A defining characteristic of inheritance litigation is that the single most important witness — the testator — is dead. And because the testator’s not around anymore to prove to us that he really was acting of his own free will when he disinherited a child, or favored a late-in-life lover, or bequeathed his estate in any other way that’s contrary to generally accepted norms, the second-hand hearsay testimony these cases turn on acts as a sort of Rorschach test. It tells us as much about prevailing social norms and the unconscious biases even the best of us — including judges — operate under, as it does about the testator’s state of mind. And that’s what makes these cases — and estate planning for unconventional clients in general — so confoundingly challenging.

It’s the perfect storm for a will contest. What do you do?

Now imagine the year is 1846. You’re an attorney practicing in north Florida, a slave-holding state. A sick old man calls for you; he doesn’t have a family in the conventional sense of the word for that time and place, but he lives with an enslaved black woman and their mixed-race children. The man tells you he wants to emancipate his partner and their children, but he’s too sick to do it on his own, so he wants to make sure they’re freed in his will after he dies. His will’s executed on January 23, 1846, and he’s dead by May of that same year. It’s the perfect storm for a will contest. What do you do?

That’s the story told by Los Angeles trusts and estates litigator Terrence M. Franklin in The 1846 Last Will of John Sutton—What’s Not So New in Will Drafting and Contests. Terry is the fourth great grandson of an enslaved black woman named Lucy Sutton, and a white farmer named John Sutton. John executed a will in 1846 that freed Lucy, their eight children, and six grandchildren.

Terry also tells his story in a video presentation that’s must-see TV for any probate attorney. And the resource page for this presentation’s packed with the kind of historical materials that are sure to warm the heart of even the fussiest history buff.

Drafting in contemplation of litigation.

There are two parts to Terry’s story that should be particularly interesting to practicing trusts and estates attorneys.

First, there’s the planning/drafting element of the story. According to Terry, at that time “in the State of Florida if you had emancipated slaves, you had an obligation to pay a thousand dollar bond for each one of them (I don’t know what the bond premium was), lest they become a burden on the people of the State of Florida, and they were required to leave the State within 30 days.”

So John’s will didn’t just emancipate Lucy and their children. His attorney, a man named Gregory Yale, drafted a mechanism into the will meant to actually get them out of Florida and to freedom.

Article Fourth [of the will] said that “I will and bequeath unto my trusty friend and relation, William R. Adams, formerly of Ware County, Georgia and now of Duval County, Florida, all of the above-named property, the said slaves, the future increase of the slaves, all the cattle, all the hogs, et cetera, on the following conditions. Namely, that upon my death or soon thereafter as practicable, the said William R. Adams shall move the said slaves and the increase thereof to a jurisdiction outside of the State of Florida, either Ohio, Indiana or Illinois where they can enjoy their freedom.” …

So the will established that William Adams was to carry out the responsibility of seeing to it that the family was to get there, but it was only on condition that he saw to it that that happened, and failing that, he was required to personally take the property because John trusted that William would see to it that the family made it to Illinois as required.

One of the most important elements of any estate plan is deciding who you’re going to rely on to carry out your wishes after your dead. John Sutton placed a huge amount of trust in his “friend and relation” William Adams. So did William come through? Big time, and in many ways he’s the real hero of this story.

So the document that was found in Southern Illinois specifically described the fact that John Sutton had created this document and that he had named a person named William Adams to be his executor. William Adams had seen to it that the family had made their way from Jacksonville, Florida, to Illinois. And by that time he was able to proclaim them to be free and able to live in perfect freedom. …

Now, bear in mind that … the family packed up all their belongings and made it from Jacksonville, Florida, on to boats I think through Savannah, around the tip of Florida, through New Orleans, up the Mississippi to Illinois where they ended up by December of … 1846. …

And as I said, William Adams who was the named executor of the will who had received the property, that is, my ancestors in trust to make sure that he saw to it that they made their way to Illinois, did in fact comply with his obligations, travelling with the family to Illinois which is where he recorded the copy of the will that I originally heard about, and declared them to be forever free.

The Will contest.

Not surprisingly, the will was contested. This is the second part of the story that should be of particular interest to practicing probate attorneys. John Sutton’s younger brother, a man named Shadrack, challenged the will on grounds that would be familiar to any of us today:

Shadrack alleged that he was informed and believed that “Sutton was at the time of the creation of the document very aged, infirm, bodily and mentally, and that he was then and had been for years wandering in his intellect and subject to the most childish and extravagant superstitions, that he was under the influence of ardent spirits, (he had been plied with alcohol) that his credulity and imbecility made him an easy dupe to the artifices of designing persons who represented to him that the families of children heretofore mentioned were not his offspring—were his offspring and when in fact, they were not his offspring.” …

The petition went on to say, “Your petitioner further showeth unto your Honor that said John Sutton being of sound mind and disposing memory aforesaid was incompetent to make any disposition of the property by will according to the law and that the instrument of writing which he has called his last will is null and void.” Similar to the language that we’d have today in a will contest, the same allegations, undue influence, fraud, lack of capacity.

In her book Fathers of Conscience: Mixed Race Inheritance in the Antebellum South, law professor Bernie Jones studied antebellum will contests in which Southern white men, typically widowed or single, left wills giving property or freedom to women of color and their mixed-race children. Prof. Jones found that the wills were often contested by white relatives claiming that the men were mentally incompetent or were unduly influenced by “jezebels” who used their feminine wiles to take advantage. It was up to the judges ruling on those contests to decide whether it was more important to follow the terms of the wills or to throw them out since they undermined social norms built on the premise that formalized economic and familial relationships between masters and slaves weren’t just distasteful, but illegal.

And for an eerily similar case underscoring the forces arrayed against Lucy and her children in 1840s Florida, you’ll want to read Florida’s Forgotten Execution: The Strange Case of Celia, which tells the story of another Duval County probate case involving another black family emancipated in the 1840s and the horrific ordeals they endured (including re-enslavement). This case was adjudicated by the same probate judge who adjudicated Sutton’s will, Judge William Crabtree, and involved an appearance by the same lawyer who drafted Sutton’s will, Gregory Yale (this time representing family members opposed to emancipation).

Against this backdrop, if you were advising William and Lucy would you tell them to role the dice on a trial in Florida or get out of town and take their chances in a free state like Illinois? (I know what I would have advised.) They apparently opted for the latter course of action; William, Lucy, her children and grandchildren were all long gone by the time the will contest was tried.

And how did that trial turn out? To my surprise, John’s will was upheld.

Well, there was a final decree that was issued on March 10, 1847 by Judge Crabtree. And in his final decree, which you can’t read very well, but Judge Crabtree upheld the will and ordered Shadrach to pay $28.08 in court costs.

But think about this, if the will had been overturned could Shadrack have sued William for some kind of civil theft in connection with helping Lucy and her children to escape? And as fugitive slaves, Lucy and her children would have lived under constant fear of being dragged back to Florida. The stakes for those involved couldn’t have been higher.

Bending the arc of history towards justice.

Terry Franklin concludes his article by reflecting on the people who’ve helped him uncover his family’s story and his great, great, great, great grandmother’s journey to freedom, including the generous pro bono assistance of Florida trusts and estates lawyers like Mike Simon and his colleagues at Gunster. Terry also reflected on the importance of “the context of history” to the work we do, not just as attorneys, but as citizens with a personal stake in bending the arc of history towards justice. I can’t say enough good things about Terry’s article, it’s a must read for any Florida probate attorney.

