Hayes v. Guardianship of Thompson, 2006 WL 3228916 (Fla. Nov 09, 2006)

This case is important for two reasons.

First, the Florida Supreme Court resolved a conflict among the DCAs regarding who has standing to litigate fees (both attorney’s and guardian’s) in guardianship proceedings.

Here’s how the Court summarized its holding, which has the effect of expanding the class of potential litigants (i.e., more people have standing to litigate, thus expect more litigation to follow in guardianship proceedings):

Although we cannot provide specific criteria, we reject the bright-line rule adopted by the Third District in [McGinnis v. Kanevsky, 564 So.2d 1141 (Fla. 3d DCA 1990)] that precludes an heir from participating in a proceeding for guardian’s or attorney’s fees. Implicit in the Third District’s reasoning is that heirs of a ward should never be afforded standing to participate in proceedings for guardian’s or attorney’s fees because there are sufficient built-in procedural safeguards to protect the interests of the ward:

[J]ust as it is obviously for the competent person to spend or misspend his assets as he pleases, so it is up to the guardianship estate, regulated by the guardian and the court, to do the same without the interference or concern with the totally non-altruistic wishes of the ward’s relatives or legatees.

564 So.2d at 1144 n. 9 (emphasis supplied).

We disagree. As the Fourth and Fifth Districts recognized in [Bachinger v. Sunbank/South Florida, N.A., 675 So.2d 186 (Fla. 4th DCA 1996)] and [Sun Bank & Trust Co. v. Jones, 645 So.2d 1008, 1017 (Fla. 5th DCA 1994)], “[c]ourts must scrupulously oversee the handling of the affairs of incompetent persons under their jurisdiction and err on the side of over-supervising rather than indifference.” Bachinger, 675 So.2d at 188 (quoting Jones, 645 So.2d at 1017). Moreover, although courts must approve petitions for guardian’s and attorney’s fees, “it is highly unrealistic to assume that such an ex parte procedure would involve any high level of scrutiny.” Bachinger, 675 So.2d at 187. Thus, depending on the circumstances of the case and the specific issues involved, heirs of a ward may be considered “interested persons” for the purpose of participating in a guardianship proceeding, including a proceeding for guardian’s or attorney’s fees. See, e.g., Bachinger, 675 So.2d at 188 (beneficiaries under the ward’s will, who cared for her before she became incompetent, were interested persons for the purpose of filing objections to guardian’s petition for final discharge).

Probate v. Guardianship: Different Priorities = Different Outcomes

This opinion is also important because it highlights how different public-policy priorities in probate and guardianship proceedings can result in courts erring on the side of less litigation when possible (probate) and erring on the side of more litigation if needed (guardianship).

This is how the Florida Supreme Court described the public-policy priority underlying all guardianship proceedings:

In guardianship proceedings, the overwhelming public policy is the protection of the ward. See § 744.1012, Fla. Stat. (2006) (declaring that the purpose of the Florida Guardianship Law is “to promote the public welfare by establishing a system that permits incapacitated persons to participate as fully as possible in all decisions affecting them; that assists such persons in meeting the essential requirements for their physical health and safety, in protecting their rights, in managing their financial resources, and in developing or regaining their abilities to the maximum extent possible; and that accomplishes these objectives through providing, in each case, the form of assistance that least interferes with the legal capacity of a person to act in her or his own behalf”).

Viewed from this perspective, it’s almost inevitable that the Florida Supreme Court would construe Florida law in a way that errs on the side of making sure all “interested persons” are given the opportunity to participate in contested guardianship proceedings — as long as the goal is to better the ward’s welfare.  The litigant that understands and incorporates this perspective into his or her case has a clear advantage.

By contrast, in probate proceedings the public-policy priority is efficiency: when in doubt, err on the side of less litigation not more.  Here’s how the Florida Supreme Court encapsulated this public policy directive in 2000:

There is a “strong public policy” in this state “in favor of settling and closing estates in a speedy manner.” May v. Illinois Nat’l Ins. Co., 771 So.2d 1143, 1151 (Fla.2000).

