Friday, March 28, 2014

Aldrich v. Basile

Aldrich v. Basile, --- So.3d --- (Fla. 2014), 2014 WL 1250073

The issues in this case stem from an "E-Z Legal Form" executed by the decedent, which apparently neglected to include a residuary clause.  Thus, the decedent left a will which simply devised a list of specifically described property to her sister if she survived her, and if she did not, left that property to her brother.  When the sister predeceased the decedent, she left the decedent additional property which was not included in that list.  This meant that when the decedent ultimately died, she died owning property that was not listed in her will.  While she did draft a document, entitled "Just a Note," which stated that all of her "worldly possessions" should pass to her brother, this document was not properly executed and was therefore not an enforceable testamentary instrument under the Florida Probate Code.

The brother argued that he was entitled to all of the property, including the property not listed in the will, for three reasons: (1) the will only named the sister and brother as beneficiaries and disposed of all property owned by the sister at the time of the execution of the will; (2) F.S. 736.6005(2) provides that a will shall be construed to pass all property that the testator owned at death, including property acquired after the will is executed, and (3) there is a legal presumption against construction of a will that results in partial intestacy.  The decedent's intestate heirs, her nieces, argued that since the will contained no mechanism for disposing of the property acquired after the will was executed, she died intestate as to that property.

The Supreme Court of Florida reviewed the legislative history of Florida law regarding wills and after-acquired property.  It noted that originally, a will would not be effective devise real property in Florida if the testator did not have an interest in that property at the time the will was executed.  Eventually, statutes were enacted which said that a residuary clause would be effective to transfer property acquired after the execution of the will.  The current law on this issue, F.S. 732.6005, reads as follows:

(1)  The intention of the testator as expressed in the will controls the legal effect of the testator's dispositions.  The rules of construction expressed in this part shall apply unless a contrary intention is indicated by the will.
(2)  Subject to the foregoing, a will is construed to pass all property which the testator owns at death, including property acquired after the execution of the will.

The legislative history of this section reveals that it was not meant to change the existing law, and the fact that the statute no longer contained an explicit reference to residuary clauses was not meant to be a substantial change in the law.

The Court also considered how intestacy law relates to F.S. 732.6005.  F.S. 732.101(1) says that, "Any part of the estate of a decedent not effectively disposed of by will passes to the decedent's heirs as prescribed in the following sections of this code."  Since the legislature did not limit the application of the intestacy statute for estates containing after-acquired property, it appears it intended for after-acquired property to be subject to the intestacy statute in the event it is not effectively disposed of by will.

The Court ultimately found the brother's arguments about his sister's intent to be ineffective. The Court held that it could not look outside the four corners of the document since the will was not ambiguous.  The will expressed no intent as to any property that she may have acquired after the execution of her will.  It contained no residuary devise.  To distribute the after-acquired property to the brother would in effect be a reformation of the will.  Therefore, the Court held that the after-acquired property would pass by intestacy to the decedent's nieces.

Justice Pariente wrote a concurring opinion, in which she made the following observation:

I therefore take this opportunity to highlight a cautionary tale of the potential dangers of utilizing pre-printed forms and drafting a will without legal assistance.  As this case illustrates, that decision can ultimately result in the frustration of the testator's intent, in addition to the payment of extensive attorney's fees-- the precise results the testator sought to avoid in the first place.

Wednesday, March 19, 2014

Campbell v. Chitty

Campbell v. Chitty, 131 So.3d 9 (Fla. 1st DCA 2012)

This case involved an appeal of a trial court order imposing monetary sanctions on a trustee of several trusts for breach of fiduciary duty.  The Appellate Court remanded for two reasons: (1) The trusts had an indemnification clause which indemnified the trustee unless her actions were negligent and the trial court did not make a finding of negligence, and (2) The judgments against the trustee required her to both repay the trusts and have her share of the trusts be set off by the same amount, which was essentially double recovery.

Thursday, March 13, 2014

Romano v. Olshen

Romano v. Olshen, 153 So.2d 912 (2014), 2014 WL 940700

The Appellate Court described this case as one "at the intersection where guardianship law meets the law concerning forms of ownership of joint bank or brokerage accounts."  It involved the ability of a guardian of the property and the attorney for guardian to recover fees from an account owned by the ward and his wife as joint tenants with rights of survivorship.