What has been miraculous to me is that people have opened their arms to me and helped to support in telling this story, including the Gunster firm. After I returned back to the ACTEC meeting after Jeffrey and I went to see the will, one of our colleagues there, Mike Simon, actually said to me, you’ve got to get your hands on those files because now there’s a rule in the State of Florida that says that once files have been digitized, they can be destroyed. So they went to court for me, pro bono, and got me ownership of those original documents, those 46 pages of documents that connect us to our history.

What I’ve learned in this process as I began to dig in further and do my own research and fill out the contours of the novel that I’m trying to write is a little bit about the importance of history. I’ve always thought of history as something that famous people did, or presidents or kings and Queens, or even individuals who did something unusual and extraordinary like Harriet Tubman who now have become part of our history.

But what I realized as I read these documents and connect to my ancestors is that we’re all living in the context of history. That everyday we are taking actions and steps that are part of history. That our descendants will be looking back to us to explain. I know that I stand on the same ark of history with John and Lucy and their children. And with my descendants who are yet to come. And I think the challenge for us, the question for us, is what are we each individually doing to bend that arc of history towards justice.

And I think that’s my message to you today, is that we can talk about the law. We can talk about the facts. We can talk about the books. We can talk about the history. But what is it that we are doing to make life better for those around us, and for our generations yet to come.

The U.S. has the world’s highest rate of children living in single-parent households. Against this backdrop it shouldn’t come as a surprise to anyone that questions about paternity are a common occurrence in probate proceedings, especially when the decedent dies intestate.

Now the bad news, as I’ve previously reported if you happen to have been age 22 or older in 2009 (i.e., age 34 or older today) you are forever time barred from adjudicating paternity in a Florida probate proceeding …  even if you have irrefutable DNA evidence backing you up. As a practical matter, this means that for middle aged adults (i.e., the most common age group for surviving children in most probate proceedings) all paternity actions are now time barred in probate. And that means there’s going to be a lot of pressure to find workarounds in those cases where paternity is factually undeniable. The “written acknowledgement” route for establishing paternity will seem like an easy answer. As demonstrated in the White v. Marks case below, it’s not.

Case study: White v. Marks, — So.3d —-, 2021 WL 1216210 (Fla. 5th DCA April 01, 2021):

If a man dies intestate his out-of-wedlock children or descendants are determined by applying one of the three tests found in F.S. 732.108(2). The first two tests are objective “yes” or “no” questions, that are fairly easy to apply. Did the decedent marry your mother, if yes, he’s your father. Was the decedent’s paternity previously established in a paternity adjudication, if yes, he’s your father (no matter what the DNA says).

By contrast, the third “written acknowledgement” test for paternity is open ended, leaving plenty of room for interpretation. The third test is found in F.S. 732.108(2)(c), which provides as follows:

The person is … a descendant of his or her father and is one of the natural kindred of all members of the father’s family, if: … (c) The paternity of the father is acknowledged in writing by the father.

Is any written acknowledgment of paternity enough? NO

In the real world, the undefined and often shifting emotional ties between men and the children of the women they’ve shared their lives with often result in a paper trail that’s equally ambivalent. If this informal paper trail is going to be used as a basis for establishing paternity, the decedent’s expressed intent needs to be beyond question — passing, contradictory references won’t suffice. Here’s the operative test:

In interpreting the prior version [of the statute], the Florida Supreme Court found that an informal writing was sufficient to meet the statute, provided the acknowledgment “directly, unequivocally and unquestionably acknowledges the paternity of the illegitimate child, in such terms and under such circumstances as may ‘be construed as a formal acknowledgment of parenthood.’” In re McCollum’s Est., 88 So. 2d 537, 540 (Fla. 1956) (quoting In re Horne’s Est., 149 Fla. 710, 7 So. 2d 13 (1942)).

Will an unsigned birth certificate suffice? NO

In this case the decedent appears on the contestant’s birth certificate — even though all sides concede he was not her biological father.

Ms. Marks’ mother, Lynda Vitale, had conceived Ms. Marks with the assistance of a sperm donor and was pregnant at the time she and Mr. Marks met. Despite the fact that Mr. Marks was not her biological father, his name was entered on Ms. Marks’ birth certificate. Ms. Marks’ mother had explained to her that to avoid the social stigma attached to out-of-wedlock births where the father was listed as “unknown,” Mr. Marks had agreed to be listed as the father.

But more importantly, the decedent didn’t sign the birth certificate. In the absence of a signature, the document is disqualified as a matter of law.

Ms. Marks has conceded on appeal that the trial court erred in finding the birth certificate constituted a written acknowledgment of paternity. The birth certificate was not signed by Mr. Marks and without the accompanying required written consent, could not qualify as written acknowledgment under the statute.

Does calling you my “adopted daughter” in my Will or Pocket Planner suffice? NO

The decedent refers to the contestant as his adopted daughter in his Will — even though all sides concede he never actually adopted her — and the reference was made for purposes of cutting her out.

Mr. Marks passed away in 2018, and his will was submitted to probate. The will devised his estate to Joseph White and Darla Hall in equal shares and expressly did not provide for Ms. Marks, stating: “I have also intentionally made no provision under this will for my adopted daughter Samantha Nicole Marks, although it is my desire that Joseph White make appropriate provisions for her.”

The decedent also made some reference to the contestant in his “pocket planner” that arguably evidenced an acknowledgment of paternity. So was this enough? Nope, especially when viewed in the context of a relationship that was marked by a lack of contact and emotional and financial support for most of the decedent’s life.

Ms. Marks readily admits that Mr. Marks was neither her biological nor adoptive father. Mr. Marks was well aware that he was not her biological father, as Ms. Vitale was pregnant before they met, which presumably explains why he referred to Ms. Marks as his adopted daughter, rather than his daughter. Because it is undisputed that an adoption did not occur, the references in the will and pocket planner are only understandable as descriptive, rather than direct, unequivocal acknowledgments of paternity. See McCollum’s Est., 88 So. 2d at 540.

It is undisputed that Mr. Marks did not undertake parental responsibilities during Ms. Marks’ life. Although Mr. Marks dated Ms. Vitale while Ms. Marks was an infant, he and Ms. Marks did not meet again until she was in her twenties. Nor did Mr. Marks provide her with any financial assistance throughout her life. Such behavior is consistent with the testimony of Ms. Marks that Mr. Marks agreed to have his name placed on the birth certificate to avoid having “unknown” listed as the father.

Further, Ms. Marks’ name was misstated under the will, and Mr. Marks directed that she not receive any devise from the estate. When considered with the lack of contact and emotional and financial support, the equivocal nature of the references becomes apparent. Accordingly, we find that the references are insufficient to create a legal relationship.

So what’s the takeaway?

Again, for reasons I’ve previously reported if you get a call from someone age 22 or older in 2009 (i.e., age 34 or older today) who wants to establish paternity in a probate proceeding, that person’s claim is now time barred. The “written acknowledgement” route for establishing paternity will seem like an easy workaround. It’s not.

Unless you have something in writing — signed by the decedent — that “directly, unequivocally and unquestionably acknowledges the paternity of the illegitimate child, in such terms and under such circumstances as may be construed as a formal acknowledgment of parenthood,” you’re not doing anyone any favors by raising false hopes.

Most parents want to treat their children fairly in their estate planning, but fair doesn’t necessarily mean equal. We all know there are perfectly valid reasons for why a parent might opt to NOT divide the family pie in equal shares, such as compensating a middle-aged child who’s given up part of his or her own life to care for mom or dad. This type of scenario comes up all the time in undue influence cases where one child — the “dutiful” caregiver — is favored in mom or dad’s will. If you’re a trusts and estates lawyer and you haven’t dealt with this kind of case yet, just wait, sooner or later you will.

