Tuesday, July 21, 2015

Flegal v. Guardianship of Swistock

Flegal v. Guardianship of Swistock, 169 So.3d 278 (Fla. 4th DCA 2015), 2015 WL 4269079

This case centered around the ownership of stock shares and due process within a guardianship proceeding.  The dispute arose over the ownership of stock shares which were initially purchased by a father and his daughters as joint tenants with right of survivorship.

Prior to his incapacity, the father sued his daughters in Pennsylvania over ownership of these shares.  He claimed even though he had transferred the shares to his daughters as joint tenants with rights of survivorship, he did not actually intend to gift the stock to them.  As evidence of this intent, he established that he had paid for the stock, kept possession of the certificates, retained all dividends and paid income taxes on the dividends.  He asked the daughters to sign the stock back to him, but they refused, so he sought a declaration that he was the sole owner of the stock.

While this litigation was pending, the daughters filed a petition to determine their father's capacity and appoint them as plenary guardians.  The father moved to dismiss, arguing that they had only brought the guardianship to avoid the outcome of the Pennsylvania action about the ownership of the stock.  The examining committee concluded he was not incapacitated, so the daughters dismissed their petition.

About a year later, the father suffered a stroke.  A daughter not involved in the stock ownership litigation filed for guardianship and sought to be appointed as emergency temporary guardian (ETG).  She listed the stock as property subject to the guardianship.  The trial court entered an order setting a hearing on that daughter's petition, and mailed the order to the other daughters who received it just four days before that hearing. 

At the first guardianship hearing, the trial court appointed the daughter as ETG.  Once she was appointed as ETG, the daughter and the ward's counsel submitted a proposed order requiring the shares to be transferred to her as guardian.  Without notice to the other daughters or a hearing, the court signed the order.  The father died the next day.

The daughter later sought to be discharged as ETG and filed her final report.  She also transferred the shares from herself as guardian to herself as personal representative of the father's estate.

The Pennsylvania court ultimately found in favor of the daughters and held that the stock was held as joint tenants with rights of survivorship.  Five months after the ETG filed her final report, the other daughters filed an untimely objection about the ownership of the shares.  They argued they lacked notice and an opportunity to be heard, and asked the court to disapprove of the ETG's final report.

The guardianship court ultimately entered an order approving the final report and noted that the other daughters had objected but that their objection was untimely.  The court also approved the distribution of the shares to the estate.  The daughters moved to vacate the discharge order and argued that they were deprived of their stock without due process.  

The Court noted that Rule 5.648(b) only requires notice of the petition for appointment of an ETG be served on the alleged incapacitated person and his attorney, not the daughters.  The daughters argued that since Rule 5.401 provides that "every petition or motion for an order determining rights of an interested person...shall be served on interested persons," they should have received notice before the stock transfer occurred as interested persons.  The Court agreed, since their interests were affected by the court's order.  The Court also found, however, that their objection to the ETG's report was untimely, so they therefore abandoned or waived any objection to that report.

Friday, July 17, 2015

Brown v. Brown

Brown v. Brown, 169 So.3d 286 (Fla. 4th DCA 2015), 2015 WL 4269921

This decision serves as a nice reminder about a court's jurisdiction over real property.  A circuit court in an estate proceeding cannot direct a personal representative to divide and distribute a decedent's real estate in another state, since the court lacks in rem jurisdiction to order and partition the sale of that real property.  To properly partition out of state real property, a personal representative is required to open an ancillary action in that state.  F.S. 64.022.

Saturday, July 11, 2015

Carroll v. Israelson

Carroll v. Israelson, 169 So.3d 239 (Fla. 4th DCA 2015), 2015 WL 3999486

The focus of this case was the applicability of F.S. 732.507(2), dealing with the effect of divorce on a decedent's will which included a devise to his former spouse and a trust for her family.

The decedent and his former spouse divorced one month before his death. Understandably, at the time of his death, he had not yet changed his estate plan to remove his former spouse from his will.  At his death, the will provided for the residuary of his estate to pass to his former spouse, and if she predeceased him, to a family trust created under her revocable trust.  The former spouse's revocable trust gave her the right to receive income and principal from the trust and to revoke or modify the trust at any time.  Upon her death, a family trust would be created for the benefit of her niece and nephew.