The ward and his wife were at odds when he was declared incompetent, and their divorce proceedings were put on hold during the guardianship.  Eventually, the ward died while still married to his wife.  The main asset of the guardianship estate was an account titled in the names of the husband and the wife, as joint tenants with rights of survivorship.  Even though the guardianship court authorized the fees of the guardian and his attorney, other than the account held with the wife, the guardianship estate did not have enough liquid assets to pay those fees, and therefore the guardian and his attorney sought to recover their fees from the account held with the wife.  The wife argued that upon the ward's death, those assets became hers and therefore the guardianship court could not reach into that account.

The decision contains a lengthy discussion about the fact that guardianship proceedings are "equitable proceedings."  It held that as a court of equity, the guardianship court is "authorized to expansively construe Chapter 744 to protect the interests of a ward."

In determining that the account held by the husband and the wife was a tenancy by the entirety, the lower court had focused on the Beal Bank decision which creates a presumption that a bank account titled in the names of two spouses is held as tenants by the entireties.  This presumption would allow the wife to block access to the account, since F.S. 744.457(1)(a) provides that property owned as an estate by the entirety by an incapacitated and his or her spouse can only be sold, transferred, conveyed or mortgaged if the spouse joins in that transaction.  The Court expressed concerns that, "Without the application of some equitable principle that would override the language of the statute, an estranged spouse would be able to block payment of a ward's necessary expenses under section 744.457(1)(a)."  The Court did not have to apply a equitable principle, though, because it held that the Beal Bank presumption is limited only to proceedings relating to debtors and creditors, and is not applicable in a guardianship proceeding or in a lawsuit where the husband and wife are opposing parties.  Thus, the Court held that the account was a joint tenancy with right of survivorship, and therefore the trial court could authorize the guardian to pay its expenses from that account.  

Upon deciding that the account was a joint tenancy with right of survivorship, the Court disagreed with the wife that the guardian had no ability to reach into the account following the ward's death.  It noted that the guardian of the property of a ward continues to perform his services following the death of the ward during the winding up of the guardianship estate and therefore he was able to seek his fees and his attorney's fees from that account.   The Court further noted that since Chapter 744 should be construed to ensure compensation of guardians and guardian's attorneys, in order to encourage guardians to serve, it would be too risky to allow a ward's death to render a survivorship account inaccessible to a guardian of the property. 

Bivins v. Rogers

Bivins v. Rogers, 147 So.3d 549 (2014), 2014 WL 940659

In this decision, the Appellate Court affirmed the trial court's determination that a ward's son lacked standing to petition the guardianship court for a change of residence.  F.S. 744.2025(1) requires a guardian to obtain court approval before removing a ward from the state or to another non-adjacent county.  It does not, however, authorize anyone other than the guardian to apply for court approval to change the residence of the ward.

The son argued that he should have standing to bring his petition since he is an "interested person" in the guardianship.  He cited the decision in Hayes v. Guardianship of Thompson, which stated "that if the person is entitled to notice or authorized to file an objection under the Florida Guardianship Law or the Florida Probate Rules, that person has standing to participate in the guardianship proceeding." Hayes v. Guardianship of Thompson, 952 So.2d 498, 506 (Fla. 2006).  The Court held that while the son may have standing to "participate" in the proceedings under the Hayes decision, the decision does not give him standing to "initiate" the proceedings.  

The Court pointed out that the son's only possible courses of action under the Guardianship Code in this situation would be (1) to petition the court for interim judicial review pursuant to F.S. 744.3715(1), if he believed that the guardian was exceeding his powers under the annual guardianship plan and was not acting in the ward's best interests, or (2) to petition for removal of the guardian pursuant to F.S. 744.477.  The Court cautioned however, that if he were to bring a petition for interim judicial review pursuant to F.S. 744.3715(1), he could be assessed with attorney's fees if the court found his petition to be without merit.  F.S. 744.3715(2).

