Tuesday, March 14, 2017

In re Cross Trusts

William Cross, as Trustee of the Perl Donohue Cross Revocable Trust and as Trustee of the Charles William Cross Revocable Trust v. Annette Cross Caito, et al.Case No.: 502015CP001572XXXXMB

This decision raises a host of trust administration questions regarding claims of breach of fiduciary duty.  While the specific breaches at issue in this case were very fact specific, the Trial Court's findings are useful in a variety of trust administration contexts: 

A. Statute of Limitations

          (1)  Trust limitation notices:  

The first question the Court dealt with was the adequacy of certain trust limitation notices to bind a beneficiary to a six-month statute of limitations as opposed to a four-year statute of limitations.  The Court held that a specific reference to the six-month statute of limitations is required by F.S. 736.1008.  Without such a reference, the statute of limitations will be four years.

          (2)  Adequacy of trust disclosure documents:

The Court next considered whether the accountings served by the trustee "adequately disclosed" matters such that the statute of limitations began to run.  Under F.S. 736.1008(4)(a), a trust disclosure document adequately discloses a matter if the document provides sufficient information so that a beneficiary knows of a claim or reasonably should have inquired into the existence of a claim with respect to that matter. Unfortunately, the decision is vague as to why the Court ultimately held that the accountings served were not adequate.  It simply states that the court could not say whether the beneficiary knew of or "reasonably should have inquired" into the existence of the claims.

B.  Breach of Fiduciary Duties

          (1) Providing information to beneficiaries:

The beneficiary sued the Trustee for various alleged breaches of fiduciary duties.  The first was failure to provide the beneficiaries with relevant information about the particulars relating to the administration of the trusts and refusal to make the information available to the beneficiaries.  The Court noted that while the trust was revocable, the duties of the trustee were owed exclusively to the settlor, and the trustee's duties to inform of the trust and its administration extended only to the settlor and not to the beneficiaries. F.S. 736.0603 and F.S. 736.0813.  Upon the settlor's death, the beneficiaries became entitled to information.  

The beneficiary, who was to received 50% of the net proceeds of the sale of a piece of trust property, requested the HUD-1 for that sale, and the Trustee refused to provide it to him.  The Court held that by refusing to provide him with the HUD-1, the Trustee breached his duty to provide a qualified beneficiary of the Trust with information concerning the administration upon reasonable request.

          (2) Improvements to property:

The beneficiary also sued the Trustee for breach of fiduciary duty for using trust assets to make improvements to one of the trust properties.  The Court held that since the improvements were not necessary for the maintenance and upkeep of the property, and because the Trustee was to inherit that specific property, the burden was on the Trustee to show that the transactions were legitimate rather than motivated to benefit himself.  Since the Trustee failed to do so by competent and substantial evidence, he did not meet his burden of showing that the expenditure of Trust monies was proper.

          (3) Failure to make partial distribution:

The beneficiary also alleged that the Trustee breached his fiduciary duty by refusing to make a partial distribution to him so that he could obtain counsel to advise him about his rights regarding the Trust.  The Court held that the Trustee's refusal to make a partial distribution, which was authorized by the terms of the Trust, was a breach of the Trustee's duties of loyalty and impartiality, and constituted self-dealing by the Trustee because he was placing his own interests (protecting himself as Trustee) ahead of the beneficiary's interests.

C.  Remedies

The Court required the Trustee to compensate the beneficiaries for his share of the unnecessary expenditures made to improve the trust property.  It also held that the Trustee was not entitled to fiduciary compensation.  The Trustee argued that the Court lacked personal jurisdiction over him to award surcharge against him, but the Court found that defense was waived and that he had affirmatively invoked the Court's jurisdiction by seeking an order discharging him from all liability, including surcharge.

Thursday, March 9, 2017

Bryan v. Fernald

Bryan v. Fernald, --- So.3d --- (Fla. 2d DCA 2017)

In determining the beneficiaries of an estate, can a probate judge rely on a factual finding made by a judge in a medical malpractice case?  Here, where there was a question about the validity of the decedent's marriage at the time of her death, which would alter the determination of her intestate heirs, the Court held that the doctrine of res judicata did not apply, because in a probate action to determine beneficiaries and a medical malpractice suit, the things sued for and the causes of action are different.  

