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John G. Grimsley of Grimsley Marker & Iseley, P.A., in Jacksonville, Florida, was on the winning side of Taylor v. Taylor, — So.2d —-, 2009 WL 186155 (Fla. 1st DCA Jan 28, 2009), a case I wrote here. I first became aware of Mr. Grimsley through his work as co-author of Florida Law of Trusts, the definitive treatise on Florida trust law (his co-author is now slouch either, Prof. Powell was the scrivener for Florida’s new Trust Code).

I invited Mr. Grimsley to share some of the lessons he drew from the Taylor case with the rest of us and he was kind enough to accept.

Looking back, what strategic decisions did you make in this case that were particularly outcome determinative at trial? On appeal?

My strategy at trial was to have the two witnesses and notary testify to the circumstances surrounding the preparation and execution of the premarital agreement. Part of this strategy was to inquire into the decedent’s intentions and statements leading up to and including the execution of the premarital agreement. Any hearsay objection was met with the state of mind exception to the hearsay rule allowing the Judge to overrule the objection.

On appeal the main strategy was to rely on the plain language of the premarital agreement and place the agreement in the context of waiving marital rights by using the Black’s Law Dictionary definition of a premarital agreement. Also, we chose not to anticipate arguments from the wife (such as the absence of specific waivers of rights in the agreement), but rather to counter those arguments in our reply brief. Specifically, that unknown rights may be waived in the premarital agreement “Indeed, Florida Statute, section 732.702(2) negates the requirements of any disclosure of assets or values for an agreement entered into before marriage.”

Looking back, would you have done anything differently in terms of framing your case for the trial-court judge?

When doing the brief there were several areas of testimony that I wished I had included at trial, but it turned out that relying on the plain language of the premarital agreement and the plain language of the waiver statute was sufficient.

I wrote here in 2006 about an “ambiguous” premarital agreement that the 3d DCA held was a valid waiver of a widow’s marital rights under F.S. § 732.702. After reading the 2d DCA’s opinion in your case, I stated “it’s impossible to reconcile the different approaches taken first by the 3d DCA in 2006 and then by the 1st DCA above when applying F.S. § 732.702 to what all of us can agree are less than artfully drafted prenuptial agreements.” Would you agree? Disagree?

Agree – testimony on intent of parties supports the terms of the premarital agreement.

From your perspective as probate litigator, do you think there’s anything that could have been done in terms of estate planning to avoid this litigation or at least mitigate its financial impact on the family?

I believe this litigation could have been avoided by the decedent seeking the advice of an attorney in preparing a prenuptial agreement. The decedent made the same mistake in a holographic will that was notarized but had no witnesses. Even the invalid will had some probative value in showing the decedent’s intent that his assets go to his son and not to his wife.

Any final words of wisdom for probate lawyers of the world based on what you learned in this case?

I learned from this case that the de novo construction of a contract on appeal applied to prenuptial agreements and allowed the appellate court to interpret the premarital agreement and apply it to the waiver statute.

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In Estate of Feinberg, 383 Ill. App. 3d 992 (1st Dist. June 30, 2008), an Illinois appellate court ruled a testator could NOT disinherit his grandchildren for marrying non-Jews. Here’s how the case was summarized in this piece in the Chicago Jewish News:

When Max Feinberg was in dental school in the 1920s and ’30s, he was one of only a handful of Jews in his class and was subjected to anti-Semitic slurs. He graduated at the height of the Depression and worked a seven-day week to build his dental practice. Although he did not adhere to the Orthodox Jewish practices in which he was raised, his Judaism was a crucial part of his life. He and his wife, Erla, belonged to a Conservative synagogue, observed Jewish tradition and always celebrated Jewish holidays.

Before he died in 1986 at age 77, Feinberg had his attorney insert a clause in his will concerning the distribution of his considerable financial assets. It stated that none of his grandchildren, or their children or grandchildren, would inherit the $250,000 he had allotted to each of them if they married a non-Jewish spouse unless the spouse converted to Judaism.

Max Feinberg couldn’t have known that that clause would become the subject of intense scrutiny and the basis of a lawsuit. In it, one of his grandchildren sought to prove that the clause was invalid. An Illinois court agreed. Now the Illinois Appellate Court has confirmed the decision, with one Jewish justice offering an impassioned dissent. There’s a possibility the case may go to the Illinois Supreme Court next.