As I’ve noted over and over again on this blog, this public-policy priority plays itself out most clearly in probate litigation involving creditor claims.  Again, the litigant that understands and incorporates this perspective into his or her case has a clear advantage.

Briefs:

Pisciotti v. Stephens, 2006 WL 3077750 (Fla.App. 4 Dist. Nov 01, 2006)

I plead the Fifth!!! Ahh, those immortal words of American jurisprudence.  Well, if you thought your friends in the criminal defense bar were the only ones who got to have fun with this bit of legal jargon . . . think again.  In this case brother figures out sister may have stolen a few checks while mom was alive.  Brother filed an adversary proceeding to remove sister as PR of mom’s estate and then sued sister for theft.  Brother then gets an order from probate court requiring sister to answer deposition questions and file a final accounting . . . overruling sister’s refusals based on her Fifth Amendment constitutional right against self-incrimination.  Wrong answer says the 4th DCA, which reversed the probate court’s order on both counts.  Here are a couple of key excerpts from the 4th DCA’s opinion:

Sister’s first argument on appeal is that the trial court’s order requiring her to answer deposition questions violates her Fifth Amendment privilege against self-incrimination, particularly in light of her brother’s comments regarding criminal prosecution of her. We agree.

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Here, given the potentially incriminating nature of the evidence, coupled with brother’s professed intent to seek criminal prosecution, sister had reasonable grounds to fear that her deposition testimony could be used as a link in a chain of evidence against her in a later criminal proceeding.  .  .  .  Thus, in this case the trial court failed to recognize that there was a reasonable possibility of prosecution, and ultimately applied the wrong law.

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Second, sister argues that the trial court’s order requiring her to file final accountings also violates her Fifth Amendment privilege. Generally, the privilege does not apply to documents that are required under the law to be prepared by a PR to carry out a fiduciary duty. [In re Rasmussen, 335 So.2d 634, 636 (Fla. 1st DCA 1975)].

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Yet given the fundamental nature of the Fifth Amendment’s constitutional guarantees, we perceive grave difficulties in applying the privilege to the deposition questions but not to the related final accountings. To refuse to apply the privilege to the order for a final accounting document in this case would have the rather perverse effect of protecting sister from giving testimonial answers conceivably providing a link in the chain of evidence but then refusing the same protection by requiring her to file accountings yielding the same information. Because of the facts and circumstances of this case, we distinguish Rasmussen.

This recently published story, Elderly Man’s Malpractice Suit Over Estate Advice Dismissed, underscores the “damned if you do, damned if you don’t” risk inherent to the estate planning field and why even the slightest whiff of a client’s diminished mental capacity has to be treated very, very seriously.

On the one hand, you can get sued for allegedly luring your very wealthy, but also very elderly, client into too much estate planning, i.e., transactions that may save millions in estate taxes, but are too complex for the client to understand and thus not something the client would have agreed to if his or her lawyer had adequately explained all the various permutations of the proposed planning strategy.  That’s essentially what happened in the case discussed in the linked-to article, as excerpted below:

A Manhattan appellate court has dismissed a legal malpractice suit on behalf of an elderly man who claimed his lawyers misled him into signing away control of his estate, but a dissenting judge said the majority’s decision “risks undermining the confidence of the public in the profession.”

Jack E. Maurer, who died last year at age 86, sued the firm formerly known as Goodkind Labaton Rudoff & Sucharow in 2003 for allegedly failing to explain to him the import of estate planning documents he signed. He also claimed the firm was conflicted because it represented his wife Rona, who he named as a co-defendant in the suit.

According to Mr. Maurer’s lawyer, Lawrence H. Silverman, the documents at issue gave Ms. Maurer control over a trust containing her husband’s major assets, a $12 million Central Park West apartment and a $3 million house in Quogue, N.Y., and placed restrictions on Mr. Maurer’s access to other retirement funds.