The new normal: middle-aged children caring for elderly parents:

Ask people where they want to end their lives, and for most the answer is home. For more and more elderly Americans that means living with a middle-aged child. According to a MetLife study about a quarter of all adult children over the age of 50 provide personal care to parents in need. Not surprisingly, as compared to the rest of the U.S. this trend is especially pronounced in Florida where 1 in 5 residents is age 65 or older.

But just because you care for an aging parent, is it fair to get a bigger slice of the inheritance pie? If the answer to that question is in any way related to the economic costs borne by family caregivers, the answer is clearly yes. According to the MetLife study the total estimated aggregate amount of wages, pension, and Social Security benefits sacrificed by adult children who become their parents’ care givers is nearly $3 trillion.

So yeah, from an economic standpoint the case for favoring a care-giver child over an equally-loved — but unavailable — sibling in a parent’s estate plan is compelling. So why do these cases end up getting litigated under some undue-influence theory so often?

Should the presumption of undue influence extend to adult children caring for elderly parents?

Undue influence is presumed when: (1) a person with a confidential relationship with the testator, (2) was active in procuring or securing the preparation or execution of the devise and (3) is a substantial beneficiary thereof.

Every middle-aged child favored by mom or dad for the sacrifices made to personally care for an ailing parent gets caught up in this three-part test. There’s no escaping it. Consider this typical scenario: did mom “confide” in the daughter whose home she was living in, of course (strike 1); if mom’s too old or frail to drive, then was daughter “active in procuring or securing the preparation or execution of the devise,” of course, who else was going to drive mom to lawyer’s office (strike 2); and finally, if mom had the audacity to actually demonstrate her gratitude for daughter’s sacrifice by favoring her in her will, then presto: daughter’s now a “substantial beneficiary” of mom’s will (strike 3).

Where the Presumption of Undue Influence Should Not Apply: Consider the “Dutiful Son” and the “Dutiful Daughter” Exceptions, by Alexander S. Douglas II:

Against this backdrop it shouldn’t come as a surprise that Florida’s appellate courts are slowly modifying the hard edges of our common law involving undue influence claims against adult children caring for elderly parents. Estate planners and litigators alike owe it to themselves and their clients to make sure they’re aware of these shifting winds. And lucky for all of us we now have an excellent Florida Bar Journal article by Alexander Douglas, a practicing probate litigator, that lays it all out for us. Here’s an excerpt:

From the plaintiff’s perspective, employing the Carpenter factors to raise a presumption of undue influence and shift the burden of proof is a powerful strategy to win an undue influence case. However, the Third and First District courts of appeal have carved out a significant defense to the presumption of undue influence when children and parents are involved. The cases of Carter v. Carter, 526 So. 2d 141 (Fla. 1st DCA 1988), the “dutiful son case,” and Estate of Kester v. Rocco, 117 So. 3d 1196 (Fla. 1st DCA 2013), the “dutiful daughter case,” outline a defense to the presumption of undue influence that every practitioner should know about and which may prevent the application of the presumption and burden shifting normally available when the Carpenter factors are shown. …

It is apparent why the presumption of undue influence does not apply in situations involving a spouse helping a spouse and dutiful children helping a parent. In such specific, natural, and common family relationships, the Carpenter factors will always be present and it is unfair to give the plaintiff in any will or trust contest the definitive advantage that the presumption of undue influence affords. It is equally likely in such natural positions of confidence and trust that a spouse or dutiful child would be involved in a settlor’s or testator’s affairs. As a matter of public policy, our society should encourage family members to faithfully assist their spouses and parent in such situations. Other evidence of undue influence is admissible to prove over reaching, and indeed there are cases in which a spouse (particularly a second spouse) or a child does take advantage of a family member. Nevertheless, such situations should not be presumed in the same manner as if a neighbor, caretaker, or acquaintance were performing the same acts.

Mr. Douglas also prepared a PowerPoint presentation expanding upon his article that’s a must read for any practitioner litigating one of these cases. I asked Mr. Douglas if I could post a copy of his presentation to the blog and he graciously agreed. Good stuff, highly recommended.

Prof. John Langbein recently wrote, “In modern American practice the state-operated court system for transferring wealth on death, called probate, is being displaced. The wealth-transfer process has been increasingly privatized, conducted now mostly in the back offices of financial institutions rather than in the probate courts.” Referred to as the “nonprobate revolution” (a term Langbein coined over 30 years ago), this paradigm shift has profound implications for how inheritance disputes are prosecuted. Case in point: the increased “federalization” of inheritance litigation.

So when can you litigate your inheritance case in federal court?

There are all sorts of reasons for why you may or may not want your case litigated in federal court. The point is to realize this is a very real possibility in an increasingly post-probate world, and plan accordingly. So the question then becomes, when can you litigate your inheritance case in federal court?

First, think diversity jurisdiction. You’re not getting your inheritance case adjudicated in a federal court if you can’t establish diversity jurisdiction under the special — and distinct — rules applied to trustees and personal representatives.

Then, think “probate exception.” You’re not getting your inheritance case adjudicated in a federal court if you can’t get past this jurisdictional hurdle. Ever since the U.S. Supreme Court dramatically narrowed the probate-exception bar to diversity jurisdiction in Marshall v. Marshall, opening the door to “federalized” inheritance litigation to an extent previously unimagined, Florida’s federal courts have grappled with how narrowly or broadly to interpret the new ground rules. The Fisher case is the latest example of that process.

Fisher v. PNC Bank, N.A., — F.4th —-, 2021 WL 2658721 (11th Cir. June 29, 2021):

Joint accounts are commonly used to avoid probate. This case dealt with a joint account owned by a mother and her daughter. Before mom died, her son allegedly took control of the account with the bank’s knowledge and acquiescence, resulting in the account being re-titled in mom’s name alone. Sound familiar? If you’re a trusts and estates litigator you’ve heard some version of this story a thousand times before.

After mom’s death daughter filed a five-count complaint against the bank in the United States District Court for the Southern District of Florida. Complete diversity existed because daughter is a citizen of New York and the bank is a citizen of Delaware. Demonstrating how skittish federal judges are about getting drawn into a category of litigation they all learned pre the U.S. Supreme Court’s ruling in Marshall belonged exclusively in state court (i.e., inheritance disputes), the federal judge dismissed the case, concluding that daughter was “ultimately attempting to circumvent the normal probate process by bringing an individual claim against [the bank].”

The court also held that mother’s sole ownership of the investment account at the time of her death meant that her daughter lacked standing to bring claims relating to the account.

On appeal the 11th Circuit reversed, disagreeing with the trial judge’s ruling on both counts. As always, the interesting question isn’t what happened, but why? So here goes.

Should the “probate exception” be applied broadly or narrowly? Answer: Narrow (as in, more of these cases should be in federal court)

In Florida, our “probate” courts are just another division of our state circuit courts, with the same jurisdictional authority to adjudicate just about any case you can imagine all circuit courts have.

So if the federal standard is that no dispute that might possibly be litigated within the context of a state probate proceeding should be litigated in federal court, then the probate exception is going to be applied broadly (barring most inheritance cases from federal court). On the other hand, if we limit the probate exception to a probate court’s core function, i.e., probate wills and administer assets of the decedent’s “probate” estate, then the probate exception is going to be applied narrowly (allowing most inheritance cases into federal court, assuming you otherwise have diversity jurisdiction).

