Juega ex rel. Estate of Davidson v. Davidson, — So.2d —-, 2009 WL 321564 (Fla. 3d DCA Feb 11, 2009)

The basic rule in Florida is that a representative party need not have standing if (1) that party has authority to act on behalf of the real party in interest and if (2) the real party in interest has standing. Florida rule of civil procedure 1.210(a) lists six types of representative parties who can bring an action in their own name without suing in the name of the real party in interest. One of those categories is the personal representative of a decedent’s estate.

The first time the 3d DCA ruled in this case it focused on the personal-representative category [click here], but overlooked Florida’s common-law rule with respect to standing: even if the plaintiff does not fall within one of the six exempt categories listed in rule 1.210(a), the plaintiff may still have standing to sue if he can establish he has some legal right to proceed on behalf of the real party in interest. It’s this common-law rule that’s at the heart of the linked-to opinion, in which the 3d DCA reversed itself on the issue of standing based on the following law:

Florida’s real party in interest rule “is permissive only….” Kumar Corp. v. Nopal Lines, Ltd., 462 So.2d 1178, 1184 (Fla. 3d DCA 1985). The rule states:

Every action may be prosecuted in the name of the real party in interest, but a personal representative, administrator, guardian, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a party expressly authorized by statute may sue in that person’s own name without joining the party for whose benefit the action is brought.

Fla. R. Civ. P. 1.210(a) (emphasis added).

“[A] nominal party, such as an agent, may bring suit in its own name for the benefit of the real party in interest.” Kumar, 462 So.2d at 1185 (emphasis added). “[A] principal may subsequently ratify its agent’s act, even if originally unauthorized, and such ratification relates back and supplies the original authority.” Id.

“Thus, where a plaintiff is either the real party in interest or is maintaining the action on behalf of the real party in interest, its action cannot be terminated on the ground that it lacks standing.” Id. at 1183; see Mortgage Elec. Registration Sys., Inc. v. Revoredo, 955 So.2d 33, 34 (Fla. 3d DCA 2007) (collection and litigation agent has standing to bring mortgage foreclosure action); Eastern Inv., LLC v. Cyberfile, Inc., 947 So.2d 630, 632 (Fla. 3d DCA 2007) (action may be maintained by assignee; “Florida Rule of Civil Procedure 1.210(a) permits an action to be prosecuted in the name of someone other than, but acting for the real party in interest.”)

The affidavit filed by the son in this case is indistinguishable from the affidavit filed by the principal in Kumar. Id. at 1181. The facts stated in the Kumar affidavit, as here, establish that the agent, Juega, has standing.

A trustee’s duty to inform and report to beneficiaries is fundamental to the trust relationship. When that system breaks down, things can go bad really fast, a point that comes up again and again every time the press reports on some trustee getting caught stealing trust funds.

And that’s apparently what happened again in the case reported on in Foreign Trusts Allege N.Y. Lawyer ‘Shamelessly Looted’ Millions From Bank Accounts. In the excerpt below note how the breakdown in the trustee reporting/accounting regime is at the heart of the accusation of theft.

The owners of five Liechtenstein-based trusts have sued a New York lawyer with 60 years experience in international estate planning, alleging he "shamelessly looted" more than $15 million from the clients for longer than a decade.

*     *     *     *     *

The suit alleges that funds were embezzled between January 1997 and December 2007. The five plaintiffs, Establishment Finapart, Establishment Figest, Establishment Gour-Sande, Establishment Elatia and Establishment Elatia, accuse Munyan of "using a Byzantine system of trusts and offshore companies for his own personal use." It alleges he diverted assets from the five Liechtenstein trusts to make payments to Riad’s accounts and to pay Kinbrace for his personal use, and that he diverted plaintiffs’ funds to pay his American Express accounts.

In Establishment Finapart v. Munyan, No. 0960110 (New York Co., N.Y., Sup. Ct.), Feldberg alleges that Ritter and Meier were directors on the trusts’ board of directors and had an obligation to prepare annual financial statements. Instead, "Ritter and Meier gave Munyan the keys to the establishments and, by extension, the assets they controlled, and turned a blind eye as Munyan drained the establishments’ coffers."