But a four-judge majority of the Appellate Division, 1st Department, ruled Tuesday that, despite Mr. Maurer’s “apparent failure to make any effort at all to read the documents,” he was bound by the “clear and unambiguous” documents he signed.

On the other hand, you can also get sued by upset heirs if they think you didn’t do enough to save taxes — even if mom and dad explicitly told lawyer “to keep it simple.”  That’s essentially what I think happened in a case involving one of Florida’s most well respected law firms, which I previously wrote about in Gannett Newspaper Fortune: Probate Administration Malpractice Update #2.

Lesson learned:

Estate planning can be very complex, involving esoteric tax concepts, lengthy trust instruments, complex financial and insurance arrangements, etc.  Estate planning can also involve very elderly clients.  Combine these two elements and you end up with the type of “perfect storm” ethics conundrum that is loads of fun in law school, but extremely challenging to navigate in real life. Florida Bar Ethics Rule 4-1.14 (Client Under a Disability) offers little real concrete guidance, and as far as I can tell their isn’t much on-point case law out there either.  See The Florida Bar v. Betts, 530 So.2d 928, 13 Fla. L. Weekly 579 (Fla. Sep 22, 1988); Vignes v. Weiskopf, 42 So.2d 84 (Fla. Jul 19, 1949).

I think the best anyone can do is to be on the look out for warning signs of incapacity and incorporate appropriate safety measures into your client communications and procedures. For those of you who like to address these issues in your engagement agreements as well, ACTEC provides this sample clause:

If concerns develop regarding your capacity, [OPTIONAL: and our representation of you has not been terminated either by you or pursuant to your engagement letter with us,] we will continue to represent you and to protect your interests to the extent consistent with our standards of practice and our ethical responsibilities. To the extent we can continue to act on your behalf, we will only take actions that we reasonably believe to be in your best interests and consistent with your previously expressed wishes. Unless you direct us otherwise in writing, by signing this engagement letter, you will be authorizing us in such representation: (1) to communicate with your family, your physicians, and your other advisors and to disclose to them such pertinent, but limited, confidential information as we may determine to be reasonably appropriate under the circumstances; and (2) to represent any person you have chosen to be your legal representative in the event your mental capacity diminishes and a legal representative is needed. However, if legal action is taken to obtain a guardian or conservator for you, we will continue to represent your interests until such time as the guardian or conservator is appointed. If the person appointed is a person you have designated to be your guardian or conservator, by signing this engagement letter you will be authorizing us to represent the guardian or conservator. Please note that we may not be able to represent the person you have chosen for a variety of reasons, including conflicts of interest. Moreover, the person you have chosen to be your guardian or conservator is free to choose counsel of his or her choice. Accordingly, your authorization to act does not bind us to act for the person you choose, nor does it bind that person to use our services.

I previously wrote here about a well respected North Carolina attorney facing serious jail time for allowing himself to get enmeshed in a fraudulent offshore trust scheme.  Continuing with the "let’s bash" offshore trusts theme, Jonathan Alper’s blog, the Florida Asset Protection Blog, had the following to say about a recently published Senate Committee Report (401 pages!) examining abusive offshore trust schemes:

I occasionally get email questions about offshore trusts for people interested in sheltering income taxes. My reply always is that asset protection planning is income tax neutral, and that an asset protection plan is not designed to reduce taxes. Nevertheless, there are promoters and attorneys who market various plans to reduce income tax involving one or more offshore legal entity. There is a well know website called Quatloos.com which reports on tax evasion scams and the prosecution of their promoters. In a November 1, 2006, post Quatloos includes a report on offshore tax havens written by the U.S. Senate committee investigating income tax scams.

The Senate report is lengthy but very interesting. Anyone who is thinking of involvement in an offshore legal structure promising to reduce income tax should read portions of the Senate report. The report is very detailed in its description of abusive offshore tax schemes, and it names the promoters and attorneys responsible.