Monday, January 23, 2017

MonarchCare, Inc. v. Guardianship of Block

MonarchCare, Inc. v. Guardianship of Block, 204 So.3d 508 (Fla. 4th DCA 2016)

In what seems to be a growing trend of appellate decisions involving guardianship fees, this decision involves a trial court's decision to reduce a professional guardian's hourly rate. Here, a professional guardian and an individual served as co-guardians of a ward.  The professional guardian billed at its standard hourly rate of $95 per hour, while the individual co-guardian billed at a rate of about $45-$50 per hour.  At an earlier hearing, the trial court granted a pending fee request for $95 per hour for the professional guardian, but prospectively capped both guardians fees at $45 per hour.

Subsequent to the entry of that order, a new judge took over the case, and the professional guardian made another request for its fees at $95 per hour.  Following an evidentiary hearing, the new judge reduced the professional guardian's rate to $45 per hour.  The professional guardian appealed.

The Court held that the court properly considered the factors laid out in F.S. 744.108(2) at the evidentiary hearing.  It noted that a previous approval of a guardian's fees would create a presumption that the rate is reasonable.  However, the Court felt that in this case, the presumption was a weak one since the prior judge did not hold any hearings to establish the reasonableness of the hourly rate.  It also noted that many of the hours billed could have been performed at a lesser rate.

Despite agreeing with the trial court's analysis of the guardianship fees, the Court reversed because it felt that the trial court simply accepted the prior judge's reduction of the fees to $45 per hour when there was no evidence in the record to support such a reduction.  It concluded that the court did not abuse its discretion in finding a valid justification for a different rate, but that the reduction of the rate to $45 per hour was not supported by the record.

Wednesday, January 11, 2017

In re Guardianship of Beck

In re Guardianship of Beck, 204 So.3d 143 (Fla. 2d DCA 2016)

In this decision, the Court considered whether F.S. 744.108(1) authorizes an award of fees and costs incurred by counsel for an emergency temporary guardian and counsel for a ward who was the subject of an emergency temporary guardianship when there was no later determination that the ward was actually incapacitated, and no guardian was appointed.  In this instance, an emergency temporary guardian was appointed, but the ward passed away before any determination of incapacity was made.  

Counsel for the petitioner, the emergency temporary guardian and the alleged incapacitated person all sought reimbursement of their fees and costs.  The trial court held that F.S. 744.108(1) did not permit an award of fees and costs before a guardian over the ward is appointed.  The Appellate Court reversed.

(1) Fees and costs of attorney for emergency temporary guardian.  The Court first held that the attorney for the emergency temporary guardian was entitled to fees under the plain language of F.S. 744.108(1) and Chapter 744, since an emergency temporary guardian is a "guardian."  It found the holding in Klatthaar inapplicable - Klatthaar dealt with whether counsel appointed by the court pursuant to F.S. 744.331 to represent an alleged incapacitated person in a proceeding to determine capacity was entitled to fees under F.S. 744.108.  There, the Court held that since the alleged incapacitated person died before a guardianship was established, F.S. 744.108 was not triggered.  Here, an emergency temporary guardian was appointed and therefore the Court found that the fees and costs of her attorney were compensable.

(2) Fees and costs of attorney for petitioner.  The trial court denied the fees and costs of the attorney for the petitioner since the petitioner was neither a guardian nor a ward, and thus was not entitled to fees under F.S. 744.108(1).  The Court found that the trial court should have considered whether the petitioner's request for a determination of incapacity and appointment of guardian redounded to the benefit of the ward pursuant to Thorpe v. Myers, 67 So.3d 338, 345 (Fla. 2d DCA 2011), and thus reversed and remanded for such a determination.

