorporated the recommendations made by a legislative task force. In its report, the Task Force made the following recommendations, which provided important guidance to the court in this case:

The Task Force spent a significant amount of time debating the concept of the right to marry being a contractual right. It had been suggested that if the court removes the right to contract then the court must remove the right to marry. The language that was agreed upon provides that if the right to contract is removed from the ward but not the right to marry, the right to marry should be subject to court approval. This is because marriage is a contract and requires that an individual understand the relationship and the rights the spouse will acquire at the time the marriage is solemnized. The right to marry should not be removed, as it is a fundamental right, but should be subject to court approval so that the judge can determine if the ward understands the marriage contract and that the ward is not a likely victim of abuse or financial exploitation.

See Guardianship Task Force, Final Report at 8 (2004).

Frame or be Framed:

How a case is framed not only structures the way in which key issues are defined and argued, it also plays a critical role in determining the eventual outcome, as it did in this case.

For example, if you frame the statutory construction issue in this case as an all-or-nothing choice between “void” and “voidable” marriages, the outcome’s inevitable: you’re going to construe F.S. 744.3215(2)(a) as requiring court approval prior to the marriage (otherwise, you’re left opting for a construction of the statute that makes judicial oversight almost impossible). That’s how the 4th DCA framed the issue in its decision, and how the Elder Law Section of the Florida Bar framed the issue in its amicus brief, and — not surprisingly — in both instances they concluded the statute required court approval prior to the marriage (which effectively made it impossible for the non-disabled putative spouse to get her marriage OK’d in court).

On the other hand, if you ditch the void vs. voidable paradigm and instead frame the issue as a choice between court approval before or after the wedding, and an outcome that makes it impossible for the non-disabled putative spouse to ever have her day in court, you’re probably going to construe F.S. 744.3215(2)(a) as permitting court approval before or after the marriage is entered into (it’s the best of both worlds: the marriage remains subject to court approval, and the putative spouse gets her day in court). That’s how the Florida Supreme Court re-framed the issue in its opinion, and the RPPTL Section of the Florida Bar re-framed the issue in its amicus brief, and in both instances they concluded — surprise! —  the statute permits court approval before or after the wedding.

New Frame = Supreme Court Win:

Bottom line, depending on how the issue is framed only one outcome becomes reasonably possible. Behold the power of framing!

Here’s how the Florida Supreme Court re-framed the statutory construction issue relying both on the statute’s actual text (nowhere does the statute contain any reference to void or voidable marriages), and on the statute’s legislative history linked-to above. As to the text of the statute:

The plain language of section 744.3215(2)(a) reflects that the Legislature did not intend for the type of invalid marriage at issue in this case to be classified as either void or voidable according to how these terms have been defined under Florida precedent.

The disputed provision does not use the terms “void” or “voidable,” nor does it use language that embodies the traditional definitions of these terms. Other statutes clearly identify circumstances that render a marriage void; however, such language was not used in section 744.3215(2)(a). For example, section 741.211, Florida Statutes (2016), is titled “Common-law marriages void,” and provides “[n]o common-law marriage … shall be valid.” (Emphasis added.) Similarly, section 741.21, Florida Statutes (2016), is titled “Incestuous marriages prohibited,” and provides that a man or woman “may not” marry certain relatives. (Emphasis added.) In contrast, section 744.3215(2)(a) does not expressly provide that an incapacitated person whose right to contract has been removed is “prohibited” from marrying unless court approval is obtained, or that any marriage entered into would be “void” absent such approval.

. . .

The plain language of section 744.3215(2)(a) is likewise inconsistent with the traditional meaning of a “voidable” marriage. As previously discussed, the statute makes a ward’s “right to marry” contingent on court approval if the right to contract has been removed. In other words, the ward’s ability to enter into a valid marriage depends on court approval. Thus, if the right to marry is not approved, any attempt by the ward to marry would result in an invalid marriage. If court approval is never obtained, the invalidity of the marriage cannot be cured, and the marriage can be given no effect. This is inconsistent with the traditional concept of a “voidable” marriage, which is “good for every purpose” until it is challenged, and “good ab initio” if it is not challenged within the parties’ lifetimes. Kuehmsted, 138 So. at 777.

. . .