 At the time of their divorce, the decedent and his former spouse entered into a marital settlement agreement in which each party agreed to waive their right to share in the other's estate.  Thus, at the time of their divorce, since they had no children, the decedent's mother became his sole intestate heir.

Following the decedent's death, the former spouse's brother attempted to probate the decedent's will.  In response, his mother filed a petition to determine beneficiaries, arguing that the devise to the former spouse's  trust was void pursuant to the marital settlement agreement and F.S. 732.507(2), so the estate should pass to her by intestacy.  She argued since the former spouse could access the assets of her revocable trust, the disposition to that trust was void, and additionally, the family trust does not even exist until the former spouse's death.  The former spouse's brother argued that the decedent's intent was that if the former spouse predeceased him, his estate would pass for the benefit of the niece and nephew, and filed an affidavit from the former spouse stating that she would modify the trust so that the provisions for the niece and nephew were irrevocable.  The trial court "engaged in the legal fiction" that the former spouse had predeceased her ex-husband, and allowed the manipulation of her revocable trust to create the family trust for the benefit of the niece and nephew.

The Court reversed, holding that F.S. 732.507(2) does not allow for "post-death legal gymnastics" to manipulate the terms of the will.  F.S. 732.507(2) provides that, "Any provision of a will executed by a married person that affects the spouse of that person shall become void upon the divorce of that person or annulment of the marriage.  After the dissolution, divorce, or annulment, the will shall be administered and construed as if the former spouse had died at the time of the dissolution, divorce, or annulment of the marriage, unless the will or the dissolution or divorce judgment expressly provides otherwise."  

The Court explained that a provision that "affects" a former spouse, does not necessarily mean a provision which provides a direct pecuniary benefit to a former spouse.  Any provision which has an effect on the former spouse would also become void upon the dissolution.  So, not only did the provision leaving the residue of the estate to the former spouse have an effect on her, but the bequest to the family trust did as well.  Since she was alive and had complete control over her revocable trust, she could merge that trust to any other trust and alter the terms of the family trust.  Because F.S. 732.507(2) becomes operative on the date of dissolution, the attempt to modify the revocable trust to make the family trust irrevocable would be too late, since as of the date of dissolution, the trust as written affected the former spouse and thus the disposition to that trust was already void.

Friday, July 10, 2015

Pierre v. Brown

Pierre v. Brown, 169 So.3d 262 (Fla. 3d DCA 2015), 2015 WL 4111330

In this guardianship fee dispute, the Court affirmed a harsh result for a successor guardian who incurred fees in cleaning up a mess created by the initial guardian.

The initial guardian of the ward incurred over $200,000 in fees.  That prior guardian secured assets of the ward, repaired a residence the ward inherited from his mother, reduced the mother's funeral bill and recovered compensation paid to a disbarred attorney.  These actions resulted in a deposit of $150,000 into a trust for the ward, on top of the ward's $78.40/month disability income and $1,400/month rental income from the real property.  Virtually all of the wards assets were paid out as fees to the initial guardian.

Once the successor guardian was appointed, he discovered that no tax returns had been filed for the ward since 2004, and the income tax obligations of the mother's estate and real estate taxes were never paid.  The successor guardian hired an accounting firm to prepare the ward's delinquent tax returns, hoping to use losses from prior years to set off the income tax, and resulted in savings to the ward.  He then twice sought his fees and costs incurred, as well as the fees of the accounting firm.  The trial court entered orders significantly reducing the fees sought by the successor guardian.

The Court upheld the trial court's orders, stating that it was unable to find that the trial court abused its discretion in determining the award of fees and costs to the successor guardian.  The Court was not bothered by the fact that the orders contained findings of facts not supported by the record, since it felt that the reduced fees were appropriate given the small size of the estate, nor was it bothered by the fact that the successor guardian was being penalized by the reduced status of the estate which he was in no way responsible for.