According to the 11th Circuit, federal courts don’t get to opt out just because they’d really rather not adjudicate inheritance cases. In other words, federal courts are required to apply the probate exception narrowly.

[T]he probate exception does not justify dismissing any case that might impact a decedent’s estate. Instead, because of our unflagging obligation to exercise our jurisdiction, we must apply the probate exception narrowly. See Glickstein v. Sun Bank/Miami, N.A., 922 F.2d 666, 672 (11th Cir. 1991), abrogated on other grounds by Saxton v. ACF Indus., Inc., 254 F.3d 959 (11th Cir. 2001) (en banc); see also Georges v. Glick, 856 F.2d 971, 973 (7th Cir. 1988) (“The [probate] exception is created by the judiciary, not by Congress. Consequently, we must construe the exception narrowly.”). Accordingly, the probate exception applies in only three circumstances. It “reserves to state probate courts [1] the probate or annulment of a will and [2] the administration of a decedent’s estate[.]” Marshall v. Marshall, 547 U.S. 293, 311, 126 S.Ct. 1735, 164 L.Ed.2d 480 (2006). It also bars federal courts from [3] “dispos[ing] of property that is in the custody of a state probate court.” Id. at 312, 126 S.Ct. 1735. Other than that, federal courts retain jurisdiction “to entertain suits ‘in favor of creditors, legatees and heirs’ and other claimants against a decedent’s estate.” Id. at 296, 126 S.Ct. 1735(quoting Markham v. Allen, 326 U.S. 490, 494, 66 S.Ct. 296, 90 L.Ed. 256 (1946)). See also Mich. Tech Fund, 680 F.2d at 741 (explaining that a main purpose of the probate exception is to preclude valuation of estate assets or the actual transfer of property under probate).

Can challenges to nonprobate transfers only be litigated by the decedent’s personal representative? Answer: NO

The bank argued that daughter’s case should be dismissed because the contested account was now owned by the estate alone, which meant only the estate’s personal representative had standing to sue with regard to this probate asset. And the trial court agreed. Here again the 11th Circuit rejected the trial court’s ruling.

Whenever nonprobate transfers are challenged, be it in federal or state court, these standing issues are going to come up for reasons not addressed in this case, but explained in depth in this excellent Florida Bar Journal article by Cady Huss and Elizabeth Hughes. So you’ll want to anticipate these arguments and note how they’re handled in this federal case.

First, daughter — not the estate — was the real party in interest under Federal Rule of Civil Procedure 17(a)(1). Why? Because daughter was suing the bank directly for damages payable solely to daughter, not the estate. So saith the 11th Circuit:

According to [daughter], the only reason the investment account was titled solely in [her mother’s] name at the time of her death is because [the bank] failed to retain [daughter] as a co-owner. She alleges that [mother] instructed [bank] that [daughter] was to remain a named titleholder on the account after the account was transferred to [bank]. [Daughter]  further alleges that [bank] representatives confirmed “both orally and in writing on numerous occasions” their understanding of those instructions. [Daughter] alleges that [bank] wrongly removed her from the investment account and that this removal ultimately resulted in the loss of [daughter’s] $150,000. [Daughter] repeats this allegation under all five counts in the complaint, stating that [bank] had “first-hand knowledge” that her money was in the account before “unilaterally remov[ing] her” in order to facilitate the loan with [mother]. Thus, the action is being brought by the person “entitled to enforce the right.” Payroll Mgmt., Inc. v. Lexington Ins. Co., 815 F.3d 1293, 1299 n.10 (11th Cir. 2016) (quoting 6A Charles Alan Wright, Arthur R. Miller, Mary Kay Kane, Federal Practice and Procedure § 1543 (3d ed. 1998)).

Second, daughter — not the estate — was the person harmed by bank’s conduct, which means she’s the one with standing to prosecute this lawsuit, not the estate’s personal representative. So saith the 11th Circuit:

[Daughter] has Article III standing. [Daughter’s] standing depends on whether her allegations satisfy three elements: (1) injury in fact, (2) causation, and (3) redressability. See Sierra v. City of Hallandale Beach, Fla., 996 F.3d 1110, 1112–13 (11th Cir. 2021) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). We think they do. [Daughter] repeatedly alleges that [the bank] injured her because its conduct cost her the money in the account. As to causation: if [the bank] had retained [daughter] as a co-owner, [daughter] would not have lost access to her money and, upon [her mother’s] death, the investment account would have passed to [daughter] as a joint tenant with right of survivorship. And the harms [daughter] alleges are redressable in the form of an award of damages against [the bank]. Accordingly, [daughter] has standing.

If a married couple transfers their tenants by the entireties (TBE) property to a joint revocable trust, have they forfeited its creditor protection shield? That’s the question at the heart of two recent Florida bankruptcy court rulings that came to opposite conclusions!

In In re Givans the court concluded that TBE property’s creditor protection shield is lost when it’s transferred to a joint trust. And in In re Romagnoli the court came to the opposite conclusion, ruling that TBE property’s creditor protection shield is not lost when it’s transferred to a joint trust. But don’t try looking for direct legal conflicts between these two rulings, the judges essentially talk past each other … which got me thinking about the power of “framing.”

Frame or be Framed:

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 as applied to sentencing patterns, bench trials, and settlement negotiations). These biases can play a dominant role in how even the most abstract and non-emotional issues are decided (including how bankruptcy judges should apply Florida’s confoundingly amorphous TBE law).

In my opinion, how the Givans and Romagnoli cases were decided is largely attributable to a single variable: the framing effect, a cognitive bias that leads people (including judges) to react to the same choice in different ways depending on how it’s presented. Framing can be an incredibly powerful advocacy tool (see hereherehere).

In re Givans, 623 B.R. 635 (Bankr. M.D. Fla. Sept. 30, 2020):

In this case the court framed the question as whether the debtor and his wife could “have it both ways.”

  • Frame #1: Should debtors be allowed to “have it both ways”?

In other words, could this couple retain the creditor-protection benefits of TBE property while also reaping the estate planning benefits of putting their property in trust? Well, there’s a reason why we usually say you can’t have it both ways: it strikes most of us as somehow unfair. Not surprisingly, when framed this way the court concluded “no,” debtor can’t have it both ways.

Property held by spouses as TBE possesses six characteristics: (1) unity of possession (joint ownership and control); (2) unity of interest (the interests in the account must be identical); (3) unity of title (the interests must have originated in the same instrument); (4) unity of time (the interests must have commenced simultaneously); (5) survivorship; and (6) unity of marriage (the parties must be married at the time the property became titled in their joint names).

The court concluded the debtor and his wife forfeited the creditor-protection benefits of their TBE property when they transferred this property to their joint trust because a trust can’t be married, so the unity of marriage was lost, which means the property stopped being TBE once it hit the trust.

The Trustee Deed provides the Debtor and [his wife] as Trustee of the Trust own the Property, not as “husband and wife.” Under trust law, a trustee holds only legal title to trust property while equitable title rests with the beneficiary. Once the Debtor and [his wife] transferred the Property to the Trust, they no longer owned the Property in their individual capacity. They held bare legal title as Trustee for the Trust. Because a trust is not a married individual, the Trust cannot own the Property as tenants by the entirety. The unity of marriage does not exist as to the Trust.

In other words, the debtor and his wife can’t have it both ways.

By transferring the Property to the Trust, the Debtor and [his wife] gave up certain legal rights in exchange for others. They lost the benefits tenants by entirety ownership afforded, such as protection of the Property from certain creditors. In exchange, they gained other benefits provided by the Trust, such as circumventing probate proceedings. They could directly transfer the Property to their children without the expense of going through probate. And because of the Trust, their children now have a present equitable interest in the Property as beneficiaries.