(3) Fees and costs of attorney for the ward.  This part of the decision was remanded for technical reasons (the death of the attorney representing the ward, among other things).  However, the Court did note that under F.S. 744.108(1), an attorney rendering services to a ward is entitled to an award of fees and costs, and the decedent became a ward as soon as the emergency temporary guardian was appointed.

Wednesday, January 4, 2017

Rose v. Sonson

Rose v. Sonson, 208 So.3d 136 (Fla. 3d DCA 2016)

This decision deals with the ability of a child born out of wedlock to establish paternity in his putative father's intestate estate.  The result turned on an analysis of the history of paternity proceedings within the probate context. 

Between the petitioner's birth in 1964 and 1986, only the mother of a child born out of wedlock could bring suit to establish paternity.  In 1986, F.S. 742.11 was changed to allow both putative children and fathers to bring suit to establish paternity and at the same time, F.S. 95.11(3)(b) was amended to impose a four year limit, running from the date the child reached the age of majority, to bring such an action.  In 2009, the four year statute of limitations was removed from F.S. 742.11 by way of an amendment to F.S. 732.108(2)(b), expressly eliminating the application of F.S.95.11(3)(b) to paternity adjudications when determining intestate succession in a probate proceeding.

The putative father did not die until 2012.  His daughters filed a petition for administration of their father's intestate estate.  The putative son appeared and claimed to be a surviving son of the decedent and thus a beneficiary of the estate.  The daughters moved to dismiss his counter-petition.  The trial court held, and the Appellate Court affirmed, that that the 2009 amendment to F.S. 742.11 could not revive the petitioner's already extinguished claim, that the 2009 amendment did not apply retroactively, and if it did, that such retroactive application would be a violation of the decedent and the personal representatives' due process rights.  

Tuesday, January 3, 2017

Hilgendorf v. Estate of Coleman

Hilgendorf v. Estate of Coleman 201 So.3d 1262 (Fla. 4th DCA 2016)

Can an estate or a beneficiary of a revocable trust compel the trustee to render an accounting of receipts and disbursements made during the life of the decedent? The Court held that here, where the trust did not contain a provision requiring accountings during the decedent's life and the decedent did not request accountings during her life, the trustee had no duty to account while the trust was revocable.

Prior to the enactment of F.S. 736.0603, which provides that while a trust is revocable, the duties of the trustee are owed exclusively to the settlor, the law in Florida provided that a trustee owed duties to the settlor/beneficiary of a revocable trust and not to contingent beneficiaries.  Only once the trust becomes irrevocable at the death of the settlor may a beneficiary sue for breach of a duty that the trustee owed which was breached during the decedent's lifetime.  However, the Court found that beneficiary must sue for a violation of a specific provision of the trust, which was not applicable here.  Since the statutory duty to account pursuant to F.S. 736.0813 does not arise until the trust becomes irrevocable, the beneficiary here was not entitled to an accounting.

Wednesday, November 23, 2016

Inglis v. Casselberry

Inglis v. Casselberry, 200 So.3d 206 (Fla. 2d DCA 2016)

And the Berlinger versus Casselberry saga continues.  As you may remember, we first met Bruce Berlinger and Roberta Casselberry back in 2013, when Roberta, the former spouse, obtained an order from the court affirming writs of garnishment on discretionary distributions to Bruce, the former husband, from four family trusts.  

Roberta then filed supplemental proceedings against Bruce and trustees of several trusts of which Bruce and his children were beneficiaries.  She sought discovery against Bruce and the trustees, seeking information about distributions to Bruce and his adult children.  The trustees objected with regard to the distributions to the adult children, arguing that those distributions were not at issue, and that the children have a constitutional right to privacy with regard to their personal financial information.  The trial court overruled the objections, noting the litigation history between the parties and the lengths Bruce went to avoid paying Roberta.  The trial court concluded that the information was relevant and ordered the trustees to comply with the discovery requests.

On appeal, the Court disagreed.  It held that the trial court must generally make a determination of whether the information sought is relevant after an evidentiary hearing.  Since there was no evidence offered about why the information was relevant, nor was its relevancy clear from the pleadings, the Court quashed the trial court's order compelling the discovery.