But what about confidentiality?

If you’ve got your litigator hat on it makes perfect sense to impose reporting duties on trustees. But my estate planning clients look at me like I’m some kind of Communist when I tell them their children (and perhaps even grandchildren!) will be entitled to annual trust accountings (plus all the other disclosure rights beneficiaries get under Florida law [click here]) once they fund that new irrevocable trust we’ve been talking about for the last six months.

Apparently I’m not the only one whose encountered this reaction because there’s a fix built right into Florida’s new trust code. Under F.S. 736.0306 a settlor can appoint or designate a person to represent and bind a trust beneficiary or to receive notices, information, reports and accounts on the beneficiary’s behalf. This section, which has no counterpart in the Uniform Trust Code, contemplates that the designated representative could be appointed directly by the settlor or by others (such as a committee) pursuant to a process set out in the trust instrument. Presto! confidentiality preserved.

By the way, some really smart people out there think this "designated representative" idea may not be such a good thing. In The Trustee’s Duty to Inform and Report Under the Uniform Trust Code, author and Denver, Colorado, trusts-and-estates attorney Kevin Millard writes about a similar statute adopted by the District of Columbia. The following critique would apply to F.S. 736.0306 with equal force:

[A] troubling aspect of the District of Columbia surrogate notice provision is that it does not give the surrogate any standing or authority to enforce the trust on behalf of the beneficiaries. If notice or information provided to the surrogate discloses a potential claim against the trustee for breach of trust, what is the surrogate to do? The statute gives the surrogate no express authority to pursue action against the trustee to redress a breach of trust. Presumably, the surrogate should notify the beneficiary of the potential breach and let the beneficiary decide whether to pursue action against the trustee, but passing the notice through the surrogate’s filter may effectively prevent the beneficiary from pursuing a claim. If the surrogate, through ignorance, lack of sophistication, or simple mistake, fails to notify the beneficiary of a potential claim, the beneficiary may never learn of the claim or may learn of the claim only after the statute of limitations has run. Additionally, it appears that the beneficiary would have no recourse against the surrogate for failing to inform the beneficiary of the claim unless the beneficiary can show that the surrogate did not act in good faith.

Here are the 2007 stat’s for the probate courts in Dade, Broward and Palm Beach county. You can find all of this data here and download numbers for your local probate court here. My chart only reports on the “cases filed” figures; click here, here and here for all the details. But numbers alone don’t tell the whole story. To understand the breadth of issues probate judges contend with in an average year, below is the official definition given for each of the listed categories. Finally, as a rough measure of how busy these judges are on average, I took the total filing figure and divided it by the number of probate judges serving in each respective county.

So what’s it all mean?

In Dade – on average – each judge took on close to 2,600 NEW cases in 2007, and in Broward and Palm Beach counties the average new case load figure hovered around 2,000 per judge. Keep in mind that these figures don’t take into account each judge’s EXISTING case load. These case-load figures may be appropriate for uncontested probate proceedings, which likely represent 99% of the cases administered by our probate courts. However, when it comes to that 1% of probate cases that are litigated, these same case-load figures suggest to me that the “cold judge” factor I wrote about here needs to be weighed heavily every time you ask a court system designed to handle un-contested proceedings to adjudicate a complex trial or basically rule on any contested and technically demanding issue or pre-trial motion of significance that can’t be disposed of in the few minutes allotted to the average probate matter.

2007 Probate Court Filing Statistics

Type of Case Dade Broward Palm Beach
Probate 4,103  4,917  4,823
Guardianship 936  504  495
Trust 67  84  234
Baker Act 3,653  1,943  1,110
Substance Abuse 709  589  1,021
Other Social 884  392  246
Total 10,352  8,429  7,929
# Judges 4  4  4
Total/Judge 2,588  2,107  1,982

Glossary: 

Probate: All matters relating to the validity of wills and their execution; distribution, management, sale, transfer and accounting of estate property; and ancillary administration pursuant to chapters 731, 732, 733, 734, and 735, Florida Statutes.