Debtor and [his wife] cannot have it both ways. The Property cannot be held by the Trust, subject to the terms of the Trust (which creates an interest for their children), and also be held as tenants by entirety, subject to common law and protected from creditors’ claims. In 2014, they created the Trust and transferred the Property to the Trust. By doing so, they lost ownership status as tenants by the entireties.

In re Romagnoli, — B.R. —, 2021 WL 2762812 (Bankr. S.D. Fla. June 30, 2021):

In this case the court sidestepped the whole can-you-hold-TBE-property-in-trust controversy and instead focused on the one question that really matters in a bankruptcy proceeding: is the property exempt from the claims of creditors? If the answer is no, you’re done, no need to get tangled up in esoteric property law questions.

  • Frame #2: Is TBE property in a joint revocable trust subject to creditor claims, regardless of whether a trust can hold TBE property?

Framed this way, the debtor won. And this time around it was the bankruptcy trustee who got lectured by the judge, not the debtor.

The Trustee expressed frustration that the Debtor has exempt assets worth collectively over $1.4 million that are exempt from the Debtor’s creditors. But those exemptions are statutory and if the Trustee wants to reach these assets, she must reach out to the Florida legislature.

What happened?

If you’re a trust law geek (and who isn’t!), “how” the court worked through the interplay between federal bankruptcy law and state trust/property law is way more interesting than the ultimate conclusion. So here goes.

We start from the premise that bankruptcy creditors are only entitled to whatever property rights debtors have — no more or less. Same goes for whatever interests a debtor has in trust.

Where the debtor’s interest is in a trust, the trustee acquires only those interests that the debtor had in the trust. See In re Raborn, 470 F.3d 1319, 1323 (11th Cir. 2006) (“[T]he [bankruptcy] trustee succeeds only to the title and rights in the property that the debtor possessed.”)

In this case the debtor had only three possible interests in the trust: as co-settlor, as co-trustee, or as beneficiary.

As a co-settlor of a joint revocable trust, under F.S. 736.0602 the debtor could only remove those assets of the trust he had individually contributed. Since the TBE property was owned jointly by the debtor and his wife (and thus jointly contributed to the trust), debtor couldn’t pull this asset out unilaterally, which means his creditors couldn’t unilaterally do so either.

To the extent that the [TBE property] is, in fact, held in the [Joint] Trust, because it was contributed as TBE and not community property, the Debtor and his Wife could only jointly remove the stock from the [Joint] Trust.

Result: Creditors stepping into the shoes of the debtor as a co-settlor of the joint revocable trust can’t unilaterally extract jointly contributed property, such as TBE property, to satisfy their claims. Strike one for creditors.

As a co-trustee, under the terms of the trust agreement the debtor could only sell or otherwise dispose of trust property, including the TBE property, with the consent of the other co-trustee, i.e., the debtor’s wife (the trust agreement in Givans had an identical provision). Which means the debtor’s creditors, stepping into his shoes as a co-trustee, could also only sell or otherwise dispose of this property with wife’s consent as co-trustee.

Thus, even if the Trustee could exercise the power of a co-trustee under the [Joint] Trust, the Trustee has not cited to any case that suggests that 11 U.S.C. § 363(f) gives the Trustee, acting with the authority of a co-trustee of a trust, the authority to bypass the provisions of the [Joint] Trust Agreement in seeking to sell property in the [Joint] Trust.

Result: Creditors stepping into the shoes of the debtor as a co-trustee can’t unilaterally sell or otherwise dispose of TBE property from the debtor’s joint revocable trust if the trust agreement requires the other co-trustee’s consent. Strike two for creditors.

As a beneficiary of a revocable trust, the debtor’s property interests in the trust are subject to creditor claims to the same extent they would have been if not in the trust. If the TBE property was creditor protected before it went into the trust, it stays creditor protected after in went into the trust. Here’s how the court explained this final nail in the coffin for the creditor’s claim against the TBE property:

[A]s the Trustee acknowledged in her objection, the ability of the Trustee to reach the Debtor’s beneficial interest is limited by applicable nonbankruptcy law. Fla. Stat. § 736.0505 states that “(1) whether or not the terms of a trust contain a spend thrift provision, the following rules apply: (a) The property of a revocable trust is subject to the claims of the settlor’s creditors during the settlor’s lifetime to the extent the property would not otherwise be exempt by law if owned directly by the settlor.”

… Assuming the [TBE property] is in the [Joint] Trust, if not in the [Joint] Trust it would be TBE property not subject to the claims of the Debtor’s creditors unless the creditors were joint creditors.

In sum, there is no theory under which the Trustee can reach the assets of the [Joint] Trust.

Result: Creditors stepping into the shoes of the debtor as a beneficiary of his joint revocable trust can’t assert claims against trust property if this same property would have been shielded if owned by the debtor directly, as is the case for TBE property when both spouses aren’t joint debtors. Strike three for creditors, debtor wins!

So what’s the take away?

First, no estate planning client wants to be a test case. No matter what your personal opinion may be on the pros and cons of joint trusts (and there are really smart people who think these trusts are a good idea), if you’re working with a married couple you need to think long and hard before advising them to transfer their TBE property to one of these trusts in light of the conflicting messages coming out of the Givans and Romagnoli cases. Some states have eliminated this uncertainty by statute. See, e.g., MO Rev Stat § 456.950 and 765 ILCS 1005/1c. Florida hasn’t gone that route. In the absence of that kind of legislation, why risk it?

Second, as trusts and estates litigators we view the world through the lens of Florida property law. Framing a TBE-in-joint-trust case in those terms proved fatal for the debtor’s exemption argument in the Givans case. By contrast, one would expect most bankruptcy judges to view the world through the lens of the U.S. Bankruptcy Code. Framing a TBE-in-joint-trust case in those terms was a winning strategy for the debtor’s exemption argument in the Romagnoli case. Two cases … same operative facts … opposite results. Behold the power of framing!

If you run a search for the term “undue influence” in Florida’s statutes, you’ll get over 30 hits. But try finding a single statutory definition for undue influence. It doesn’t exist.  What we’re left with instead is case law, which is context specific and open to a broad range of interpretation by whomever your judge (or jury) happens to be. It’s basically a “I know it when I see it” standard.

“I know it when I see it” … is a problem:

Why is this a problem? Because when it comes to undue influence, I may know “it” when I see it, and someone else will know “it” when they see it, but what they see and what they “know” may or may not be what I see and what I “know,” and that’s NOT okay.

Good lawyering depends in large part on the ability to predict the legal consequences of a given set of facts. Amorphous legal standards make it impossible to advise our clients with any degree of certainty. This lack of certainty is a problem for estate planners and litigators alike.

No matter how perfectly drafted your estate planning documents might be, there’s no guarantee they’ll survive a future undue-influence challenge because the definition of what we exactly mean by undue influence is a moving target. It’s whatever your fact finder thinks it is. And as litigators looking back on a set of facts, this same lack of certainty makes it impossible to predict in advance which Carpenter factor your particular judge may or may not consider in your particular case. This uncertainty makes it dramatically more difficult to litigate and settle cases.

Developing a statutory definition:

It doesn’t have to be this way. Florida’s “I know it when I see it” approach to undue influence isn’t universal. There are alternatives.

For example, in California a team of experts on elder abuse and undue influence received funding from the Borchard Foundation on Law and Aging to conduct two projects. The research team was lead by Mary Joy Quinn, who was then the Director of the Probate Department for the San Francisco Superior Court.