Janien v. Janien, 2006 WL 2956304 (Fla. 4th DCA Oct 18, 2006)

Under Florida law a surviving widow or widower is entitled to at least 30% of the decedent spouse’s estate.  If done properly, an “elective share trust” allows a person to satisfy his or her surviving spouse’s elective share rights, while still retaining the right to say what happens to the elective-share assets when the surviving spouse dies.   This planning device  can be especially useful  where a person wants to provide for a second  wife or husband, but make sure the family assets go back to his or her children when the surviving spouse dies.

No productive-property clause = failed elective share trust:

The issue in this case was whether the following clause created an elective share trust within the meaning of F.S. 732.2025(2).  The drafting attorney who prepared this instrument testified that at the time he did the drafting he’d never heard of an elective share trust.  So the question was did the decedent “accidentally” get it right?

ARTICLE SECOND: If my husband, Cedric Janien, survives me:

A. I devise and bequeath my beneficial interest in the North Chatham Realty Trust, together with all furniture, fixtures, antiques and other items of personal property in said residence, to my Trustee, with the right in my husband to exclusively live in and occupy such residence for the period of his life, and provided that he is financially able to do so, he shall be responsible for all maintenance charges and taxes assessed against the residence during his lifetime. If he does not have the financial ability to pay such expenses and taxes, them my Trustee is authorized and is directed to mortgage the premises for the purpose of paying such maintenance charges and taxes.

The trial court ruled this trust did NOT qualify as an elective share trust.  The 4th DCA agreed, providing the following valuable guidance:

First, Article Second (A) fails to satisfy the requirement of section 732.2025(2)(a), because .  .  .  Cedric is entitled neither to the “use” of the property within the meaning of the statute, nor to “income” derived from the property.

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Article Second (A) created something less than a life estate in the Massachusetts property.

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We also hold that Article Second (A) does not satisfy the requirements of section 732.2025(2)(b). That section requires that the purported elective share trust be “subject to the provisions of former s. 738.12 or the surviving spouse has the right under the terms of the trust or state law to require the trustee either to make the property productive or to convert it within a reasonable time.”

Lesson learned: 

The technical requirements for a valid elective share trust are such that you’re probably not going to have a qualifying clause unless the drafting attorney knew what he or she was doing.  By way of contrast, the following is a form of elective share trust that actually works:

Despite any other provision of this Trust Agreement, if my wife or her designated representative elects the Elective Share in my estate, any trust created under this Trust and not qualifying for the federal marital deduction in which my wife is a beneficiary will be divided into two parts, with the least amount of that trust as is needed to satisfy the balance of the Elective Share unpaid by other sources under Section 732.2075 of the Florida Statutes being held as a separate trust (the “Elective Share Trust”) and administered so as to qualify under Section 732.2025 of the Florida Statutes (including the right for my wife to require the Trustee to make the trust property productive or to convert it within a reasonable time). Unless the original trust already provides for a qualifying invasion power or a qualifying power of appointment for my wife, the Personal Representative in its discretion may elect to create an invasion power for the Elective Share Trust for purposes of valuation under Section 732.2095 of the Florida Statutes. If an invasion power is created, the Personal Representative shall designate that such a power is to apply by filing a notice with my wife and in the probate court within 6 months after the election by my wife of the Elective Share.

Continue Reading No productive-property clause = failed elective share trust

Revocable trusts are widely used in Florida for estate planning purposes.  The standard procedure is to title large assets in the name of the revocable trust to avoid having to probate those assets when the settlor dies and also to make it easier for a successor trustee to administer those assets for the benefit of an incapacitated settlor.  On the other hand, because clients can change or “revoke” their revocable trusts at any time and revocable trusts offer zero asset protection from creditors, some may feel that titling assets in the name of the trust is a technical matter with no real-life significance.  Wrong answer . . .  as demonstrated by this case.

