Articles Posted in Estate Administration

The importance of a Semicolon – Does property partially used as primary residence and partially for business purposes qualify as Homestead?

Does property partially used as primary residence and partially for business purposes qualify as homestead under Article X, Section 4 of the Florida Constitution? Surprisingly, the answer apparently rests on a semicolon.

This question was addressed in 2003 by the Florida Court of Appeal for the First District in Davis v. Davis, 864 So. 2d 458 (Fla. 1st DCA 2003). The facts of this case are as follows: Mr. Horace Davis lived with his wife Carolyn on a contiguous piece of property measuring less than 160 acres outside of municipality in an unincorporated portion of Nassau County. The property included the couple’s residence and on a portion separate from the residence, Mr. Davis operated a mobile home park generating profit through rent. Mr. Davis died in 2000 having written a will.

Is Investing Homestead Sale Proceeds Okay?

Florida Constitution provides protection from forced sale to homestead property from most creditors. Art. X, § 4, Fla. Const. The protection covers not only the physical homestead property but also the proceeds from the sale of the homestead, provided the proceeds are reinvested in another homestead property. In a scenario where you invest the homestead sale money in securities and then buy another homestead with it, does the money retain homestead protection?

The Florida Supreme Court answered this question in the affirmative in a recent 2016 decision JBK Assocs. v. Sill Bros., 191 So. 3d 879 (Fla. 2016). In that case, JBK Associates, Inc. (“JBK”) obtained a final judgment against Mr. Sill for $740,487.22.  Mr. Sill had consequently opened a brokerage account with Wels Fargo and deposited the sale proceeds from the marital home of Mr. Sill and his ex-wife. The account was titled “FL Homestead Account” and was split into three sub-accounts, one containing cash and two containing mutual funds and unit investment trusts.

Florida same-sex surviving spouses may be added on a death certificate without a court order

In 2015, the United States Supreme Court issued its pioneering decision in Obergefell v. Hodges, 135 S. Ct. 2584 (2015), holding state laws prohibiting or refusing to recognize same-sex marriages unconstitutional.  After Obergefell, Florida started recognizing same-sex marriages and began to list a same-sex surviving spouse on the deceased spouse’s death certificate, where the marriage was lawfully entered into in another jurisdiction.  However, the surviving spouse was out of luck if the marriage was entered into before Obergefell, unless the surviving spouse obtained an individual court order approving the correction.

This obtrusive situation has changed for now.  In a recent order from March 23, 2017, a federal judge granted a summary judgment to a certified class, ordering that Florida must amend any death certificate without a court order when the decedent was lawfully married to a person of the same-sex at the time of the death.  The same judge issued an order striking down Florida’s marriage ban in August 2014.  The plaintiffs in this case were two gay surviving spouses, married before Obergefell, who filed the case not only on their behalf, but on behalf of other similarly situated persons as well.  The plaintiffs sought to have their spouses’ death certificates show they had been married, but the state argued that Florida law prohibited amending the death certificates without a court order.

Is Investing Homestead Sale Proceeds Okay?

Florida Constitution provides protection from forced sale to homestead property from most creditors. Art. X, § 4, Fla. Const. The protection covers not only the physical homestead property but also the proceeds from the sale of the homestead, provided the proceeds are reinvested in another homestead property. In a scenario where you invest the homestead sale money in securities and then buy another homestead with it, does the money retain homestead protection?

The Florida Supreme Court answered this question in the affirmative in a recent 2016 decision JBK Assocs. v. Sill Bros., 191 So. 3d 879 (Fla. 2016). In that case, JBK Associates, Inc. (“JBK”) obtained a final judgment against Mr. Sill for $740,487.22.  Mr. Sill had consequently opened a brokerage account with Wels Fargo and deposited the sale proceeds from the marital home of Mr. Sill and his ex-wife. The account was titled “FL Homestead Account” and was split into three sub-accounts, one containing cash and two containing mutual funds and unit investment trusts.

What Effect Does Divorce or Remarriage Have On Your Estate Plan

Anytime there is a major life change, whether it is the birth of a child, marriage, or divorce, your estate plan should evolve as your life evolves. But do any of these events result in automatic changes to your estate plan or do you have to update your estate plan after each event?

In most states, including Florida, a divorce will automatically change the terms of your will. Fla. Stat. § 732.507(2) provides that any provision of a will that affects a former spouse will be treated as if the former spouse is deceased upon divorce, unless the will or divorce judgment expressly provides otherwise. This means that when your divorce is official, any portion of your will bequeathing items or money to your ex-spouse will be deemed void. However, if you want to provide for your ex-spouse in some fashion after the divorce, it is important that your will clearly reflect that intent.

Florida Appeals Court Strikes Down Probate Creditor Claims From Child For Child Support Arrearages

On May 11, 2016, the Fourth District Court of Appeal issued its decision in Davis v. Hengen regarding creditor claims for child support arrearages against a decedent’s estate, when the decedent dies with unpaid child support obligations.

Upon the dissolution of their marriage, Clifford Davis and his then wife entered into a marital and property settlement agreement. According to the agreement, Clifford was obligated to pay monthly child support to his ex-wife to support their daughter, Deborah. When the father died, he died intestate. At the time of his death, the father had outstanding child support payments due. Deborah and Clifford’s current wife, Acaia, were appointed co-personal representatives of Clifford’s estate.