In the first project, the researchers examined the literature on undue influence as well as the statutory definitions of undue influence in all fifty states. This effort ultimately resulted in a 146-page report entitled Undue Influence: Definitions and Applications Final Report, which in turn lead to California Welfare and Institutions Code § 15610.70. This statute, quoted below, offers a clear and concise definition for undue influence that’s easily understandable by lawyers and non-lawyers alike. Note that California’s statutory definition also includes the indicators or “red flags” of undue influence a court is required to consider (this is a codification of Florida’s Carpenter factors).

(a) “Undue influence” means excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in inequity. In determining whether a result was produced by undue influence, all of the following shall be considered:

(1) The vulnerability of the victim. Evidence of vulnerability may include, but is not limited to, incapacity, illness, disability, injury, age, education, impaired cognitive function, emotional distress, isolation, or dependency, and whether the influencer knew or should have known of the alleged victim’s vulnerability.

(2) The influencer’s apparent authority. Evidence of apparent authority may include, but is not limited to, status as a fiduciary, family member, care provider, health care professional, legal professional, spiritual adviser, expert, or other qualification.

(3) The actions or tactics used by the influencer. Evidence of actions or tactics used may include, but is not limited to, all of the following:

(A) Controlling necessaries of life, medication, the victim’s interactions with others, access to information, or sleep.

(B) Use of affection, intimidation, or coercion.

(C) Initiation of changes in personal or property rights, use of haste or secrecy in effecting those changes, effecting changes at inappropriate times and places, and claims of expertise in effecting changes.

(4) The equity of the result. Evidence of the equity of the result may include, but is not limited to, the economic consequences to the victim, any divergence from the victim’s prior intent or course of conduct or dealing, the relationship of the value conveyed to the value of any services or consideration received, or the appropriateness of the change in light of the length and nature of the relationship.

(b) Evidence of an inequitable result, without more, is not sufficient to prove undue influence.

Putting theory into practice:

In step two of the California undue-influence project, the research team built on the new statutory language to conduct focus groups and pilot tests, obtain expert review of, refine, and publish a screening tool for use by non-lawyer elder abuse investigators.

This effort resulted in a 30-page article published in the Journal of Elder Abuse & Neglect entitled Developing an Undue Influence Screening Tool for Adult Protective Services, which in turn produced the California Undue Influence Screening Tool (CUIST). This is the kind of practical, hands-on tool that turns a great legislative idea into a powerful real-world solution for the victims of elder exploitation and their families.

Understanding the science of undue influence:

Embedded in California’s statutory definition for undue influence and the list of red flags courts are required to consider when adjudicating these cases is a deep understanding of the cognitive neuroscience underlying this particular form of elder abuse. The victims in these cases aren’t any more gullible than anyone else; they’re normal human beings acting exactly as one would expect them to act if targeted for exploitation at a time when their defenses are low because they’re cognitively or emotionally impaired.

For a fascinating introduction to the latest cutting edge science shaping our understanding of a person’s susceptibility to undue influence — especially as applied to the elderly — you’ll want to check out what the researchers speaking at the Stopping Financial Exploitation-Florida On The Forefront conference had to say. The Chair of that conference was elder law attorney extraordinaire Shannon Miller, and fortunately for all of us  who didn’t get to attend she’s posted video links for each speaker. The following is a sample from her excellent YouTube channel:

  1. Cognitive Changes In The Aging Brain Put Seniors At Risk for Financial Exploitation, by Dr. Nathan Spreng, Ph.D., McGill University
  2. Are Older Individuals At Risk For Cyber Exploitation? Research On The Exploitable Brain, by Dr. Natalie Ebner, Ph.D., University of Florida
  3. Financial Vulnerability and Exploitation in Aging: From Surveillance To Intervention and Prevention, by Dr. Gary Turner, Ph.D., York University
  4. The Exploitable Brain: Clues To Prevent Exploitation Of The Elderly, by Dr. Bonnie Levin, Ph.D., University of Miami

A few years ago Jonathan Galler published an excellent article in the Florida Bar Journal explaining the nuts and bolts of how creditor claims are litigated in probate proceedings. The article’s entitled This Party’s Dead! But Will the Lawsuit Survive? Here’s an excerpt:

The creditors’ claims process can be broken down into four phases: 1) service or publication of the notice to creditors; 2) the filing of a statement of claim; 3) the filing of an objection to the claim; and 4) the filing of an independent action to litigate the substance of the claim. The process is designed to promote “the public policy of providing for the speedy settlement of estates” and “the payment of claims and the distribution to the beneficiaries” in a timely fashion.

What makes this claims process challenging is that it plays out across two co-equal branches of the same circuit court: the Probate Division (where the estate’s administered) and the Civil Division (where independent actions are adjudicated).

When a creditor files a claim in the Probate Division, the estate can test its facial sufficiency in two ways. First, did it follow the “form and manner” requirements of Fla. Prob. R. 5.490? And second, was it filed within the strict filing deadlines contained in F.S. 733.702? If the answer to either question is “no,” the estate can file a motion to strike the claim in the Probate Division.

If the creditor filed a facially sufficient claim, the estate can test its merits by filing an “objection,” which then obligates the creditor to file an “independent action” in the Civil Division. The merits of creditor claims are adjudicated in the Civil Division.

If an estate simultaneously pursues both defenses, i.e., a motion to strike and an objection, the case is now before two co-equal judges: one in the Probate Division, the other in the Civil Division. The question then becomes, which judge decides this initial round of challenges? That procedural question’s answered by the Abbott case discussed below.

Northern Trust Company v. Abbott, — So.3d —-, 2021 WL 45668 (Fla. 2d DCA January 06, 2021):

This case involved a contested creditor claim. The estate challenged both the claim’s facial sufficiency by filing a “motion to strike” in the Probate Division, and the claim’s merits by filing an “objection,” which then obligated the creditor to file an independent action in the Civil Division.

When the estate asked the probate judge to rule on it’s motion to strike, the claimant cried foul, arguing the probate judge’s jurisdiction to adjudicate any aspect of the claim ended once the independent action was filed in the Civil Division. Here’s how the 2d DCA framed the issue:

[W]e write to address the parties’ arguments related to the scope of the probate court’s jurisdiction when faced with both an objection, which results in the filing of an independent action in circuit court, and a motion to strike a statement of claim. [Claimant] takes the position that when she filed her independent action under section 733.705(5), the probate court’s jurisdiction ended. Neither the probate rules nor chapter 733 address the filing of a motion to strike, but the cases allow an interested party to file both an objection and a motion to strike a statement of claim, as [the estate] did here. See Simpson v. Estate of Simpson, 922 So. 2d 1027, 1029 (Fla. 5th DCA 2006); Bell, 366 So. 2d at 767.

