Developments in Probate, Trust and Guardianship Law

By: Glenn M. Mednick

The purpose of this article is to provide an overview of recent cases involving probate/estate, trust and/or guardianship issues, as well as an introduction to the “Florida Power of Attorney Act” which became effective on October 1, 2011.

WHEN IS A GIFT A GIFT?

Welch v. Dececco, 101 So. 3d 421 (Fla. 5th DCA 2012) provides some insight. In this case Frank Welch’s uncle, Frank Kolbl, transferred ExxonMobil stock to him via an inter vivos gift. The circuit court found the nephew failed to prove present donative intent because the stocks were still registered in the Uncle’s name at his death. The appellate court reversed because it was not clear from the trial court’s opinion that it considered all relevant evidence. The elements of an inter vivos gift are present donative intent, delivery and acceptance. See, Mulato v. Mulato, 705 So. 2d 57, 61 (Fla. 4th DCA 1997). “Although stock registration is properly considered in analyzing donative intent, it is not necessarily dispositive where, as here, other evidence is presented for and against such intent.” It was unclear from the circuit court’s order whether the court focused exclusively on the stock registration, or properly considered it as one fact along with all the other evidence relevant to donative intent.

Mulato v. Mulato is a case from 1997 involving both bank accounts and stock certificates. While the Fourth District Court of Appeal (hereafter “DCA”) examined the same three elements as described above, it did it in different ways. As to the bank accounts, the Fourth DCA placed a great deal of weight on the grantor/sister’s testimony that she never intended to make a gift to her brother with any of the funds in the account, that she placed all her social security payments and interest compounded in those accounts, and that she placed her brother’s names on the accounts only so if she got ill he could take care of her or receive the funds upon her death. The brother admitted at trial that he never deposited funds into any of the accounts, made any withdrawals or exercised any control over them. Hence, the appellate court held the brother was not entitled to a present interest in the accounts. As to the stock, the result was the same as far as the brother was concerned. The Fourth DCA stated that registering stock in two names creates the rebuttable presumption that a gift was intended. Dorothy, the sister, testified she bought all the stock with her own money, that she originally had put her father’s name on it with hers and when he died put her brother’s name on it so if anything happened to her he could take care of her. Based on Dorothy’s exclusive control of the stock, her brother’s lack of knowledge regarding the identity and the amount of stock, and the fact that he never received any dividends, the appellate court concluded that he had no present interest in the stock and only would receive it upon her death.

GUARDIANSHIP CASES

Of late, we have seen more appellate cases involving guardianship disputes, than we have seen over the previous few years combined. They cover the gamut of issues, but here is a small sampling of the holdings in those cases.

In Shen v. Parkes, 100 So.3d 1189 (Fla. 4th DCA 2012) the appellate court reversed the circuit court’s reliance on the written reports of the Examining Committee members, holding that the admission of such reports without any live testimony is hearsay. In that case, the Alleged Incapacitated Person’s attorney objected to the admission of the reports claiming they were hearsay. The Petitioner did not assert that the written reports were admissible under any hearsay exception, and the Fourth DCA held that it doesn’t appear that any exception applies. They went on to say: “We also note that if the hearing was uncontested, the court could rely on, at a minimum, the comprehensive examination portion of the reports, as the statute provides for the court’s consideration of such. However, because this was a contested hearing, and Shen objected to the reports as hearsay where the committee members did not testify, we hold that the court erred in basing its order on the reports.”

The Fourth DCA held as it did there because the incapacity hearing was contested. This has been a hot area of debate for some time, and this is the first appellate case holding that the Examining Committee Reports are hearsay when they are objected to and there is no testimony from the Examining Committee members. If no objection is made to the Reports, they still will be admitted by the trial court into evidence. Rumor has it that the Real Property, Probate and Trust Law Section of The Florida Bar is already working on a legislative fix directed to the Shen holding.

The Ward’s estranged son requested in In Re Guardianship of Trost, 100 So.3d 1205 (Fla. 2d DCA 2012) disclosure of guardianship documents from his father’s Guardian and from the Trustee of his Trust, who happened to be the same person. The General Magistrate concluded the son was not entitled to discovery of any of the Trust documents of the Ward, pursuant to Fla. Stat. §736.0603(1) because the Trustee only owed a duty to inform and account to the settler while he is living. The estranged son was not a beneficiary of the Trust. Fla. Stat. §736.0207 provides that an action to contest the validity of a revocable trust may not be commenced until the trust becomes irrevocable by the settlor’s death or other trust terms, except by the guardian of an incapacitated settlor’s property. Once the trust became irrevocable then the Trustee had 60 days to give notice of the trust and a copy of it to the qualified beneficiaries of the Trust. The Second DCA acknowledged that Fla. Stat. §744.441 did not allow the trial court to require the trustee to disclose trust documents to the estranged son. However, the Second DCA stated as a next of kin he would be entitled to receive notices of the guardian’s petitions to perform any acts requiring court approval if he filed a request for notices and copies of pleadings, as provided in the Florida Probate Rules. However, the estranged son still had to establish that he had a “legally cognizable interest” in the Ward’s trust. Because he was not a beneficiary of the trust, he only should have received the guardianship reports and its attachments and not a disclosure of all guardianship reports that pertained to the trust. “The question of who is an interested person may vary depending on ‘the particular purpose of, and matter involved in, any proceedings.’ Hayes, 952 So. 2d at 507 (citing §731.201(21), Fla. Stat. (2006)). The definition of ‘interested person’ requires the trial court to evaluate the nature of both the proceeding and the interest asserted. Id. The trial court must decide on a case-by-case basis whether a party who receives notice of petitions is an ‘interested person’ for purposes of a guardianship proceeding.” In Re Guardianship of Trost, supra at 1211. Therefore, the estranged son’s status as a next of kin, without more, did not entitle him to disclosure of all guardianship documents. He was only entitled to the guardianship reports and what was attached to them.