The case was also written up here in Trusts & Estates Magazine and here in the Chicago Tribune.

It’s not uncommon to see estate-planning articles touching on the pros and cons of “incentive trusts”: trusts that use money to encourage or discourage certain behaviors [click here]. The take-away for Florida estate planners from the Feinberg opinion is that love ’em or hate ’em, you can only go so far with incentive trusts; get too creative and your client’s estate plan may meet the same fate Max Feinberg’s did.

By the way, I’m pretty sure a Florida court would rule the same way as the Illinois court did. If you come across this issue in your practice you’d do well to focus on Restatement of Trusts §29, which the Illinois court relied on heavily in its opinion. Here’s the key excerpt from the Feinberg opinion:

The Restatement Third of Trusts provides that trust provisions which are contrary to public policy are void. It gives as a specific example a provision that all of a beneficiary’s rights to a trust would terminate if he married a person who was not of a specified religion:

[Comment j.] Family relationships. A trust or a condition or other provision in the terms of a trust is ordinarily * * * invalid if it tends to encourage disruption of a family relationship or to discourage formation or resumption of such a relationship. * * *

* * *
In addition, a trust provision is ordinarily invalid if it tends seriously to interfere with or inhibit the exercise of a beneficiary’s freedom to obtain a divorce * * * or the exercise of freedom to marry * * * by limiting the beneficiary’s selection of a spouse * * *. * * *

* * *
[Illustration 3.] The marriage condition terminates all of [settler’s nephew] N’s rights if, before termination of the trust, he ‘should marry a person who is not of R Religion,’ with the same gift over to C College. The condition is an invalid restraint on marriage; the trust and N’s rights will be given effect as if the marriage condition and the gift over to C College had been omitted from the terms of the trust.

Restatement of Trusts § 29, Explanatory Notes, Comment j, Illustration 3, at 62-64 (3d ed.2003).

We hold that under Illinois law and under the Restatement (Third) of Trusts, the provision in the case before us is invalid because it seriously interferes with and limits the right of individuals to marry a person of their own choosing.

The Florida Bankers Association prepared this white paper proposing new legislation to be titled “Prudent Investor Rule Not to Apply,” aimed at relieving trustees of Irrevocable Life Insurance Trusts (ILITs) from a duty to determine whether decisions made by settlors in the selection of life insurance companies, particular types of life insurance policies, and the continuing payment of policy premiums from funds provided by settlors, are appropriate investments and in the best interest of their beneficiaries. I regularly come across articles discussing how to manage the unique fiduciary risks inherent to ILITs (click here for example), so this new legislation seems like a good idea. If anyone has any questions or comments, contact the chair of the Trust Law Committee of the Florida Bar’s Real Property, Probate and Trust Law Section: Barry Spivey.

Here’s one of those facts of life most probate lawyers learn early on in their careers: testators aren’t always 100% honest when describing their intentions to potential beneficiaries. For example, just because a client tells his second wife (or girlfriend) she’ll be taken care of in his will . . . doesn’t mean he really means it. Or maybe he meant it at the time he said it, but then had second thoughts and just never quite got around to signing that new will.

It’s that kind of common sense that’s at the heart of a recent California appellate decision in which the court held that a widow (second wife) lacked standing to sue her late husband’s estate-planning lawyer for failing to prepare a will that would have disinherited her late husband’s minor son (from a prior marriage) and left everything to her instead. The analysis underlying Myung Chang v. Lederman, 172 Cal.App.4th 67 (Cal.App. 2 Dist. Mar 16, 2009), is thorough and well-reasoned. If you ever find yourself facing a similar claim, you’ll want to pull this opinion and give it a read. When all is said and done, however, I think the court recognized the point I made above and ruled accordingly. Here’s the key excerpt from the opinion:

From a practical standpoint, common experience teaches that potential testators may change their minds more than once after the first meeting [with their estate planning lawyer] . . . [FN6]

FN6. Common experience also teaches that testator’s may not be completely candid when describing their intentions to potential beneficiaries.

For a detailed summary of the Lederman opinion, see Marshall Oldman’s piece in the Metropolitan News-Enterprise [click here].

And for a similar ruling by the South Carolina Supreme Court, see the Wills, Trusts and Estates Prof Blog post entitled South Carolina: No Attorney Duty to Prospective Will Beneficiaries.

