Articles Posted in Trust Disputes

Legal Capacity and Estate Planning – How to Safeguard a Will from Future Litigation or Contests

When a loved one grows older, ages and declines, their caretakers’ ever growing to-do list can become overwhelming. After dealing with the basic, everyday needs of an aging family member, it may sometimes be easy to overlook the fact that your loved one does not have a valid will.  By not addressing this issue, the task of handling final affairs and estate distribution after their death becomes increasingly more difficult. If you are responsible for someone who is at risk for developing Alzheimer’s, dementia, or any other disease that can affect their mental capacity, it is important that you consult with an estate planning lawyer who can ensure that a proper will is drafted in accordance with the laws of the state of Florida.

Florida courts have held that a will can be properly admitted to probate if the testator was competent at the time the will was executed.  Jervis v. Tucker, 82 So.3d 126 (FL 4th DCA 2002).  A testator will be found to have been competent if they possessed the ability to “mentally understand in a general way the nature and extent of the property to be disposed of, and the testator’s relation to those who would naturally claim a substantial benefit from the will, as well as a general understanding of the practical effect of the will as executed.” American Red Cross v. Estate of Haynsworth, 708 So.2d 602, 605 (FL 3rd DCA 1998). Florida courts will apply these standards and also evaluate the facts specific to a particular case in order to determine if a testator was of “sound mind” when they created the will. Estate planning lawyers play an important role in this process and have the responsibility of ensuring that the testator is legally competent at the time the will is created.

Elder abuse: the farmer population as the next potential target

Florida is a state well-known for its agriculture. In fact, within the United States, it is safe to presume that most people think that the best oranges come from Florida (we certainly think they do). Agriculture is the second most important economic activity in Florida, preceded only by tourism. Agriculture contributes $104 billion in revenue to the state and employs two million people.

According to a 2016 study by Oregon State University and Portland State University, the average age of farmers is 60 years old. Additionally, it is believed that in the next twenty years, 10 million acres of farmland are going to change ownership. Like all other people, we can expect health issues to arise as our farmers age. Studies suggest that 38% of people who are over 85 years old have dementia or some impairment in their mental faculties.

WILLS, TRUSTS, and ARBITRATION AGREEMENTS

In previous blog posts, we have shown how wills and trusts are favored vehicles when protecting someone’s assets. Perhaps one of the purposes of a well-drafted will or trust is to avoid hearing the judge’s gavel when knowing who gets what part of the inheritance. Unfortunately, contentions amongst the parties may well exist. The good news is that since 2007, parties have another alternative to resolve disputes that arise out of a will or a trust. Florida Law provides the option for parties to have a clause in their will or trust requiring arbitration. See Fla. Stat. § 731.401.

Arbitration, is a private (not state-sponsored) method of resolving disputes. Arbitration is not to be confused with mediation: While mediators help the parties in finding a solution, arbitrators decide a dispute.

Undue Influence

For a Will to be valid, certain conditions must be met. The testator must have legal capacity, be at least eighteen years old, have testamentary intent, and the will must not be a product of undue influence or duress. The first two requirements are usually relatively easy issues to resolve, but undue influence and duress are not always clear. As the Supreme Court of Florida explained, “[u]ndue influence is not usually exercised openly in the presence of others, so that it may be directly proved, hence it may be proved by indirect evidence of facts and circumstances from which it may be inferred.”[1]

The Fourth District Court of Appeal, in Blinn v. Carlman,[2] stated that, “[w]hen a will is challenged on the grounds of undue influence, the influence must amount to over persuasion, duress, force, coercion, or artful or fraudulent contrivances to such an extent that there is a destruction of free agency and willpower of the testator.” When a will is a product of undue influence, it, by definition, is not the intent of the testator, and therefore courts should not give effect to it.

IRREVOCABLE SPENDTHRIFT TRUSTS

Trusts are popular estate planning instruments that may bring many benefits both during lifetime and in the case of death. Some common reasons for setting up a trust include the avoidance of costs and time consumption of probate proceedings, property management for those who cannot or do not wish to manage the property themselves, continuance of property management after death or during disability, and saving of taxes and protection of the assets against the claims of creditors. However, there are several types of trusts and not all of them provide these benefits to the same extent.

The revocable trust is the most flexible one as the creator (settlor) can at modify the terms of the trust or completely revoke it at any time. See Fla. Stat. § 736.0602. However, the assets transferred into such trust are still considered personal assets of the settlor and accordingly, can be reached by his or her creditors. See Fla. Stat. § 736.0505(1)(a). Therefore, the revocable trust is not an ideal solution for asset protection purposes. Upon death of the settlor, this trust becomes irrevocable, meaning that the rules for asset distribution can no longer be changed. It is also possible to make a trust irrevocable from the outset and to afford protection against creditors by adding a spendthrift provision. See Fla. Stat. § 736.0502.