Guardianship (Adult or Minor): All matters relating to determination of status; contracts and conveyances of incompetents; maintenance custody of wards and their property interests; control and restoration of rights; appointment and removal of guardians pursuant to chapter 744, Florida Statues; appointment of guardian advocates for individuals with developmental disabilities pursuant to section 393.12, Florida Statutes; and actions to remove the disabilities of non-age minors pursuant to sections 743.08 and 743.09, Florida Statutes.

Trusts: All matters relating to the right of property, real or personal, held by one party for the benefit of another pursuant to chapter [736], Florida Statutes.

Florida Mental Health Act or Baker Act: All matters relating to the care and treatment of individuals with mental, emotional, and behavioral disorders pursuant to sections 394.463 and 394.467, Florida Statutes.

Substance Abuse Act: All matters related to the involuntary assessment/treatment of substance abuse pursuant to sections 397.6811 and 397.693, Florida Statutes.

Other Social Cases: All other matters involving involuntary commitment not included under the Baker and Substance Abuse Act categories. The following types of cases would
be included, but not limited to:

  • Tuberculosis control cases pursuant to sections 392.55, 392.56, and 392.57, Florida Statutes;
  • Developmental disability cases under section 393.11, Florida Statutes;
  • Review of surrogate or proxy’s health care decisions pursuant to section 765.105, Florida Statutes, and rule 5.900, Florida Probate Rules;
  • Incapacity determination cases pursuant to sections 744.3201, 744.3215, and 744.331, Florida Statutes;
  • Adult Protective Services Act cases pursuant to section 415.104, Florida Statutes.

Brigham v. Brigham, — So.2d —-, 2009 WL 454492 (Fla. 3d DCA Feb 25, 2009)

This case has already had a huge impact on Florida’s trust-law landscape. When the 3d DCA first weighed in on this case in 2006, it upheld a trial court ruling cutting the trustees off from trust assets to pay for their legal-defense [click here]. That opinion lead directly to a change in Florida’s trust code that impacts every new trust-related lawsuit in this state [click here].

This time around the 3d DCA again made new law, addressing the following issue of first impression:

Is the trustee of a “land trust” subject to the conflict-of-interest rules generally applicable to trustees under Florida law?

The uncertainty at the heart of this question is a consequence of the unique nature of land trusts, sometimes referred to as “Illinois land trusts” because of where they were first invented [click here for more on land trusts]. The defining characteristic of a land trust is that the trustee doesn’t have any of the independent fiduciary authority of a regular trustee, all a land-trust trustee is supposed to do is follow orders and hold title to real property. Here’s a quote from the linked-to opinion encapsulating this point:

The trustee accordingly is a mere vessel of title. It exercises no control over the property and only acts according to the beneficiaries’ directions. People v. Chicago Title & Trust Co., 75 Ill.2d 479, 27 Ill.Dec. 476, 389 N.E.2d 540 (1979). Accordingly, the single warranty or representation that a trustee makes upon execution of documents is that it has the power and authority to appropriately execute the instruments.

If all you are is a “mere vessel of title” with no independent fiduciary authority, does it make sense to subject you to the duties and conflict-of-interest rules generally applicable to trustees? According to the 3d DCA the answer is “YES,” here’s why:

Appellees argue that pursuant to section 731.201(33), land trusts are excluded from the definition of a “trust” under all of chapter 737. We disagree. Chapter 737 has been applied by courts to regulate and to rule on land trusts, and chapter 737 is directly referred to in the Florida Land Trust Act, section 689.071(5). The definition of a “trust” under section 731.201(33), states it does not include a land trust created under section 689.05. However, the trust created by the EFP Brigham Land Trust No. 1 dated September 28, 1991 (the “EFP Trust”), was not a land trust created under section 689.05. Although the EFP Trust was executed by Marion and was a written trust, it did not comply with the requirements of section 689.071.