U.S. v. Guyton, Slip Copy, 2009 WL 1308431 (M.D.Fla. May 08, 2009)

The IRS is the "über" creditor of any probate estate. Why? Two reasons. First, the personal representative (PR) is personally liable for any of the decedent’s unpaid taxes to the extent the PR pays any debts due by the decedent before paying the decedent’s tax liability. 31 U.S.C. § 3713(b); IRS Manual § 5.5.1. There’s nothing like personal liability to focus the mind. Second, the normal rules simply don’t apply to the IRS. As the court ruled in the linked-to order, the IRS is NOT subject to the limitations periods applicable to all other creditors:

Turning to Defendant’s final threshold argument, case law makes clear that the Government’s claim is not subject to state statutes of limitation, including Florida Statute § 733.705(8), absent its own consent. See e.g., United States v. Summerlin, 310 U.S. 414 (1940); see also United States v. Kellum, 523 F.2d 1284, 1286 (5th Cir.1975).

The Manhattan district attorney’s office’s elder abuse unit is prosecuting Anthony Marshall of exerting undue influence upon his mother, Brooke Astor, when she was diminished by Alzheimer’s disease, to persuade her to sign a codicil to her 2002 will that made Marshall the outright heir of her residuary estate instead of having it pass ultimately to charities.  Marshall is the only son of Brooke Astor, a grande dame of New York society who died in August 2005 at 105 leaving an estate valued at $132 million in addition to a $60 million trust.

This is a will contest, pure and simple. Unfortunately, it’s being litigated as a criminal prosecution. 

As reported in Brooke Astor’s son Anthony Marshall goes on trial for stealing from socialite mom, Marshall – who is 84 – is effectively looking at spending the rest of his life behind bars if he loses this trial:

Marshall faces up to 25 years in prison, if convicted. He and Morrissey have pleaded not guilty. Prosecutors filed an 18-count indictment against Marshall . . . three months after Astor died on Aug. 13, 2007.

Marshall stole artwork from his mom, gave himself a $1 million raise for acting as her financial adviser and spent her cash to buy a 55-foot yacht and pay the captain’s $52,000 annual salary, the indictment charged.

Lesson learned?

As our population ages, I suspect more and more local prosecutors will feel compelled to prosecute what are essentially inheritance disputes as criminal matters. Whether you think this is good or bad public policy is almost beside the point; it’s a fact of life we’ll have to deal with. Which means probate litigators will need to start teaming up with criminal defense attorneys much more frequently, advise their clients to “plead the 5th” at the first hint of trouble [click here], and consider what steps they as lawyers need to take to avoid becoming prosecution targets themselves [click here].

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Probate litigator Stephen P. Heuston of Frese, Hansen, Anderson, Anderson, Heuston & Whitehead, P.A., in Melbourne, Florida, was on the winning side of Belanger v. Salvation Army, 2009 WL 223884 (11th Cir.(Fla.) Feb 02, 2009), a high-profile case that received a good amount of press (and I wrote about here and here).  I invited Mr. Heuston to share some of the lessons he drew from this case with the rest of us and he was kind enough to accept.

Looking back, what strategic decisions did you make in this case that were particularly outcome determinative at the trial-court level? On appeal?

The plaintiffs chose to bring the action in Federal District Court so all argument was done by written pleadings. The order from the trial court was on The Salvation Army’s Motion to Dismiss, which was our first pleading filed. The point being there was very little strategic decision making due to how early we were in the process. On appeal The Salvation Army presented basically the same arguments as set forth in their Motion to Dismiss. Because the case presented an issue of first impression (the interpretation of Florida’s pay-on-death statute 655.82 as to whether a charity is a permissible beneficiary) the 11th Cir. Court of Appeals heard oral arguments. Arguments made by both parties were consistent with their written briefs.

Do you think this case will have lasting repercussions in terms of how POD accounts are used in Florida or how charities do business in Florida?