Criminalizing Exploitation of the Elderly and Its Effects on Estate Planning

For estate planning attorneys, the concept of criminal punishment is not the first thought when asked: “What could be the outcome?” In a typical case, the worst that happens is the client losses their share of an inheritance or perhaps ends up paying more taxes on the estate.  However, Fla. Stat. §825.103 makes exploitation of an elderly person or disabled adult a criminal offense.  But what is exploitation under the statute?  A person is guilty of exploitation if they knowingly obtain or use, or endeavor to obtain or use, an elderly person’s funds, assets, or property with the intent to temporarily or permanently deprive the elderly person of the use of the funds, assets, or property.  The person must be a person who stands in a position of trust and confidence with the elderly individual, or has a business relationship with the elderly individual.  A Fourth District Court of Appeal case shows the slippery slope of how a situation that should be dealt with by a will contest can turn into a criminal trial.

In Cynthia Franke v. State, Cynthia Franke’s appealed her conviction for financial exploitation of the elderly.  Franke and Mary Teris had been friends for almost thirty years and met when Teris became a client of the firm where Franke was a stockbroker.  Franke and Teris became very close over the years and developed a mother/daughter type of relationship.  Franke helped Teris, including driving her wherever she needed to go and helping with Teris’ two disabled adult sons.

Time Limitations for Proceedings Against Trustees: Discussing Failure to Account

An individual serving as a trustee owes certain duties to the beneficiaries of that trust. One such duty is the duty to account to the beneficiaries.  Failure to provide an accounting as required in § 736.0813, Fla. Stat. is a breach of trust by a trustee. Fla. Stat. § 736.1001(1).  A beneficiary can institute an action for an accounting and/or against a trustee for breach of trust, but the factual circumstances of the case may determine the time limitations for bringing such actions. These limitations are found in the Florida Trust Code under  § 736.1008, Fla. Stat. Under  § 95.11, Fla. Stat., the statute of limitations for a legal action alleging breach of trust or fiduciary duty is four years.

The Trust Code, specifically §  736.1008, Fla. Stat., provides further clarification as to how Chapter 95 applies in trust matters. Under § 736.1008(1), if the trustee issued a trust disclosure document that adequately discloses information, the four year statute of limitations applies, beginning on the date that the beneficiary receives the disclosure. For all matters not adequately disclosed in a trust disclosure document if the trustee has issued a final trust accounting, the trustee has given final notice to the beneficiary that the trust records are available, and has given written notice of the applicable limitations period, the limitation period begins on the date that the beneficiary receives the final trust accounting and notice. However, under § 736.1008(3), when the trustee does not provide a final trust accounting, or give notice to the beneficiary that the trust records are available, the applicable limitations period for a matter not adequately disclosed begins on the date the beneficiary has actual knowledge of the facts underlying the claim.  Florida Statute § 736.1008(2) provides a way for a trustee to shorten the amount of time the beneficiary has to file a claim from four years to six months. In order for the six month time limitation to apply, the trust disclosure document must adequately disclose the information, and the trustee must inform the beneficiary of the shortened limitations period. The shortened limitations period starts on the date the beneficiary receives both the disclosure document and the limitations notice. .

Gun Trusts: Background Check Loophole Eliminated

A gun trust is a legal device that makes it easier to handle firearms after the gun owner’s death. These trusts are used for guns that are regulated by federal laws: the National Firearms Act of 1934 (NFA) and a revision of the NFA, Title II of the Gun Control Act of 1968. Gun trusts must take into account both federal and state weapons laws. Some of the weapons regulated by the NFA include silencers, machine guns, grenades, short-barreled shotguns, and short-barreled rifles. These weapons already have some regulations in place, including requiring its serial number to be registered with the Federal Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).

Although there are restrictions in place, the NFA allowed the making or transferring of a firearm without a background check through a gun trust. The Attorney General, on January 4, 2016, signed a regulatory rule to close up this dangerous loophole: Machineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity With Respect To Making or Transferring a Firearm. This rule, also known as ATF Final Rule 41F (the “Rule”), will have a huge impact on the use of trusts in the sharing and in the acquisition of weapons regulated by the NFA. It seeks to ensure that proper identification and background checks apply equally to legal entities, trusts, and individuals. The rule became effective on July 13, 2016, 180 days after its signing. However, the Rule is not retroactive, and as such, pending applications will not be affected.

Florida Appeals Court Comes Down Against Probate Creditor Claims From Child For Child Support Arrearages

On May 11, 2016, the Fourth District Court of Appeal issued its decision in Davis v. Hengen regarding creditor claims for child support arrearages against a decedent’s estate, when the decedent dies with unpaid child support obligations.

Upon the dissolution of their marriage, Clifford Davis and his then wife entered into a marital and property settlement agreement. According to the agreement, Clifford was obligated to pay monthly child support to his ex-wife to support their daughter, Deborah. When the father died, he died intestate. At the time of his death, the father had outstanding child support payments due. Deborah and Clifford’s current wife, Acaia, were appointed co-personal representatives of Clifford’s estate.