A claim’s facial sufficiency is a pure probate-law issue, which means it makes sense to allow probate judges to adjudicate motions to strike in the Probate Division before wasting time on the merits of an independent action pending in the Civil Division. That bit of common sense prevailed both at the trial court level and on appeal in this case. Bottom line, if you file both an objection and a motion to strike a statement of claim, your claim gets decided in the Probate Division. So saith the 2d DCA:

A motion to strike tests the facial sufficiency of the statement of claim, whereas the objection—which requires the claimant to file an independent action—relates to the validity or merits of a facially sufficient claim. See Simpson, 922 So. 2d at 1029 (noting the probate court should have ended its inquiry after determining whether the claimant was a reasonably ascertainable creditor and erred in proceeding to determine the validity of the claimant’s claim, stating “the merits of [the claimant’s] claim should have been determined in an independent action”); Bell, 366 So. 2d at 767 (“The personal representative’s objection to the sufficiency of the [s]tatement of [c]laim can be raised only in the probate court. The personal representative may not collaterally attack the sufficiency of the claimant’s [s]tatement of [c]laim in the trial court which will hear the independent action.” (citations omitted)). When a challenge to the legal sufficiency of a claim is made, the probate court must first determine the facial sufficiency of the claim before the parties litigate the subject matter of the claim in circuit court. See id. Similarly, a challenge to the timeliness of the claim is also a matter within the jurisdiction of the probate court. See Picchione, 354 So. 2d at 955 (holding the probate court properly entered summary judgment on an untimely claim filed against the estate). If the statement of claim is not facially sufficient or is time barred, then there is no reason to require the parties to participate in an independent action to determine the merits of the claim.

I recently reported on the Erlandsson v. Erlandsson decision and how the 4th DCA’s opinion highlighted the sometimes gut wrenching ethical challenges attorneys face when representing an adult client who’s cognitively impaired in a way that is clearly affecting his or her decision making. Enrique Zamora, one of South Florida’s premier elder law attorneys, graciously agreed to share his thoughts on the case.

[1] Can you give us some background on your experience as court-appointed counsel in contested guardianship proceedings, both as a practitioner and as an educator?

I have been practicing Elder Law for 35 years, even though the Elder Law Section of the Florida Bar was established in 1991. My areas of practice are mostly concentrated in Probate and Guardianship both administration and litigation.

I have been adjunct professor teaching Elder Law at St Thomas Law School since 2004 and Guardianship Law since 2015. I taught 2 semesters (2017 -2018) of Elder Law at the University of Florida Levin College of Law. The weekly commute to Gainesville finally got to me and I decided to quit.

I have been representing AIP’s [“Alleged Incapacitated Persons”] as court appointed attorney for over 25 years. I could write a book on some of my more interesting cases.

I have been the instructor for examining committee members through FSGA [“Florida State Guardianship Association”] sponsored conferences for over 10 years. I’m currently the designated instructor for all examining committee members in Miami-Dade County.

I have also been a speaker on guardianship topics for the Elder Law Section of the Florida Bar for many years.

[2] In the Erlandsson case the court-appointed counsel clearly believed a plenary guardianship was in the AIP’s best interest. If you were court-appointed counsel in this case and you too agreed a plenary guardianship was in the AIP’s best interest, as a practical matter what two or three actions would you have taken before the hearing to possibly broker a compromise of some sort?

I’m a firm believer that mediation is a very useful, but underutilized tool in resolving incapacity/guardianship issues. I also keep in mind that I’m an advocate for my  AIP client and NOT a Guardian ad Litem. Therefore, [my personal opinion of what is in] the best interest of my client is not controlling. My client’s instructions and objectives are my primary source of guidance during the incapacity proceedings. Having said that, there is a clear limit as to how far I can try to follow my client’s objectives, as Chapter 744  clearly states my representation is limited by the ‘extent that it is consistent with the rules regulating the Florida Bar’(744.102(1)).

If mediation doesn’t work, try it again!!. I have  participated in mediation up to 3 times in more than one case.

Even though it is difficult to tell from the opinion in the Erlandsson case, it appears that the AIP was reluctant to take her psychotropic  medication as well as not controlling her diabetes, but it also appears that there was some level of capacity on the part of the AIP. I have successfully convinced several of my  clients to accept the medication being recommended in many Baker Act cases. Therefore, trying to communicate the need to take her medication would have been a possible solution. Of course in this type of cases that solution tends to be short-lived, as usually another crisis arises sooner rather than later.

[3] What advice do you have for court-appointed counsel representing an AIP who is able to communicate just fine, but the AIP is acting irrationally?

My advice if your client is acting irrationally is to look up the meaning of irrational in a  dictionary. Don’t try to apply your standards of what is rational and try to put yourself in your client’s shoes, especially if they are elderly and not in good health. A person’s view of life changes as you see the end coming!!!. But if after doing all that ,you still think your client is acting irrationally, limit your representation as to be consistent with the rules regulating The Florida Bar. Wasting money in discovery with little chance of success is not a recommended strategy.

[4] In your opinion, is a change in our guardianship statutes or ethics rules (or both) needed to ensure disabled adult AIP’s are properly represented in contested guardianship proceedings, or is it simply a matter of better education? And why?

It is always a difficult task to represent a client with diminished capacity, but it can be done. However, in my opinion attorneys need more guidance as to how to handle representation of clients  with diminished capacity. We need to revisit Rule 4-1.14 of the Florida Bar and see how it can be modified to address specifically [the] representation of a client in [an] incapacity proceeding in particular and with diminished capacity in general.

The RPPTL and the Elder Law Sections  are working on both the statutes and the rule. A new Chapter 745 is coming to replace 744 and a revised 4-1.14 is also in the works. Whether these changes address all concerns remains to be seen.

[5] From your perspective as a practitioner, do you have any parting words of wisdom for judges in these cases?

My advice to judges is be patient. Incapacity proceedings can be very stressful on everyone, including the judges. In addition, don’t be paternalistic. Elderly people want to be independent and value their freedom. I will never forget one of my clients during an incapacity hearing, who told the judge in a very convincing and forceful way ‘Judge I need a guardian like I need a hole in my head’. Who can argue with that???

If ownership of a business asset is contested in an estate, the answer to “who gets it?” might be found in the controlling contract, not the decedent’s will or trust. This key point is often overlooked.

For example, in the Blechman case there was a dispute over ownership of the decedent’s 1/2 interest in an LLC. In that case the LLC operating agreement contained the following clause:

… in the event of a death of a Member during the duration of this Agreement, the Membership Interest of the deceased Member shall pass to and immediately vest in the deceased Member’s then living children and issue of any deceased child per stirpes.

Based on this text the court ruled the contested LLC interests were never part of the decedent’s probate estate, but instead transferred immediately to his children, bypassing his trust (which favored the decedent’s girlfriend). Bottom line, the LLC operating agreement controlled, not the decedent’s trust.

Procedurally, the Blechman case was litigated within the probate proceeding as part of a contested estate accounting action. That’s not the only way these cases play out.

Breach of Contract vs. Non-Probate Transfer:

Sometimes the controlling contract doesn’t result in a non-probate transfer, but instead sets up a breach of contract claim against the estate as a form of “agreement concerning succession” governed by F.S. 732.701.

While the end result is the same (contract controls, not the decedent’s will or trust), your litigation path is different. These cases are litigated as contested creditor claims that get adjudicated not by your probate judge, but as “independent actions” before a different judge sitting in the civil division. That’s what happened in the Finlaw case below.

Finlaw v. Finlaw, — So.3d —-, 2021 WL 1431125 (Fla. 2d DCA April 16, 2021):

In this case the decedent signed a partnership agreement governed by Ohio law that contained the following clause:

Each partner, who shall ultimately become a surviving spouse, further agrees to have prepared and execute a last will and testament so as to vest his or her interest in this Partnership in his or her children (lineal descendants).

The decedent subsequently executed a will that left her partnership interest not to her child, but to a grandson. After decedent died, her son filed a creditor claim against the estate asserting an interest in the partnership due to the decedent’s failure to execute her will in conformity with the above-quoted provision of the partnership agreement. Grandson objected, triggering son’s obligation to file an independent action. This is all classic probate creditor-claim procedure.