Where There’s a Will, There May Not Always Be a Way for Attorney-Client Privilege

Attorney-client privilege may not always apply in probate litigation. In fact, the Third District Court of Appeal has held that under the Florida Evidence Code, a lawyer may not invoke attorney-client privilege under certain circumstances.

Attorney-client privilege is a key hallmark of the attorney-client relationship. The privilege prevents disclosure of confidential communications pertaining to legal advice between a client and her attorney. Attorney-client privilege therefore promotes candor and better representation. Rule 4-1.6(a) of the Florida Rules of Professional Conduct states that “[a] lawyer must not reveal information relating to representation of a client . . . unless the client gives informed consent.” https://www.floridabar.org/rules/rrtfb/rule/?num=4-1.6. Further, under the official comments to Rule 4-1.6, a lawyer has an ethical obligation to assert attorney-client privilege on a client’s behalf, including during proceedings involving evidentiary matters.

The Hunt for Tom Clancy’s Estate Comes to an End

Popular author Tom Clancy wrote many iconic novels, and the story of his estate battle sounds like it comes straight out of a book. The author, who died at the age of 66 of heart failure, left an estate valued at $82 million. This $82 million estate includes an ownership interest in the Baltimore Orioles baseball team worth $65 million, a working World War II tank, a mansion on Chesapeake Bay and over $10 million in business interests from his novels and movie adaptations.

According to the original will, Clancy left his Chesapeake Bay home and other properties, along with any of his joint bank or investment accounts to his wife Alexandra. Clancy also left a portion of the residue of the estate to the Hopkin’s Wilmer Eye Institute, which he had previously given a $2 million donation in 2005. The rest of his estate was to be divided between a series of trusts. The 2007 will originally provided for three trusts and divided the rest of the estate as follows: one-third for Alexandra, one third for Alexandra to use while she was alive and then passing to their daughter, and one-third to be divided among his four children from his previous marriage.

When a Trustee Goes Bad: Removal of a Trustee

Trustees play a critical role in trust administration. Settlors, or creators of the trust, give trustees legal title and management authority over the settlor’s property for the benefit of the beneficiaries.  An unruly trustee could improperly deplete the trust property and leave nothing for the beneficiaries.  Florida recognizes the importance of the trustee’s role and has numerous statutes regulating trustees and protecting beneficiaries.  The provisions include, but are not limited to:

  1. The trustee shall administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in accordance with the Florida Trust Code. 736.0801, Fla. Stat. (2006).

B.B. King Estate Fight: One Year Later and No End in Sight

Legendary blues musician B.B. King passed away on May 14, 2015 due to congestive heart failure at the age of 89.  In a will created in 2007, King named his longtime business manager, Laverne Toney, as the executor/personal representative of his will.  The 2007 will, thus, puts Toney solely in charge of administering King’s assets, his property, and his trust.  In June 2015, a Las Vegas judge confirmed Toney’s appointment as sole executor, and rejected efforts to contest the will made by four of Mr. King’s children.

Although B.B. King did not have children from either of his two marriages, he nevertheless claimed to have 15 children with 15 different women over the course of his lifetime.  Confusing the situation still further, King’s doctors determined in the 1980’s that due to King’s low sperm count, he was not able to conceive children.  However, King never disputed paternity, and claimed to be the father of all 15 children, 11 of whom are still alive and have been fighting Toney over the estate.

New Orleans Saints and New Orleans Pelicans owner, Tom Benson, is currently involved in a family dispute and a series of judicial proceedings emerging from changes in his estate planning documents. After becoming displeased with the way his daughter—Renee Benson—and her two kids, Rita and Ryan, began acting upon his remarriage, Mr. Benson decided to strip his descendants of ownership shares of the Saints and Pelicans.  These ownership shares were provided for in trusts that Benson had created to benefit Renee, Rita, and Ryan.

However, under the terms of the trusts, removal of the shares requires that Mr. Benson replace them with other assets of equal value.  Benson has tried to fulfill this obligation, but his attempts have proven futile as the trustees have refused to accept promissory notes Benson has attempted to deliver in exchange for the ownership interest in the sports teams.  The trustees believe that Benson has not offered assets equal to the value of the ownership interests, as questions still exist as to the dollar value of the assets.

Under Florida law, if the terms of the trust dictate that a third party has the authority to control the actions of a trustee, that third-party authority may be owed deference over the trustee’s discretionary power.  See In re Celotex Corp., 487 F.3d 1320 (11th Cir. 2007). If this case was being litigated in Florida and Benson had reserved the authority to control the actions of the funds’ trustees, litigation may have been avoided.  Needless to say, a well-written and comprehensive estate plan can make all the difference when flexibility is necessary to handle previously unforeseen circumstances.

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