The Second DCA held in In Re Guardianship of Ansley, 94 So.3d 711 (Fla. 2d DCA 2012) that a judge can’t cut the attorney’s fees of the attorney for the co-guardians in a contested guardianship proceeding without explaining the reasons why. The circuit court granted the petition and found the attorney’s hours and rate, the paralegal’s hours and rate, and expenses all to be reasonable, but then entered a total award less than sought or which a multiplication of the hours by the hourly rates and the addition of the expenses would have given rise to. There was no expert opinion testimony in the record which the circuit court could have relied on in reducing the amount sought in the petition. The Second DCA observed that the amount of the actual award in the order under review and the amount requested indicated to them that the circuit court intended to award less than the amount sought in the petition, however, they were unable to determine the basis for the circuit court’s award. The Second DCA reversed and remanded for the circuit court to enter a new order that sets forth the basis for the award, including the hours determined compensable, the hourly rate, and other factors considered in arriving at the award.

ADMISSION OF A LOST OR DESTROYED WILL INTO PROBATE

Brennan v. Honsberger, 101 So.3d 415 (Fla. 5th DCA 2012) dealt with admission of a lost or destroyed Will into probate. The 2001 Will had already been admitted to probate, but a non-relative friend petitioned to have a 2002 Will admitted into probate, claiming that the Will was lost or destroyed without the decedent’s knowledge or consent. The 2002 Will left a home that the Decedent owned in Canada to Ruth Honsberger (hereafter “Ruth H.”) and everything else to the Decedent’s brother. The brother disclaimed his interest under the Will. The children petitioned to have the 2001 Will admitted to probate, while acknowledging the 2002 Will and stating that they believe it no longer existed. Affidavits of the witnesses to the 2002 Will were submitted, but no live testimony of any disinterested witness to the 2002 Will. The Fifth DCA held that the 2002 Will should not have been admitted to probate because Ruth H. failed to present evidence to overcome the presumption that the 2002 Will had been destroyed by the testator with the intent to revoke it. In Florida the presumption when an original will is known to have existed but cannot be located after death is that the testator destroyed it with the intent to revoke it, and the proponent of the lost will has the burden of introducing competent, substantial evidence to overcome the presumption. However, the trial court on remand allowed both disinterested witnesses to testify. Even though both witnesses testified as to the execution of the 2002 Will, neither had knowledge of its content. Ruth H. as the proponent of a lost will was required to present the testimony of at least one disinterested witness to establish its content. Because she failed to do so, the Fifth DCA held the trial court erred in admitting the 2002 will to probate.

DUTY TO PROVE TRUSTEE’S ACTIONS WERE NEGLIGENT

In Campbell v. Chitty, 37 Fla. L. Weekly D2799/2012 Fla. App. LEXIS 20868 (Fla. 1st DCA 2012), the trustee had monetary sanctions imposed against her for breach of her fiduciary duty. One of the Trust contained an indemnification clause that held the trustee harmless from any damages or liability for the trustee’s actions or omissions as long as such actions or omissions were not negligent. The First DCA reversed a judgment because the trustee’s actions were not proven to be negligent. On remand, the trial court was directed to make factual findings as to whether or not the Trustee’s actions rose to the level of negligence. The First DCA held that the trial court could only award damages for the breach of the Trust if it finds that that the trustee’s actions were negligent.

The remaining money judgments imposed against the trustee were also reversed as the trial court not only directed the trustee to repay certain amounts to the trusts, but it also directed those amounts to be set off from the Trustee’s share of the trust. Thus, the trial court essentially awarded the appellee double recovery on all of the judgments. They reversed the remaining money judgments and remanded for the trial court to enter an order directing the trustee to either repay the designated amounts or for those amounts to be set off against her share of the trust.