Aronson v. Aronson, 930 So.2d 766, 31 Fla. L. Weekly D1317 (Fla. 3d DCA May 10, 2006)

In July of 1996, Mr. Aronson titled his condo located on Key Biscayne in Miami , FL in his revocable trust.  I’m assuming this trust mostly favored his children.  A few months later, in December of 1996 Mr. Aronson deeded this same condo to his second wife.  Perhaps inevitably, Mr. Aronson’s children and second wife ended up in litigation over who owns the condo: the trust or second wife? At trial, the court ruled in favor of second wife.  On appeal, the 3d DCA reversed, ruling that an individual can’t deed a property in his individual capacity if he’s previously deeded it over to his revocable trust, even if he had the authority at any time to revoke his own trust.  The following are a few excerpts from the 3d DCA’s opinion:

Here, the Settlor executed a warranty deed conveying the property to himself, as trustee. Thus, the Settlor, in his capacity as trustee, became the legal title holder of the trust property. See Buerki, 570 So.2d at 1063. Once the Settlor held the property as trustee, for the benefit of the beneficiaries of the trust, he no longer possessed the power to convey the property in his individual capacity.

*     *     *     *     *

However, assuming that the Trust reserved to the Settlor and the Trustee certain powers to dispose of trust assets, there is no question that Mr. Aronson failed to withdraw the property in strict compliance with the Trust instrument as it required the Settlor to deliver a written document to the Trustee in order to withdraw the Trust assets. See Bongaards, 793 N.E.2d at 339. Instead, Mr. Aronson conveyed real property in his individual capacity, which he did not legally own in that capacity. Accordingly, the subsequent transfer was invalid as a matter of law.

We need not and, indeed, cannot attempt to glean Mr. Aronson’s intent in transferring the property to the trust, or subsequently to Ms. Aronson in his individual capacity. Here, there was no ambiguity in either the original transfer of the property to the Trust by warranty deed or the subsequent transfer of the property to Ms. Aronson by quit claim deed. See Dolphins Plus, Inc. v. Hobdy, 650 So.2d 213, 214 (Fla. 3d DCA 1995)(noting that unambiguous language of a written instrument is not subject to judicial construction or interpretation). Having created a valid trust and being familiar with the powers he retained therein, as well as the law in this area, Appellants contend that Mr. Aronson’s intent was to appease his second wife and effectuate a sham transaction he knew to be legally invalid. Conversely, it is argued that Ms. Aronson was the natural object of Mr. Aronson’s bounty and that the subsequent transfer must be held to be valid to give meaning to Mr. Aronson’s actions. These and other explanations may exist in attempting to ascertain the true motive behind Mr. Aronson’s actions. However, the choice of any particular scenario to explain and give meaning to Mr. Aronson’s intent involves guesswork that is not likely to produce enduring legal principles under which to consider future cases.

In re Estate of Stisser, 932 So.2d 400, 31 Fla. L. Weekly D1008 (Fla. 2d DCA Apr 07, 2006)

Technical issues such as whether a Florida court has in rem jurisdiction over a matter or whether in personam jurisdiction is required can have huge impacts on how a case is litigated.  In this case, the outcome of that question determined whether a Florida personal representative was forced to sue the successor trustee of the decedent’s revocable trust for payment of expenses and taxes in Florida or Minnesota.  The PR won the argument before the probate court, even though the trust was administered in Minnesota by an individual trustee residing in Minnesota containing trust assets that apparently were located in Minnesota.  Based on these facts, I don’t see how the probate court concluded that it had in rem jurisdiction over the trust — none of the assets were located in Florida.  On appeal, the 2d DCA reversed. 

The 2d DCA got to the right result, but its expressed reasoning is flawed because it fails to zero in on the single key issue before it: was the lawsuit limited solely to questions involving the parties’ rights over property in Florida or was the lawsuit seeking to impose a judgment directly against a person or party?  Instead the 2d DCA framed its opinion in terms of an "indispensable party" analysis.  For the record, here’s how the 2d DCA expressed its reasoning:

[T]he probate court could not enter such a ruling in the absence of the Cotrustees. “‘The law is settled that, in suits against the trustee affecting trust property, the trustees as well as the cestuis que trustent should be made parties defendant.’ ” First Nat’l Bank of Hollywood v. Broward Nat’l Bank of Fort Lauderdale, 265 So.2d 377, 378 (Fla. 4th DCA 1972) (quoting Griley v. Marion Mortgage Co., 132 Fla. 299, 182 So. 297, 300 (1937)).  The general rule is that a “trustee is an indispensable party in all proceedings affecting the estate.” Id. Yet, in the instant case, both the probate court and the parties appeared to agree that the court did not have personal jurisdiction over the Cotrustees. The probate court stated that it did not require personal jurisdiction over the Cotrustees and proceeded without it in the mistaken belief that it had in rem jurisdiction, which it believed was sufficient. Stisser conceded at the hearing that the probate court did not have personal jurisdiction over the Cotrustees.