*  *  *  *  *

The EFP Trust Deed failed to contain language that conferred on Dana, the trustee, the power and authority “either to protect, conserve and to sell, or to lease, or to encumber, or otherwise to manage and dispose of the real property described in the recorded instrument.” Because Dana, as the lawyer that created and transferred the Deed to North Carolina attorneys for recordation, failed to include the formalities in the Deed required to create a Florida Land Trust under section 689.071, it is a trust regulated by chapter 737.

Moreover, even if it had qualified as a land trust, we agree with appellants that the reasoning set forth in the case of In re Saber, 233 B.R. 547 (Bkrtcy.S.D.Fla.1999), is instructive on why the requirements of section 737.403, should apply to Dana, as the trustee: “Although the real and personal property interests of Florida land trust are divided between the trustee and beneficiary, a Florida Land Trust is essentially the same as an ordinary trust in terms of the duties, rights and responsibilities of the trustee and beneficiary.” Id. at 554. For these reasons, Dana, as Trustee, of either a land trust or a trust, was required to comply with section 737.403(2), when Dana gifted the Brigham Tree Farm Property to himself.

Additional Take-Away Points:

The linked-to opinion is long and it covers a lot of ground. Clearly, this case was hotly contested by determined lawyers on both sides who knew their way around a court room. But aside from the key land-trust ruling, I think there are two additional take-away points probate lawyers in general can learn from.

  • A de novo appellate standard of review can be your best friend in trust litigation:

First, the linked-to opinion is another example of why “de novo” review can be your best friend in trust litigation. That was the standard of review in this case:

The trial court’s failure to apply and/or the misinterpretation of several trust statutes are matters of law subject to de novo review. In addition, the standard of review is also de novo when reviewing the trial court’s interpretation and application of Florida law. See Gordon v. Regier, 839 So.2d 715, 718 (Fla. 2d DCA 2003); Gilliam v. Smart, 809 So.2d 905, 907 (Fla. 1st DCA 2002). Likewise, the interpretation of several unambiguous trust provisions is also subject to de novo review. See Miller v. Kase, 789 So.2d 1095 (Fla. 4th DCA 2001).

Based on this standard the 3d DCA basically stepped in and second guessed almost every substantive decision made by the trial-court judge, reversing every order he entered after what must have been a very long trial. If you’re representing the side trying to sue the trustee, winning your case based on trustee negligence is a daunting task [click here], and you have little recourse on appeal. Fact-based rulings by the trial-court judge are almost untouchable on appeal. But, as I’ve written before [click here], if the case against the trustee is framed as a fight over how a statute or trust instrument is supposed to be applied, then you basically get a do over on appeal because of the de novo review standard. That’s what the plaintiffs did in this case and it paid off for them in a stunning appellate victory.

  • De-facto trustee concept:

Probate litigation is usually the last act in a play that’s been going on for years. The starting point in this litigation often revolves around allegations of wrong doing by someone the decedent trusted and counted on before he or she died. This trusted person could be a family member or some sort of care giver (e.g., an at-home nurse). These allegations are often the basis for an undue-influence claim. In the linked-to opinion the plaintiffs went a step further, using these sorts of allegations as a basis for a breach-of-fiduciary-duty claim against someone who wasn’t the named trustee of any the decedent’s multiple trust. So how’d they do it? By implication:

Turning now to Patricia, the record clearly shows that she acted as a fiduciary for Marion and as Dana’s de-facto trustee conducting all of the tasks either at the direction of Dana or on her own accord. Patricia owed a fiduciary duty to Marion. “If a relation of trust and confidence exists between the parties (that is to say, where confidence is reposed by one party and a trust accepted by the other, or where confidence has been acquired and abused), that is sufficient as a predicate for relief.” Doe v. Evans, 814 So.2d 370, 374 (Fla.2002); Susan Fixel, Inc. v. Rosenthal & Rosenthal, Inc., 842 So.2d 204 (Fla. 3d DCA 2003). “Fiduciary relationships may be implied in law and such relationships are ‘premised upon the specific factual situation surrounding the transaction and the relationship of the parties.’ ” Id. at 207. Courts have found a fiduciary relation implied in law when “confidence is reposed by one party and a trust accepted by the other.” Capital Bank v. MVB, Inc., 644 So.2d 515, 518 (Fla. 3d DCA 1994). To establish a fiduciary relationship, a party must allege some degree of dependency on one side and some degree of undertaking on the other side to advise, counsel and protect the weaker party. Watkins v. NCNB Nat’l Bank of Fla., N.A., 622 So.2d 1063, 1065 (Fla. 3d DCA 1993).