POWERS OF ATTORNEY UNDER THE FLORIDA POWER OF ATTORNEY ACT

The “Florida Power of Attorney Act” (the “Act”) became effective October 1, 2011, and consists of Sections 709.2101 through and including 709.2402, Florida Statutes. It is beyond the scope of this article to examine the differences between the Act and Chapter 709 as it existed before the Act became effective, or to explore issues pertaining to drafting. Instead, we will merely highlight some nuances of the Act. A power of attorney executed before October 1, 2011 remains valid if its execution complied with the laws of Florida at the time of its execution. However, a power of attorney executed on or after October 1, 2011 is valid only its execution complies with Section 709.2105, Fla. Stat., which requires that the power of attorney “be signed by the principal and by two subscribing witnesses and be acknowledged by the principal before a notary public or as otherwise provided in s. 695.03”. Except for formalities of execution, the Act applies to a power of attorney regardless of the date of creation. See, §709.2402 (2), Fla. Stat.

The prior law did not provide guidance as to how much time a financial institution could take when deciding whether to accept a power of attorney presented to it. Under Section 709.2120(1), Fla, Stat.:

(a) A third person must accept or reject a power of attorney within a reasonable time. A third person who rejects a power of attorney must state in writing the reason for the rejection.

(b) Four days, excluding Saturdays, Sundays, and legal holidays, are presumed to be a reasonable time for a financial institution to accept or reject a power of attorney with respect to:

1. A banking transaction, if the power of attorney expressly contains authority to conduct banking transactions pursuant to s. 709.2208(1); or

2. A security transaction, if the power of attorney expressly contains authority to conduct security transactions pursuant to s. 709.2208(2).

(c) A third person may not require an additional or different form of power of attorney for authority granted in the power of attorney presented.

Moreover, Subsection (3) contains sanctions if a third person in violation of Section 709.2120, Fla. Stat., refuses to accept a power of attorney, which include a court order mandating acceptance, and liability for damages, including reasonable attorney’s fees and costs.

Serving as an agent or attorney in fact, under the pre-2011 terminology, is a daunting responsibility and carries with it liability for your actions or failure to timely act. An agent is a fiduciary and should review Section 709.2114, Fla. Stat. in detail to familiarize yourself with your statutory responsibilities before accepting an appointment as an agent. Further, we strongly urge you to meet with counsel prior to accepting an appointment to better acquaint yourself with all your responsibilities and any practical considerations applicable thereto. Two of the statutory duties are to keep a record of all receipts, disbursements, and transactions made on behalf of the principal; and to create and maintain an accurate inventory each time the agent accesses the principal’s safe-deposit box, if the power of attorney authorizes the agent to access the box. See, §709.2114(1)(c) and (d), Fla. Stat. An agent should further be aware that the remedies under the Act are not exclusive and do not abrogate any right or remedy under any other law, do not supersede any other law applicable to financial institutions or other entities and that law controls if inconsistent with the Act, and that the common law of agency and principles of equity supplement the Act, except as modified by the Act or other state law. See, §§709.2301, 709.2302 and 709.2303, Fla. Stat.

In Albelo v. Southern Oak Insurance Company, 2013 Fla. App. LEXIS 1747; 38 Fla. L. Weekly D 301 (Fla 3rd DCA 2013) the Third DCA held that the insurance company’s argument in which the insured was required to seek a guardian for herself as a condition of maintaining a claim against them while already having a Durable Power of Attorney, which the insurance company did not contest the formalities of execution of and had not sought to rescind on the ground that the insured was incompetent, was frivolous and granted appellate attorneys pursuant to §57.105, Fla. Stat.

When challenging a power of attorney, the proper formalities for service of process must be followed. In Griffith v. Slade, 95 So.3d 982 (Fla. 2d DCA 2012), the mother executed a durable power of attorney in favor of her youngest daughter, Norma Griffith. There were three other daughters and one son, and the other daughters brought a petition to set aside the power of attorney based on various grounds. A hearing was set on the petition and notices of the hearing were sent to Norma Griffith including by certified mail, but no summons or process was ever issued or served upon her. Norma Griffith didn’t appear at the hearing and the petition was granted. Because service of process was never properly accomplished or waived, the order terminating the power of attorney was reversed. While acknowledging the circuit court’s concern over the alleged behavior of Norma Griffith, “[p]rocedural due process requires that each litigant be given proper notice and a full and fair opportunity to be heard.” While decided after the effective date of the Act, it was not deemed to be applicable in that case.

CONCLUSION

The Latin phrase stare decisis is defined as “[t]o abide by, or adhere to, decided cases.” Black’s Law Dictionary, Sixth Edition. Despite this doctrine, the law is ever evolving. We have seen countless examples of this throughout our legal history. Whether due to changes in social mores, advances in technology or in recognition of new legal concepts or rights, the law adapts and changes over time. This principle is especially true in the areas of estate/probate, trust and/or guardianship law. The Law Offices of Glenn M. Mednick, P.L. is committed to keeping you informed of significant developments in these areas of the law. Please check back regularly as new articles will be published periodically to chronicle the changes and developments in the law which impact our areas of practice.

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