Very much so. I had many charities and the Florida Bankers Association and the International Florida Bankers Association who were following this case closely. Charities were obviously concerned because this was an inexpensive means for donors to make gifts at death. There are no legal fees or other transaction costs to set up a POD account naming a charity as a beneficiary on a bank account. There are no records kept on how much money is transferred to charities by means of POD accounts but I have been told by several charities that if donors were not able to use POD accounts to name a charity that it would have a significant negative impact on charitable fundraising. Additionally, the banks were concerned because if Florida law was interpreted to have not allowed charities to be a permissible POD beneficiary the banks were concerned about liability for having paid out to charitable POD beneficiaries since the Florida POD statute became effective in 1995. Additionally, the Florida statute was derived from the Uniform Nonprobate Transfers on Death Act, which has been adopted in some version by 48 states. A negative interpretation of the Florida statute could have had an impact on similar statutes in other states, possibly impeding this popular form of charitable giving in other states.

From your perspective as probate litigator, do you think there’s anything that could have been done in terms of estate planning to avoid this litigation or at least mitigate its financial impact? 

Difficult to say. A similar bequest by will or trust would have been more costly to set up and could have still been challenged on other grounds by the decedent’s children. One possibility would have been for the decedent, Mr. Belanger, to explain to his two children that is was his intent to leave the POD bequest to the charity and explain why he was doing so. Many challenges to bequests to charities result from the shock to the children who were unaware of their parents charitable intent. Many children in those situations feel hurt and become suspicious of the charity and its involvement in procuring the bequest. If the parent can explain to the children the purpose and reasoning for the charitable gift then this can often times eliminate or at least reduce the hurt that might otherwise result from finding out only after the parent has died.

Any final words of wisdom for probate lawyers of the world based on what you learned in this case?

When representing charitable organizations the probate litigation attorney should advise the charity to not be intimidated by the legal process. If the facts and law favor the interest of the charity then the charity should do a cost-benefit analysis to determine if defending their interest and upholding the intent of the donor is justified. If it is justified then the charity should persevere during the legal proceeding and continue for as long as it makes economic sense. It is often times left to the charity to defend the charitable intent of the decedent. There are many in the probate process or trust administration who may attempt to frustrate the intent of the decedent, e.g. disgruntled children or other family members, and it is often advisable for the charity to defend against legal actions that impede the decedent’s charitable intent.

Blake v. Waks, — So.3d —-, 2009 WL 1212242 (Fla. 3d DCA May 06, 2009) (NO. 3D09-980)

One of the defining characteristics of probate litigation is that cases are always decided by judges: no juries here. So if you’re afraid you won’t get a fair hearing because a judge says or does something demonstrating bias against you, you’re entitled to request that he or she disqualify himself or herself. F.S. § 38.10; Fla. R. Jud. Adm. 2.330. In the linked-to opinion the 3d DCA applied this standard in granting a request to disqualify a probate judge for apparently being biased against the petitioner. Here’s the court’s one-paragraph explanation of its ruling:

According to duly executed affidavits, in denying agreed motions to disburse the net proceeds of an intestate estate to the petitioner Blake, a genealogical researcher who had found and who held unchallenged powers of attorney from the previously unknown heirs of the decedent, see Morse v. Clark, 890 So.2d 496 (Fla. 5th DCA 2004) (recognizing party status of genealogical service holding assignments from heirs), the presiding probate division circuit judge volunteered the statement, among others, that she did not trust him to make the required distribution to his principals. This comment, based on nothing in the record or otherwise, well justified the petitioner’s expressed belief that she was not impartial, and therefore required the granting of his application for her disqualification. See Grandview Palace Condo. Ass’n v. City of N. Bay Vill., 974 So.2d 1170 (Fla. 3d DCA 2008); Miami Dade Coll. v. Turnberry Invs., 979 So.2d 1211 (Fla. 3d DCA 2008).

Bayview Loan Servicing, LLC v. Giblin, — So.3d —-, 2009 WL 1139236 (Fla. 4th DCA Apr 29, 2009)

Here are the key facts of this case as reported by the 4th DCA:

Decedent and Nivia Giblin were married in 1959. They had a daughter together. In 1981 they separated but never divorced. In 2000, decedent purchased a piece of residential property in Broward County. Title to the property was placed in the decedent’s name. The wife and daughter lived in the home, but decedent never did. Decedent died in 2001.

Is this the decedent’s homestead property? YES

As crazy as it may sound, yes, you can own homestead property you’ve never lived in if your “family” lives in the house. You get to this conclusion by applying the literal text of Article X, section 4 of the Florida Constitution, which provides in relevant part as follows:

(a) There shall be exempt from forced sale under process of any court .  .  .  the following property owned by a natural person:

(1) a homestead  .  .  .  [if it is] the residence of the owner or the owner’s family;

*  *  *

(b) These exemptions shall inure to the surviving spouse or heirs of the owner.