Given the fact that the law requires the probate court to have personal jurisdiction over the Cotrustees of a trust in order to enter a ruling affecting the corpus of the trust and given the fact that the court lacked such jurisdiction over the Cotrustees, the probate court was without authority to rule on the complaint filed by Stisser. We conclude therefore that the probate court erred in denying the Cotrustees’ motion to quash service of process and in taking jurisdiction over the instant case. Accordingly, we reverse.

I previously wrote here about Florida Bar Ethics Rule 4-1.8(c), which bars Florida attorneys from writing themselves into wills and trusts they draft for clients . . . and the hot water one Florida attorney was in for allegedly running afoul of that prohibition.  In Fla. Bar Urged to Help Estate Lawyers Avoid Ethics Pitfall a related issue is reported on: Florida attorneys naming themselves as personal representatives or trustees of wills and trusts they draft.  The underlying conflict here is that fees payable to PRs and trustees can be huge windfalls for the attorneys involved.

My firm’s practice is to avoid serving as PR or trustee for our clients . . . when possible.  There are situations, however, when clients need this assistance.  For example, with respect to elderly clients with no family to speak of in Florida, you may be the only person in the world they can count on once they pass away to serve as PR, or the only person in Florida willing and able to step in as successor trustee of their revocable trust in the event of incapacity.  That’s why a blanket ethics rule wont work in this context.  The linked-to article addresses the other end of the spectrum: attorneys who ALWAYS solicit this business and ALWAYS write themselves in as PRs and trustees for their clients.  Here are a few excerpts for the linked-to story:

Some estate and trust lawyers are urging the Florida Bar to recommend tighter rules governing lawyers who draft a client’s will or trust and also serve as the personal representative or trustee for the estate.

Florida Supreme Court rules prohibit lawyers from being named as beneficiaries in the wills they draft for clients. But nothing stops them from being designated as personal representative or trustee. As the personal representative or trustee, an attorney stands to earn significant fees.

Rohan Kelley of Fort Lauderdale, who heads the Bar’s real property, probate and trust law section, said too many lawyers “are writing themselves into documents for their own personal gain.” Lawyers should not serve in fiduciary roles in more than 50 percent of the cases where they draft the will or trust, he said.

“We need a disciplinary rule for lawyers who serve as not only trustees but personal representatives,” Kelley said. Lawyers who are found to be serving as the personal representatives or trustees for most of their estate cases should face discipline, he argued.

If lawyers place themselves in fiduciary roles in wills or trust documents they draft, it is imperative that they set up a legal mechanism that allows for their removal from such positions, said Christopher Boyett, Holland & Knight’s South Florida private wealth team leader based in Miami. “It’s absolutely awful to set up a situation where you cannot be removed,” he said.

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Some trust and estate lawyers say there are circumstances where the best way for a lawyer to represent a trust and estate client is to serve in a fiduciary role, and the lawyer should be fairly compensated.

“It’s not easy to be a personal representative or a trustee, and it can come with a fair amount of liability,” said Michael Simon, a partner at Gunster Yoakley & Stewart in West Palm Beach.

But lawyers also agree that the lack of ethical guidance from the Bar increases the potential for attorneys to take advantage of estate and trust clients, who generally are elderly and may not be at their mental peak.