Accordingly, we conclude that the Legislature did not intend for the concept of a “void” or “voidable” marriage to apply to the disputed provision. We hold that section 744.3215(2)(a) does not preclude the possibility of ratification of a marriage if the court subsequently gives its approval, but an unapproved marriage is invalid and can be given legal effect only if court approval is obtained.

And here’s what the court had to say about how its reading of the statue lines up with the statute’s legislative history:

The legislative intent, as declared in section 744.1012, Florida Statutes (2016), [evidencing] the goal of protecting incapacitated persons from exploitation while upholding their rights … combined with the legislative history of the Florida Guardianship Laws, demonstrates the Legislature’s consistent efforts to uphold incapacitated persons’ rights to the greatest extent possible. Therefore, the Legislature likely did not intend for section 744.3215(2)(a) to render a ward’s unapproved marriage absolutely void, particularly in cases such as this, where the ward was not deemed incapacitated with respect to his right to marry, the parties were engaged prior to his incapacitation, the guardian was asked twice to obtain the court’s approval, and there is no evidence whatsoever of abuse or financial exploitation.

Similarly, to interpret section 744.3215(2)(a) as rendering a ward’s unapproved marriage merely voidable would undermine the Legislature’s efforts to safeguard a ward’s inalienable right “to be protected against abuse, neglect, and exploitation.” § 744.3215(1)(d), Fla. Stat. As previously discussed, if a ward whose right to contract has been removed enters into a marriage without obtaining court approval, and such a union is considered voidable, the effect is that the marriage is essentially valid “for every purpose” unless and until it is challenged in a direct proceeding during the ward’s lifetime. This affords the ward and the ward’s estate little, if any, protection from financial exploitation if the ward passes away before the validity of the marriage can be challenged.

The interpretation of section 744.3215(2)(a) the Legislature likely intended—that, absent court approval, a marriage entered into by a ward whose right to contract has been removed is invalid, but ratifiable—advances both objectives of the Florida Guardianship Laws. It protects the ward and the ward’s estate by allowing a court to assess the risk of abuse and exploitation before the alleged spouse acquires any rights as a result of the marriage. It also upholds the ward’s fundamental right to marry to the greatest extent possible by allowing for the possibility of ratification.

…

Based upon the foregoing, we answer the certified question by holding that a ward’s failure to obtain court approval prior to exercising the right to marry does not render the marriage void or voidable. Instead, we conclude that under section 744.3215(2)(a), court approval is required before a ward whose right to contract has been removed may enter a valid marriage. Any marriage entered into without court approval is invalid. However, the statute does not prevent the ward or the intended spouse from seeking court approval after marrying in order to ratify the marriage. Accordingly, we quash the decision of the Fourth District and remand to the district court for proceedings consistent with this opinion.

If you’re a working probate attorney, elective share claims loom large in your practice. Which means anytime the thicket of interconnected and complicated statutes making up this body of law gets changed, it’s worth paying attention to. And recently there’s been an uptick in activity on the legislative front.

In 2016 our legislature amended F.S. 732.201 to make explicit what most of us had assumed was always the case: elective share claims set a floor — not a ceiling — on the amount of assets a surviving spouse is entitled to from an estate (see here).

This year a much broader package of reforms was introduced via Senate Bill 724. For those of us in the trenches, a good first start in terms of making sense of how these changes will actually impact our day-to-day practice is the bill’s Legislative Staff Analysis, which I’ve summarized below. All of these changes took effect on July 1, 2017.

[1] Homestead is Now Included in the Elective Estate:

This is a big deal. Previously, homestead property was specifically excluded from the elective estate. Now, homestead property is expressly included in the elective estate (F.S. 732.2035(2)), unless the surviving spouse has waived his or her homestead rights (F.S. 732.2045(1)(i)). If the homestead passes to the surviving spouse in fee simple, it’s valued at its fair market value on the date of the decedent’s death, but if the surviving spouse takes a life estate or an undivided one-half interest in the homestead, it’s valued at one-half of its fair market value on the decedent’s death date (see F.S. 732.2055(1) and 732.2095(2)).

[2] Extension of Time to File:

This change will make life easier for claimants. In order to exercise the option to take the elective share, a surviving spouse must file his or her election by the earlier of 6 months after the date the surviving spouse is served with the estate’s Letters of Administration, or 2 years after the death of the surviving spouse (F.S. 732.2135(1)). Previously, if you wanted to ask for an extension to file your claim, you had to do that before your original filing deadline. That’s changed. Now you can file for an extension up to 40 days after your original filing deadline (F.S. 732.2135(2)).

