Florida Probate, Trust & Estate Blog : Florida Probate Lawyers & Attorneys : Clark Skatoff Law Firm : FL Wills, Trusts & Inheritance : Palm Beach, Broward County, Boca Raton

In Florida probate administration, the probate rules permit the use of "Formal Notice" to notify beneficiaries and other interested persons of a specific action or request that has been made to the probate court.  When an interested person petitions the Florida probate court, the interested person send the formal notice to all persons who may be effected by what is being requested.   The persons receiving the formal notice then have 20 days from the receipt of the formal notice to respond to the court if there is disagreement of objection to what is being requested.

Formal notice is sent, according to the Florida Probate Code, via certified mail to each interested person.  This is unlike how most relief is sought in most courts, where normally a summons must be formally served on the persons effected by litigation. 

Examples of relief requested from a Florida probate court for which formal notice needs to be served, or may be served, include the following:

• Petition for Administration
• Petition to Construe Will
• Petition to Probate Lost Will
• Petition to Determine Beneficiaries
• Petition to Remove Personal Representative
• Petition to Surcharge Personal Representative
• Petition to Cancel a Devise
• Petition to Revoke Probate of Will

Even though, in most jurisdictions in Florida, the probate court hears both probate and trust disputes, the formal notice rules apply only in probate matters.  Trust proceedings must be initiated and served through the normal Florida Rules of Civil Procedure.  

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A Florida probate court and the appellate court have dealt with a number of problems regarding the administration of a trust managed by JP Morgan Chase. The case has been extensively litigated, and the appellate court has recently issued its third opinion on the matter, in the case of Siegel v. JP Morgan Chase, (Fla. Dist. Ct. App. 4th Dist., Oct. 19, 2011).  The facts of the case, according to the appellate court, included the following

The settlor of the trust, Dorothy H. Rautbord, established a trust to benefit her for her life, with the remainder to be distributed to her children who survived her, including her sons.  The trust permitted the trustee to pay from income and principal, so much “as the Trustee, in its sole discretion, shall deem appropriate or advisable for the support, maintenance, health, comfort or general welfare of the Settlor [Rautbord].”   

The trust reserved for Ms. Rautbord the power to amend, modify, or revoke the trust, and excluded a power of attorney holder from exercising these powers.  

JP Morgan Chase Bank was the trustee.  After Ms. Rautbord became incapacitated, the holder of the power of attorney made large withdrawals from the principal of the trust by signing “revocation” letters, which the trustee honored.  The trustee issued checks for many gifts and also spent “considerable” amounts for Ms. Rautbord’s general welfare. 

The woman holding a power of attorney used the power of attorney to make gifts from the trust to dozens of people, including the JP Morgan employee in charge of administering the trust.   

The settlor passed away.  The remaindermen of the trust (those who were to receive what was left in the trust after the death of the settlor), sued because of the gifts and other amounts of alleged excessive distributions. 

This decision dealt primarily with the standing of the remainder beneficiaries to challenge the distributions that were made during the life of the settlor.  The court ruled that, under New York law, the remainder beneficiaries had standing to pursue their case.  Rather than stopping at the standing issue, however, the court made a number of other rulings that are important for trustees administering trusts, especially when the trustee is faced with demands from another person holding a power of attorney.  

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Surviving Spouses in Florida receive certain entitlements in a Florida probate administration, including a minimum percentage of the estate (elective share), rights to a Florida homestead, support during the probate administration, and other benefits.

Marital Agreements (Prenuptial and Postnuptial Agreements)

·         MARITAL AGREEMENTS.  Martial Agreements which are often referred to as prenuptial agreements, ante-nuptial agreements, and post-nuptial agreements, can waive or create rights upon the death of a spouse.  It is imperative to have a lawyer review these agreements who is familiar with the probate process to properly any rights you may have at death or as a surviving spouse.   It is also important to have these documents properly reviewed by experienced probate lawyers to ensure any death time provisions are properly addressed prior to signing any of these agreements.  Many of the rights of a surviving spouse can be waived or increased in properly drafted agreements.

·         TIMELINE TO FILE A CREDITOR CLAIM.  If a surviving spouse of a Florida decedent has a Marital Agreement, it is imperative that his or her attorney file a protective creditor claim to preserve these contract rights of the surviving spouse, within the three months of the filing the Notice of Publication to Creditors or thirty days from the date of service of a known creditor, even if the surviving spouse is the personal representative.  A common mistake of probate lawyers in handling marital agreements is the failure to file such a creditor claim.  There is no harm in filing a protective claim, and often filing a protective creditor claim results in the payment of benefits to a surviving spouse which may otherwise be lost.  The Florida Supreme Court has even ruled that filing such a claim is necessary to enforce a surviving spouse’s right under a marital agreement. Spohr v. Berryman, 589 So. 2d 225 (Fla. 1991).  The consequence of failing to timely file a creditor claim for a spouse with rights under a marital agreement can be severe, and a spouse may potentially lose all benefits of the marital agreement if the proper procedures are not followed.