Moreover, Patricia owed a duty to Marion as Marion’s employee. An employee owes a duty to her employer to exercise diligence and good faith in matters relating to the employment. Haynes v. The Singer Co., 1981 WL 2344 (N.D.Fla. June 19, 1981); Kilgore Ace Hardware, Inc. v. Newsome, 352 So.2d 918, 919 (Fla. 2d DCA 1977). It is undisputed that Patricia was Marion’s employee. Additionally, the record reflects that Patricia received $218,607, ostensibly as salary, plus $56,000 as gifts during the final years of Marion’s life.

Accounting concepts are dull in the abstract, it’s only in application to a real live set of facts that they become interesting. Ask the folks at Enron/Arthur Anderson if they think accounting is boring?! And ask your clients if they think accounting is boring the next time you double a trust’s income distribution or deliver a huge tax savings based on nothing other than a working knowledge of Florida’s fiduciary accounting principals? (P.S. Think you’ll have trouble getting that bill paid?)

So I think we can all agree it’s worth your while to at least know how to spot a fiduciary-accounting issue when it’s staring you in the face. And the best way to tackle that problem is to have a list of hot-button fiduciary accounting scenarios to be on the look out for. Which is what William C. Carroll and John W. Randolph, Jr., deliver in an excellent two-part series on Florida’s version of the Uniform Principal and Income Act. I wrote here on Part I of this series. In Things That May Surprise You About Florida’s Principal and Income Act and Related Accounting Law, Part II, the authors move up the complexity scale by tackling the following scenarios:

  1. Life Estate in Real Property
  2. Mutual Fund Capital Gain Distributions
  3. Bond Discounts and Premiums
  4. Determination of Net Income of an Estate in Marital Deduction Instances
  5. Establishing a Principal Reserve for Future Income Expenses 

Here’s an excerpt from the article’s introduction:

Part one of this two-part article introduced the reader to the provisions of the Florida Uniform Principal and Income Act. In part two, the authors continue using examples to explore the more complex workings of the act and how those provisions allocate trust and estate receipts and disbursements between income and principal of an estate or trust. As in part one, these examples assume that the will or trust is silent as to allocating the receipt or disbursement at issue to either income or principal, and does not give the personal representative and/or trustee a discretionary power of administration.

As reported here, Sen. Max Baucus has introduced a bill in the Senate that would make the 2009 estate tax level permanent and reunify the estate and gift taxes. Nothing surprising here, but it’s worth noting that this bill also allows portability of the exemption for spouses. This is a big deal. By now I think the emerging consensus is that "portability" is going to be a part of the new estate-tax landscape, which I previously wrote about here.

For more detail on the Baucus bill, click here for North Carolina estate planning attorney Greg Herman-Giddens’ comments on his North Carolina Estate Planning Blog.

Levine v. Levine, — So.2d —-, 2009 WL 482260 (Fla. 5th DCA Feb 27, 2009)

Whether or not an adult is in fact legally “incapacitated” is often the crux of the case in contested guardianship proceedings. The fact finders that are supposed to answer that question are the members of the examining committee appointed by the probate judge pursuant to F.S. § 744.331.

If your client disagrees with the committee’s findings, you won’t get your day in court by simply demanding an evidentiary hearing. Under the peculiar procedural rules governing guardianship proceedings, you first have to file a motion to strike the committee’s report then have your evidentiary hearing. Make sense? I don’t think so, but according to the 5th DCA, that’s the law. Here’s why:

Evidentiary Hearing? Wrong Answer:

Dr. Levine contends that the language of [F.S. § 744.331(4)] notwithstanding, he should have the right to an evidentiary hearing to challenge the opinions of the examining committee members, either individually or collectively. We disagree, as the language of the statute is clear and unambiguous. Once a majority of the examining committee concluded that Mr. Levine was not incapacitated, the trial court was correct in dismissing the petition to determine incapacity and the petition for the appointment of a guardian. See Mathes v. Huelsman, 743 So.2d 626, 627 (Fla. 2d DCA 1999) (holding once examining committee concluded that alleged incapacitated person had full capacity, trial court was required to dismiss petition to determine incapacity); see also In re Keene, 343 So.2d 916 (Fla. 4th DCA 1977).