[3] Elective Share Trusts and the “Unproductive Property” Trap:

If done properly, an “elective share trust” allows a person to satisfy his or her surviving spouse’s elective share rights, while still retaining the right to say what happens to the elective-share assets when the surviving spouse dies. This planning device can be especially useful where a person wants to provide for a second wife or husband, but make sure the family assets go back to his or her children from a prior marriage when the surviving spouse dies. Given the natural tensions inherent to all blended families, it’s not uncommon for these trusts to end up getting litigated.

Drafting an enforceable elective share trust can be technically challenging. For example, in order to qualify as an elective share trust, the trust agreement must provide the surviving spouse with the ability to convert unproductive trust assets into productive assets (e.g., compel the trustee to sell a vacant lot that’s producing no income). Previously, if you left that clause out you could end up in court (see here). Not any more. Revised F.S. 738.606 will now “save” your trust by adding that clause statutorily if it got left out in the drafting process. This is a welcomed change.

[4] Attorney’s Fees and Costs:

It kills me when unscrupulous litigants use the threat of catastrophic legal fees to brow beat adversaries into accepting legally baseless claims. Little by little this threat is getting chipped away in the trusts and estates context by giving our court’s expanded cost-shifting powers (see F.S. 733.106(4) and F.S. 736.1005(2)). And now those expanded powers have come to elective share litigation.

Previously, if a court concluded an election was made or pursued in bad faith, the court could assess attorney’s fees and costs against the surviving spouse or the surviving spouse’s estate. Bad faith is a high standard to meet — so it’s gone! Under new F.S. 732.2151, a probate judge’s cost-shifting authority’s been significantly expanded to the much more generous “as chancery requires” standard. “The well settled rule in chancery cases is that a court of equity may, as justice requires, order that costs follow the result of the suit, apportion the costs between the parties, or require all costs be paid by the prevailing party.” Estate of Brock, 695 So.2d 714, 716 (Fla. 1st DCA 1996).

The new statute also addresses the mechanics of fee shifting in the probate context, authorizing a court to do one or more of the following:

  • Direct payment from the estate;
  • Direct payment from a party’s interest in the elective share or the elective estate; or
  • Enter a judgment that can be satisfied from other property of a party.

And last but not least, if the personal representative fails to file a petition to determine the amount of the elective share, as required by the Probate Rules, the surviving spouse can get paid from the estate for doing that job.

[5] Contribution to the Elective Share:

Ideally, you want to make sure no one gets anything until you’ve calculated how much the elective share is going to be. Bringing assets back into the estate is never easy, but sometimes it’s unavoidable. Beneficiaries who have received a distribution of property that is included in the elective estate, as well as “direct recipients” (F.S. 732.2025(1)), must give those assets back (i.e., “contribute”) to the extent necessary to satisfy an elective share shortfall (F.S. 732.2085(1)).

Those who owe a contribution must, as a general matter, pay interest on the contribution at the statutory interest rate. This interest starts accruing 90 days after the contribution order under current law. But what if there’s no contribution order? The statute’s been amended so that interest begins accruing on any amount of the elective share not satisfied within 2 years of the date of the decedent’s death, regardless of whether an order of contribution was entered (F.S. 732.2145(1)).

But wait, there’s more!

Elective share claims can be among the most technically challenging matters any probate lawyer ever has to contend with. So anytime that body of law changes, you’ll want to draw on as much professional commentary as possible to figure out all the implications. Which brings me to an excellent Florida Bar Journal article I’d recommend entitled Recent Amendments Bring Important Changes to Florida’s Elective Share, by Lauren Y. Detzel and Brian M. Malec. Here’s an excerpt:

The amendments made to Florida’s elective share laws during the 2016 and 2017 legislative sessions should be welcome news to surviving spouses. The protections enacted, including the opportunity for surviving spouses to obtain attorneys’ fees and costs in litigation and their entitlement to interest on delayed elective share payments, further Florida’s public policy and remove the inequities that disadvantaged surviving spouses in elective share litigation under prior law. Given the importance of the elective share, however, do not be surprised if additional legislative proposals are made to continue refining perceived injustices in the current regime.