Pierre v. Estate of Pierre, 928 So.2d 1252, 31 Fla. L. Weekly D1434 (Fla. 3d DCA May 24, 2006)

Suppose mom writes a will that cuts out estranged son, suppose further estranged son reappears on the scene shortly before mom’s death after 10 years of no contact with mom and somehow the will that cut him out goes “missing.” Well, estranged son might be smiling because if mom died without a will (i.e., intestate), then as one of her lineal descendants he gets a piece of the estate. Under Florida law, if the originally signed copy of a will is missing, it is presumed that the testator’s intent was to destroy the will and thus a photocopy of the will is not valid. However, this presumption can be overcome, which is what happened in this case.

Here’s how the 3d DCA explained the law in Florida governing lost wills:

When a person who executes a will dies and the will cannot be located, a rebuttable presumption arises that he or she destroyed the will with an intent to revoke it. See In re Estate of Hatten, 880 So.2d 1271, 1274 (Fla. 3d DCA 2004)(stating that when a decedent who has made a will dies, and the will cannot be found among the decedent’s personal papers or in other logical locations, a rebuttable presumption arises that the decedent herself destroyed the will with the intent to revoke it). The presumption may, however, be rebutted with competent substantial evidence that the interested party had access to the testatrix’s home, an opportunity to destroy the will, and a pecuniary interest in doing so. See Walton v. Estate of Walton, 601 So.2d 1266, 1267 (Fla. 3d DCA 1992)(explaining that the presumption that a decedent destroyed her will with the intention of revoking it may be overcome by competent and substantial evidence, and that “the existence of persons with an adverse interest in destroying a will who have an opportunity to do so, may serve to rebut the presumption that the will has been revoked”).

As we conclude that there is competent substantial record evidence to support the trial court’s finding that the presumption of revocation was overcome, we affirm.

Bush v. Webb, 2006 WL 2872522 (Fla. 1st DCA October 11, 2006)

An overarching theme of Florida’s probate code (and recurring point of discussion on this blog) is the tension between basic due-process rights on the one hand and Florida’s strong public policy favoring the speedy administration of estates on the other. In order to move things along as quickly as possible (with the least amount of litigation expense possible), Florida law provides extremely short windows of opportunities for litigants to file claims.  Florida’s 2-year non-claim statute (733.710(1)) epitomizes this stated public policy because of its simplicity and utter disregard for due process or equitable considerations. When it comes to creditors, after 2 years it’s game over . . . period, no exceptions.

The issue litigated in this case was whether language in a will explicitly directing the personal representative to pay the decedent’s funeral expenses trumps Florida’s 2-year non-claim statute. The 1st DCA described the will-language in contention as follows:

The decedent died on February 16, 2002. In her will, she bequeathed all her property to appellant and directed that her “just debts, funeral and administration expenses be paid as soon after [her] death as may be practical . . .”

The personal representative in this case was the decedent’s sister. Apparently the decedent’s children paid mom’s funeral expenses then waited over two years to file a claim against mom’s estate seeking reimbursement. The PR said NO, the trial court said YES, and the 1st DCA sided with the PR, changing the answer to NO again. Here’s how the 1st DCA described the reasoning underlying its decision to reverse the probate court’s ruling:

It is undisputed in this case that appellees filed their claims against the decedent’s estate more than two years after her death. Pursuant to section 733.710(1), the claims were barred. Contrary to appellees’ argument, the decedent’s directive that her estate pay her funeral expenses did not excuse their statutory obligation to file their claims against the estate within two years of the decedent’s death. See Marshall Lodge No. 39, A.F. & A.M. v. Woodson, 190 So. 749, 751 (Fla.1939) (“We do not think that the provision of the will directing the executors to pay all of the just debts of the testator had any effect upon the operation of the statute of non-claim.”). Were that not the case, each of the decedent’s creditors could have simply relied on the will and filed claims against the estate long after her death, thereby forever subjecting the estate to uncertainty. Such a situation would conflict with the purpose behind section 733.710(1).

Lesson learned:

If you even suspect an estate may owe you money, when in doubt file a claim . . . and do it sooner rather than later.  An early claim can always be withdrawn, a late claim is gone forever.