Motion to Strike? Right Answer:

FN1. Ms. Stimmel contends that if the examining committee concludes that the alleged incapacitated person is not incapacitated, there is no remedy available to the other interested parties involved in the proceeding even if the report is materially deficient. We disagree. We do not believe that the court must rely on a report from the examining committee which is materially deficient. However, rather than conducting an evidentiary hearing to test the examining committee’s report, an action that would violate [F.S. § 744.331(4)], a more appropriate remedy would be for the court, or any interested party, to move to strike the report. If such a motion is granted, the court could then order a re-examination by the existing committee (or committee member) or appoint a new committee (or committee member) and order a re-examination.

Bonus Point: Who Pays the Committee’s Fees?

If the examining committee says the person being examined is OK, that may be good news for the potential ward, but bad news for the examining committee. Why? Because now there’s no guardianship “estate” from which to pay their fees. So who pays? The statute doesn’t cover that contingency (oops!), a “gap” in the law I first wrote about here. In this case the probate judge ordered the petitioner to pay: “wrong answer” says the 5th DCA:

The trial court also ordered Dr. Levine to pay the examining committee’s fees. Ms. Stimmel concedes error. While section 744.331(7)(a) allows the trial court to award members of the examining committee reasonable fees, subparagraph (c) of that section provides that the cost and attorney’s fees of a dismissed petition are to be assessed against the petitioner only if the court finds the petition to have been filed in bad faith. The court made no such finding here. We recognize that the statute has a gap in determining responsibility for payment of the examining committee fees when a good faith petition is denied or dismissed. See Ehrlich v. Severson, 985 So.2d 639, 640 n. 1 (Fla. 4th DCA 2008). As did the Ehrlich court, we urge the Legislature to specify who pays the examining committee fees in this circumstance.

Listen to this post

If your judge is prepared and understands the facts and law of your case, all is well. But when your judge is not prepared, or simply doesn’t “get” it, he’s what Denver, Colorado litigator Peter Bornstein refers to as a “cold” judge in Persuading a Cold Judge, an excellent article he published in the ABA’s Litigation magazine. Here’s how Bornstein frames the issue:

Having your case decided by another human being who may rule against your client out of ignorance is to stare into the abyss. Of all the reasons to tell your client why his or her case was lost, the least satisfying and most embarrassing is having to say, “The judge never understood what it was about.” Every trial lawyer has candidly said, “I won cases I should have lost and lost cases I should have won.” The reason for this truism is often the “cold” judge—the judge who hears and rules without knowledge, understanding, depth, or concern. So, what do you do when you stand before a cold judge? Don’t panic. Keep your cool. Do your best. And remember that even when your judge is prepared, scholarly, and mindful of her reputation, you still know more about your case than anyone else in the courtroom.

State courts are especially prone to cold judging. Not because our state judges don’t want to do the right thing (I assume they all do), but because our state court system is so starved for resources they simply don’t have the luxury of preparation. Also, as a general rule, although the stakes in dollar terms may be smaller, the issues involved in contested inheritance proceedings can be just as complicated and difficult as the issues at play in large complex commercial cases. To make matters worse, clients are often unwilling or unable to pay for the same level of preparation.

So what’s to be done? One option is to “privatize” the litigation by including mandatory arbitration clauses in all your wills and trusts and if that wasn’t done, try tapping into one of the many voluntary alternative-dispute-resolution tools available under Florida law. And if that doesn’t work, then Bornstein delivers solid advice – especially useful for probate litigators – on how to warm up even the frostiest judge:

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

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

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

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

The Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act (UAGPPJA) addresses a problem that needs fixing in Florida: interstate jurisdiction controversies involving adult guardianship proceedings. As I’ve written before, due to our highly mobile population (especially with respect to retiring seniors) inter-state forum shopping in contested guardianship proceedings is a growing problem. So it’s not surprising these cases are already bubbling up through our appellate court system.