Spouse Dies Without a Will (Intestacy)

·         INTESTATE.  If a person dies without a Will he or she is considered to die intestate.

·         INTESTATE SHARE.  If a spouse dies without a Will, the surviving spouse receives an intestate share.  (If a couple is separated at the time of death, the surviving spouse is not barred from inheriting).

·         SHARE OF SURVIVING SPOUSE - NO CHILDREN OR ALL CHILDREN OF SURVIVOR.  If the only survivor is a surviving spouse, or if all the lineal descendants are also lineal descendants of the surviving spouse, then the surviving spouse receives the entire estate of the decedent.  This rule applies only for spouses passing away on or after October 1, 2011.  Under prior Florida law, if the deceased spouse had children, the surviving spouse received only one-half of the estate, or one-half of the estate plus $60,000 if all of the children were of the marriage.

·         SHARE OF SURVIVING SPOUSE IF THERE ARE SURVIVING CHILDREN FROM DECEDENT BUT NOT OF THE SURVIVING SPOUSE.  If there are children of the decedent who are not children of the surviving spouse, then the surviving spouse receives one-half of the intestate estate. 

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Title: Pressing the “Do Over” Button: Strategies for Modifying Wills and Trusts after Formation

Presenter: Joshua S. Rubenstein

                Mr. Rubenstein opened his presentation discussing a few current events that weren’t expected such as the European debt crisis, the Asian spring, and the Yankees failing to reach the World Series. He noted that you cannot anticipate all changes and issues that may arise in the future.   Clients often make bad decisions regarding their estate plans, and lawyers sometimes make mistakes. In addition, people are living longer than ever before which raises the question, so how long does a person have to wait to inherit? There is an increase in litigation, and trust beneficiaries often few trusts negatively. Mr. Rubenstein divided the presentation into four different sections in discussing how to address some of these issues:  I) Tax Considerations Underlying Modifications: Income and Transfer Taxes, II) Retroactive Modifications, III) Prospective Modifications, and IV) Special Considerations with Respect to Litigation Settlements. 

I) Tax Considerations

                In describing the tax consideration’s underlying modifications, he noted the current low income tax rates, which he only expects to increase.  Historically income tax rates are as high as 90% for the top rates as opposed to the current 35-40% income tax rates and 15-28% capital gains rates.   He also discussed the various forms of taxation for different entities and how gifts, legacies and distributions from estate/and or trusts are generally tax exempt, except for income in respect of a decedent, distributable net Income, and gifts to employees.   The most common deductions are charitable, businesses, and administration expenses which are all subject to substantial limitations. He also noted many states and municipalities impose income tax rates, while eight states levy no income tax. 

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The attorney-client privilege is the oldest confidential communication privilege in the Florida common law and is codified by statute and contained in the Florida Evidence Code, section 90.502, Florida Statutes (2011).  The attorney-client privilege protects the contents of confidential communications made in the rendition of legal services and has as its purpose to "encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice." American Tobacco v. State, 697 So.2d 1249, 1252 (Fla. 4th DCA 1997) (quoting Haines v. Liggett Group, Inc., 975 F.2d 81 (3d Cir.1992)). 

But until recently, only the Florida common law extended the attorney-client privilege to Florida personal representatives and Florida trustees involved in probate and trust litigation. This meant that personal representatives and trustees would have to look to Florida case law to determine whether communications with their attorneys were privileged and protected from beneficiaries challenging their actions. Florida common law recognizes that a Florida personal representative or a Florida trustee generally holds the attorney-client privilege, but also directs that when a beneficiary attempts to gain access to privileged information during litigation concerning the probate or trust, the court must decide whose interests the attorney really represents — the fiduciary's or the beneficiary's. See Jacob v. Barton, 877 So. 2d 935 (Fla. 2d DCA 2004) (recognizing that beneficiary might be the “real party” in interest for whom attorney performs the work thus entitling beneficiary in Florida probate or trust litigation to otherwise privileged information).

As of June 21, 2011, Florida trustees and Florida personal representatives have the added protection of Fla. Stat. § 90.5021, which addresses the “fiduciary attorney-client privilege” and explicitly extends the attorney-client privilege to a personal representative and trustee in probate and trust proceedings. Fla. Stat. § 90.5021 states that:

(1)   For the purpose of this section, a client acts as a fiduciary when serving as a personal representative or a trustee as defined in ss. 731.201 and 736.0103...

(2) A communication between a lawyer and a client acting as a fiduciary is privileged and protected from disclosure under s. 90.502 to the same extent as if the client were not acting as a fiduciary. In applying s. 90.502 to a communication under this section, only the person or entity acting as a fiduciary is considered a client of the lawyer.”

So, while a beneficiary can still attempt to obtain communications between a Florida personal representative or a Florida trustee and their attorney during probate or trust litigation, Florida personal representatives and trustees have the added protection of section 90.5021 to rely on to protect privileged communications with their attorneys.

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