As his independent action son filed this complaint for declaratory judgment pursuant to F.S. 86.011 and F.S. 86.041 asking the court to construe the partnership agreement and determine that he, rather than the grandson, is the sole beneficiary of the decedent’s interest in the partnership. In a thoughtful and very instructive 11-page final judgment the trial court ruled in son’s favor.

At trial and on appeal grandson argued that no matter what the partnership agreement said, what the decedent really wanted, as reflected in her will, was for him to get this asset. That may be true, but it doesn’t matter. Contracts trump wills — under both Ohio and Florida law — so saith the 2d DCA:

Under both Ohio and Florida law, where contracting parties expressly agree on the disposition of property upon death, that agreement generally controls over a testamentary disposition of the property. See Barnecut v. Barnecut, 3 Ohio App.2d 132, 209 N.E.2d 609, 612-13 (1964) (holding that where a partnership agreement called for the settlement of a partnership interest, the interest did not become a part of the decedent’s estate); Blechman v. Est. of Blechman, 160 So. 3d 152, 159 (Fla. 4th DCA 2015) (observing “the general principle that express language in a contractual agreement ‘specifically addressing the disposition of [property] upon death’ will defeat a testamentary disposition of said property”) (alteration in original) (quoting Murray Van & Storage, Inc. v. Murray, 364 So. 2d 68, 68 (Fla. 4th DCA 1978))); see also Swanda v. Paramount Com. Real Est. Invs., No. C-030425, 2004 WL 1124587, at *2 (Ohio Ct. App. May 21, 2004) (holding partner’s attempt to transfer partnership share by will ineffective where transfer was contrary to partnership agreement).

Thus, having agreed in the partnership agreement to devise the partnership interest only to her children who are lineal descendants, the decedent’s subsequent devise to her grandson instead was contrary to the terms of the agreement. The trial court did not err in so concluding.

Increasing numbers of people have connections with one country, but live and work in another, frequently owning property or investments in several countries. At the center of this global trend sits Florida, a magnet for foreign investors and a hub of international banking, finance and professional services.

Not surprisingly, Florida probate attorneys often find themselves drawn into international estate cases, be it because the decedent was hiding assets in this state, or some other information critical to a foreign estate proceeding is located in Florida, or because the location of the decedent’s domicile at death is contested and there are dueling probate proceedings running simultaneously here and abroad.

A fundamental challenge for parties and their counsel in all of these cases is how to uncover the evidence they suspect exists, but have yet to obtain. If the decedent owned property in Florida or was domiciled in Florida, the answer is simple. Commence a probate proceeding in Florida, then take advantage of all of the discovery tools generally available to litigants in any Florida civil case, which Probate Rule 5.080 tells us are also available to litigants in any Florida probate proceeding.

Section 1782:

If there’s no jurisdictional “hook” for a Florida probate proceeding, but critically important evidence is located in this state nonetheless, all is not lost. One of the lesser-known strategies to obtain U.S.-style discovery in aid of a foreign probate proceeding is 28 U.S.C. § 1782, known colloquially as “Section 1782″. This federal statute permits a party contemplating or involved in a foreign proceeding to seek documents and even depositions from its opponent or third parties located in the U.S.

Section 1782 can be used by parties involved in overseas inheritance litigation. For example, in Application of Esses, the court granted a section 1782 petition that sought discovery for use in a Hong Kong probate proceeding, in In re Application for Discovery Pursuant to 28 U.S.C. §1782, the court granted a section 1782 petition that sought discovery for use in an Italian probate proceeding, and in In re Pimenta, the court granted a section 1782 petition that sought discovery for use in a Brazilian probate proceeding.

Timing matters:

Section 1782 petitions are technically demanding federal proceedings, best left to specialists. But it’s the kind of tool all probate attorneys should at least be aware of. Why? Because timing matters. This tool is best used early in the process. If you wait until after you’ve been beaten up overseas to try your luck in a Florida courtroom, you’ve probably waited too long, as the petitioner in In re Abud Valech recently learned.

In re Abud Valech, 2020 WL 8919124 (S.D. Fla. December 31, 2020):

This case involved claims by the widow of a man reported to be “one of Ecuador’s richest and most powerful men” whose fortune included businesses, real estate holdings, and investments in Ecuador, Florida, Panama, and other jurisdictions. Despite living a “wealthy lifestyle during their marriage,” when husband died his surviving spouse found he basically had nothing titled in his name, which meant her spousal inheritance rights, referred to as “conjugal share rights” in Ecuador, were worthless.

Following her husband’s death, the widow initiated eight pre-suit discovery petitions in Ecuador. And in every single one of those cases widow’s discovery efforts went nowhere; they were all denied. In addition to her discovery petitions, the widow also commenced three separate proceedings “in Ecuador asserting her conjugal share rights.” According to widow’s Ecuador-law expert, in Ecuador “a lawsuit must be accompanied by all the evidence intended to be used.” Having gotten nowhere in her pre-suit discovery efforts, presumably her spousal-inheritance petitions lacked much, if any, evidentiary support, which again meant she lost every time. Against this backdrop widow decided to try her luck in Florida.

Not surprisingly, the fact that she’d been stymied at every turn in Ecuador was used to devastating effect against the widow once she filed her Section 1782 petition in Florida. The Florida court and defense counsel contesting the Section 1782 petition repeatedly made reference to widow’s prior setbacks in Ecuador.

Applicant has already filed eight unsuccessful evidentiary petitions in Ecuador and cannot use this Application as an “end run” to circumvent the decisions made by Ecuadorian judges to obtain the information. …

In addition to the Noboa Declaration, the Motion also relies on the declarations of Jorge G. Alvear Macias and Daniel Kuri Garcia. ECF Nos. [11-2], [11-3]. Alvear detailed the eight evidentiary requests and three complaints before Ecuadorian courts. ECF No. [11-2] at 65–80. In his conclusion, Alvear notes that despite Applicant’s dissatisfaction with the eleven court requests, she did not challenge any of the decisions with an appeal, a challenge which was available to her. ECF No. [11-2] at 79. Therefore, Alvear presumed that she “acquiesced in those judicial decisions that were adverse to her.” Id. …

The Movants argue that the discovery sought cannot be for use in a proceeding because there is no pending proceeding in Ecuador, and none is “reasonably contemplated.” ECF No. [11] at 14–15. Indeed, they state that “Applicant has unsuccessfully pursued eleven such proceedings in Ecuador”—including eight pre-trial petitions for evidence and three complaints—“all of which have been rejected or unsuccessful.” ECF No. [11] at 15. …

Here, despite eight pre-trial evidentiary petitions, Applicant has been unable to obtain information regarding the property, assets, and income owned and/or controlled by Mr. Anton. The information sought in the eight pre-trial evidentiary petitions is very similar to the information sought in this Application. … This Application is requesting similar information that was previously denied in Ecuador for both substantive and procedural reasons, and, therefore, this factor weighs against granting the Application.

There were other factors also weighing against the widow, as explained by the Florida court in its application of the  Intel factors” to this case. Bottom line, widow’s Section 1782 petition was denied.

Lesson learned?

Again, timing matters. Would this story have ended differently if widow had contacted a Florida probate attorney shortly after her husband died, who then recommended that she start by filing a Section 1782 petition in Florida prior to jumping into court in Ecuador, and widow had successfully obtained evidence in Florida helpful to her case in Ecuador? And then widow used the evidence uncovered in Florida to support her subsequent inheritance claims in Ecuador? Would this alternate sequence of events have changed the ultimate outcome? We’ll never know. This I do know: getting hammered overseas before you show up in Florida to file your Section 1782 petition is a pretty good way to guarantee you’re going to lose in Florida too.