Monday, March 10, 2014

In re Guardianship of Rawl

In re Guardianship of Rawl, __ So.3d __, 2014 WL 889050

An attorney for a ward, noticing internal inconsistencies in the reports of the examining committee, took it upon himself to contact one of the committee members and ask her to reassess the ward.  He then attempted to file the reassessment with the guardianship court, but the guardianship court said it was "inappropriate" for him to have contacted an examining committee member, and similarly it was "inappropriate" for him to file the reassessment.  At the same time, however, the court appointed a second examining committee to evaluate the ward, because it was troubled by the fact that the reassessment contained different findings than the original assessment, and because it also noted the inconsistencies in the original reports.

The second examining committee found the ward to be completely incapacitated and appointed guardians of the person and property for the ward.  The attorney then filed for his fees and costs, and presented expert evidence that his hourly rate was reasonable, that he obtained the reassessment report because he had legitimate doubts about the original report and he did not intend for a second committee to be appointed, and that his actions benefited the ward.  The trial court reduced the attorney's hourly rate by half of the fees incurred related to the appointment of the second examining committee and imposed the total cost of the appointment of the second examining committee against him.  The court's comments seemed to indicate that the reduction in fees and assessment of costs was more in the nature of a sanction for contacting the examining committee member than because his fees and costs did not benefit the ward.

On appeal, the attorney argued that the trial court abused its discretion in reducing his fees and charging him for costs, since he had established that his services benefited the ward.  An attorney who renders services for a ward is entitled to a "reasonable fee" pursuant to F.S. 744.108, as long as his services benefit the ward or the ward's estate.  Thorpe v. Myers, 67 So. 3d 338, 345 (Fla. 2d DCA 2011).  The Court held that the trial court's finding that his fees were not for the ward's benefit was not supported by competent, substantial evidence.  The act of seeking a reassessment, based on concerns about the accuracy of the report, especially in light of the problems with the original reports, clearly benefited the ward.  F.S. 744.331 does not prohibit an attorney from contacting an examining member and seeking a reassessment, the trial court did not find bad faith in the attorney's actions and the court had similar concerns with the original reports.  Therefore, even if the way the attorney handled the reassessment was improper, the court's finding that his fees did not benefit the Ward was not supported by competent, substantial evidence, and therefore the trial court should reconsider his petition for fees and expenses.

Tuesday, March 4, 2014

Peck v. Peck

Peck v. Peck, 133 So.3d 587 (Fla. 2d DCA 2014)

When attempting to modify or terminate an irrevocable trust, most trust attorneys will first run through the litany of available statutory methods of modification provided to us in the Florida Trust Code (for a review, click here).  If none of the statutory methods work in a given situation, most attorneys will rely on the common law to modify an irrevocable trust.  

The Court in this case upheld a lower court decision allowing modification of an irrevocable trust under the common law.  The trust being modified came about because the settlor's father's will devised the residuary of his estate to two trusts established by his children for their own benefit.  The daughter's trust was settled by the daughter, was irrevocable and named the daughter and her brother as co-trustees. Twenty years after the trust was established, the daughter filed a petition to terminate the trust and her children agreed to the termination.  Her brother, as co-trustee, objected to the termination because he feared his sister might unwisely spend the trust assets, and his father, when he made the initial devise, had similar concerns about his daughter's spending.  The brother argued that the trust could not be terminated because under F.S. 736.04113, the trust's purposes had not yet been fulfilled.  

The trial court held that the trust could be terminated, since F.S. 736.04113 does not limit the court's common law authority to terminate a trust.  Citing Preston v. City National Bank of Miami, 294 So.2d 11 (Fla. 3d DCA 1974), the court allowed the trust to be terminated since the settlor and all beneficiaries consented, even though the trust was irrevocable and the trust's purposes have not been accomplished.  The Court upheld the termination of the trust, and said that if the father had created the trust himself as settlor, he probably could have structured the trust so that it could not be modified under the common law after his death.  But since he structured his estate plan in a way which allowed the daughter to settle her own trust, she was able to modify or terminate her trust with the beneficiaries' consent, even if it defeated her father's intent.