The UAGPPJA addresses the forum shopping problem by creating a reliable process for determining with certainty which state will have jurisdiction to appoint a guardian or conservator if there is a conflict among one or more states. The UAGPPJA’s legislative status in Florida is unclear, although it is getting some attention in Tallahassee. Legislation adopting the uniform act in Florida was introduced in January 2009 –  then inexplicably withdrawn the next month. Stay tuned for more.

Provost v. Justin, — So.2d —-, 2009 WL 484633 (Fla. 2d DCA Feb 27, 2009)

When Florida adopted its version of the Uniform Trust Code in 2007 [click here], it modernized and sometimes dramatically changed our prior body of trust law. One of the fundamental changes was a reversal of the presumption regarding revocability of trusts: the presumption used to be a trust is NOT revocable; F.S. 736.0602(1) now provides that trusts are revocable by default. My guess is that this change in the law may have been one of the causes for the linked-to case, although less-than-clear drafting was probably the primary culprit. Here’s how the leading expert on our new trust code, Prof. Powell, explained the importance of clear drafting in this Fl. Bar Journal article explaining the new code:

Methods of Amending or Revoking Trusts
Along with stating that it is revocable, a well-drafted revocable trust instrument will specify the method that is to be used to accomplish a revocation or amendment. If the trust instrument does this, the provision in the instrument is exclusive in the sense that the trust can be revoked or amended only by substantially complying with the method stated in the instrument. If the instrument does not specify a method, any clear and convincing manifestation of the settlor’s intent to revoke is sufficient, including a provision in the settlor’s later will or codicil expressly revoking the trust or specifically devising property that would otherwise pass according to the trust terms.[FN 57]

[FN 57] See generally §736.0602(3)(b). The “substantial compliance” test in this section may be more lenient than existing Florida law, which appears to require strict compliance. See Euart v. Yoakley, 456 So. 2d 1327 (Fla. 4th D.C.A. 1984).

In the linked-to opinion the joint revocable trust agreement contained language limiting the right of amendment to the settlors "during their lives." After one of them died, the survivor attempted to amend their joint trust agreement in a way that would basically disinherit their three children and leave most of the estate to the widow’s caregiver. This was a lawsuit waiting to happen.

Here’s how the 2d DCA explained its rationale for rejecting the purported trust-agreement amendment and reversing the trial court’s judgment:

“The polestar of trust interpretation is the settlors’ intent.” L’Argent v. Barnett Bank, N.A., 730 So.2d 395, 397 (Fla. 2d DCA 1999). “In determining the settlors’ intent, the court should not ‘resort to isolated words and phrases’; instead, the court should construe ‘the instrument as a whole,’ taking into account the general dispositional scheme.” Roberts v. Sarros, 920 So.2d 193, 195 (Fla. 2d DCA 2006) (citations omitted). The parties agree that these principles apply to the case at hand and rely on both L’Argent and Roberts in disputing the interpretation this court should give to the Trust.

As in L’Argent, the Trust contains language that limits the right of amendment to the grantors “during their lives.” See 730 So.2d at 397. Based on our review of the entire Trust document, we conclude that both grantors needed to execute any amendment to the Trust. Because Aurele Provost did not execute the amendment prepared by Geraldine Provost, the amendment is ineffective. Accordingly, we reverse the summary judgment in favor of Appellees Elizabeth Justin and Sharon Harsch and remand for the trial court to enter summary judgment in favor of Appellants Levis Provost, Marquis Provost, and Constance Monty.

By the way, we should expect to see more and more joint revocable trusts as part of our practice. Especially if spousal portability of estate-tax exemptions is folded into any new version of the estate tax (and I think it will, click here). For a solid primer on joint revocable trusts see Joint Trusts in Separate Property States by frequent lecturer and Chicago estate planning attorney Louis Harrison.