(c) The homestead shall not be subject to devise if the owner is survived by spouse or minor child, except the homestead may be devised to the owner’s spouse if there be no minor child….

(emphasis added).

Based on this language the 4th DCA affirmed a trial-court order ruling that the subject property was in fact the decedent’s homestead . . . even if he never lived in the place. Here’s how the court summarized its reasoning:

The language of article X, section 4 is clear and unambiguous. Here, decedent was a natural person who owned property occupied by his wife and child at the time of his death; thus, the property is homestead. Because decedent died leaving a spouse, the descent of his property is controlled by section 732.401(1), Florida Statutes (2001). As such, the wife is entitled to a life estate in the homestead with a vested remainder to the descendants. § 732.401(1), Fla. Stat.

By the way, this isn’t the first time a court has come to this conclusion. See In re Colwell, 196 F.3d 1225 (11th Cir. 1999) (Under Florida law, homestead exemption can be established to each of two people who, while married, are legitimately living apart in separate residences, if they otherwise meet requirements of exemption.); Law v. Law, 738 So.2d 522 (Fla. 4th DCA 1999) (Husband, who permanently resided in separate home from wife, was entitled to homestead exemption on that residence from former wife’s lien, even though husband and current wife owned another home for which they claimed homestead exemption, where there was no indication that husband and wife were separated for illegitimate reasons.)

Lesson learned?  .  .  .  Florida’s homestead law is NOT intuitive.

You can’t assume you know the answer to that “simple” homestead question a colleague or client calls about “just to pick your brain.” If the stakes are high enough, researching the issue – before it’s litigated – is always the way to go. Once you’re in court and briefing the issue you may be surprised by what you find . . . as I’m sure the losing side in this case was.

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Probate litigator Norman A. Fleisher of Gutter Chaves Josepher Rubin Forman Fleisher P.A. in Boca Raton, Florida, was on the winning side of Hernandez v. Gil, a hard-fought case that wound up before the 3d DCA on three different occasions, resulting in a PCA and two fascinating written opinions I wrote about here and here.

Norm graciously agreed to share some of the lessons he drew from this case with the rest of us.

Hi Norm. Thanks for taking the time. First question, looking back, what strategic decisions did you make in this case that were particularly outcome determinative? Would you have done anything differently?

The most important decisions were not unusual. We were always concerned that the opposing party might try to circumvent the settlement, so our focus was to make the agreement as clear as the English language would allow. One unusual aspect of the settlement is that the opposing party was asked to personally appear before the Judge when the settlement agreement was approved and to state, under oath, that he understood the agreement, approved the agreement, and wanted the Judge to approve the agreement. The transcript of that hearing has been very useful in subsequent proceedings.

From your perspective as probate litigator, do you think there’s anything that could have been done in terms of estate planning to avoid this litigation or at least mitigate its financial impact on the family?

Not really. The estate planning documents have never been the issue in this case. The issue has been the enforcement of the settlement agreement. Mr. Hernandez attempted to challenge his mother’s documents following her death, but the settlement agreement explicitly prohibited him from making such a challenge.

The three appellate decisions in this case apparently revolved around enforcing your settlement agreement. If you knew then what you know now, would your settlement agreement have been different? How so?

I have struggled with this issue for years. I’ve wondered if we could have made the agreement clearer, and when preparing for the hearings and oral arguments I would play devil’s advocate and try to think of ways the agreement was somehow vague or open to alternative interpretations. But fortunately, every time we brought the agreement before the court or the appellate panel the Judges always agreed that the agreement and the releases were clear.

Any final words of wisdom for probate lawyers of the world based on what you learned in this case?

As any probate litigator will tell you, trust and estate litigations are often not based on reason. It is easy for a lawyer to be dispassionate about the dispute, but for the parties these matters are deeply emotional. So even though a settlement agreement is clear, and even though an opposing party may have lost every hearing, and even though the court may have severely sanctioned the opposing party, the deeply personal nature of these matters may still cause the opposing party to refuse to quit. The lesson for lawyers was set forth in the 3rd DCA’s last opinion on this matter [click here] – sometimes a lawyer who is asked to fight on for a lost cause must simply say no to a client or a potential client.