Articles Posted in Trustees

Seeking Paternity in Probate: Are You Out of Time?

When an estate enters probate and is being distributed, the distribution is usually between family members. Family members can include spouse, children from the marriage, parent, adopted child, aunt, cousin, etc. If there are issues or questions about the status of these individuals, they are usually litigated after the estate holder passes. But what if you are a child born out-of-wedlock? What status do you have and what rights do you have to the estate?

Under Fla. Stat. § 732.103, any children from the marriage are automatically deemed heirs of the estate, and entitled to a share of the intestate estate. But out-of-wedlock children have to establish paternity if they want to share in the distribution of the estate. But do these individuals have the opportunity to litigate the paternity after the father has passed? The opportunity is there, but it is subject to a statute of limitations under Fla. Stat. § 95.11(3)(b). The statute imposes a four year limitation for paternity actions generally, starting from the date the individual turns eighteen.

Fiduciary Exception for Attorney-Client Privilege is Extinct in Florida

If you are an attorney hired by a fiduciary, whether it be a trustee, a guardian, or a personal representative, you not only are working for the fiduciary, but you are also working for the best interests of the third party ward or beneficiary. However, can the beneficiary come forward and demand access to privileged communications between the fiduciary and the fiduciary’s attorneys? The “fiduciary exception” to the attorney-client privilege would allow beneficiaries to demand access, as long as the information is related to the normal administration issues of the trust or estate. Because the beneficiary is the intended third party beneficiary of the trust or estate, they are entitled to the information related to the trust or estate.

The original rule created confusion and uncertainty for fiduciaries and their attorneys, so Florida legislatively abolished the “fiduciary-exception” rule by adopting Fla. Stat. § 90.5021. Specifically § 90.5021(2) states that any communication between a lawyer and client acting as a fiduciary is privileged and protected to the same extent as if the client was not a fiduciary. However, there was still much litigation over this issue, and the Supreme Court of Florida on more than one occasion expressed concerns over its constitutionality. However, the Supreme Court of Florida finality resolved the issue in In re Amends. to Fla. Evidence Code, No. SC17-1005 (Fla .Jan. 25, 2018), in which it upheld the constitutionality of the statute.

FLORIDA SUPREME COURT ADOPTS “ATTORNEY-FIDUCIARY PRIVILEGE” RULE

The attorney-client privilege is one of the oldest legal concepts and the backbone of providing effective legal services.  It keeps the communication between an attorney and her client secret and protects it from disclosure, with some exceptions, even when other rules compel disclosure. It is the attorney’s duty and the client’s right―an assurance that she may communicate with her attorney frankly and openly.

The privilege covers communication relating to legal representation between the lawyer and her client that the client intends not to disclose to third persons. Fla. Stat. § 90.502. This privilege is not, however, absolute and many jurisdictions have recognized an exception in fiduciary relationships. This exception allows beneficiaries of a trust to obtain privileged communication between the trustee who administers the trust for their benefit and the attorney who advised the trustee on her fiduciary duties.

HOW THE NEW TAX BILL MAY AFFECT DIVORCES

In one of our previous posts we informed about the new Tax Cuts and Jobs Act (“TCJA”) and the major changes it brings, including the various adjustments in tax deductions. This article focuses on deductions applicable to alimony, as the new system may significantly affect and expedite divorce settlements in the months to come.

Alimony is a form of spousal support awarded by agreement or by court decision to the lower-income spouse after divorce, typically referred to as the “dependent” spouse. The courts have wide discretion in establishing the amount of alimony and the time period during which the higher-income spouse is obligated to pay. The purpose of alimony is to help the dependent spouse overcome the divorce and to at least partially maintain the standard of living the spouses shared during their marriage. To ease the burden of splitting one household into two, the alimonies were tax deductible – at least until now.

How to comply with formal requirements of Will execution

Florida law places great emphasis on compliance with its statutes regarding execution of wills. This is to assure the authenticity of such an important document profoundly affecting many lives, and prevent fraud and imposition in its execution. The statutory provisions, which appear in Florida Statute §735.502, set out four main requirements for executing a will. Failure to comply with the formal requirements can invalidate the will and force the estate to pass through intestate succession. It is therefore important to comply with and understand these formal requirements.

Firstly, the will must be in writing. This means that the document can be handwritten, typed, or printed. Florida does not recognize oral wills (nuncupative wills) or wills without witnesses (holographic wills). Nuncupative wills are allowed in only few jurisdictions and typically require witnesses and some exigent circumstances such as a car accident or a heart attack. Contrarily, many states recognize holographic wills and have different requirements as to their validity.

Ademption: When devises are actually not part of the estate

Many unexpected things can happen in the period between the execution of a will and the death. For example, a decedent may devise the family house in Key West to her granddaughter. Several years after executing the will, the decedent gets into financial troubles and sells the Key West house. With other matters on her mind, the decedent never gets to adjust the will and passes away. Does the granddaughter still have a right to the house? Does she get money instead? Does she get anything at all?

The legal term describing a situation when a particular asset devised in the will is not part of the estate is ademption by extinction. The Florida statutes cover ademption in Section 732.606 for specific devises, and Section 732.605 for securities. Ademption is not uncommon. The decedent may have owned the asset and later sold it, or could have never owned it all. The situation would be different if the grandmother gave the granddaughter the Key West house as a gift before passing away. In that situation, the granddaughter’s devise would have been satisfied during the grandmother’s lifetime. Accordingly, this legal concept is called ademption by satisfaction and is not discussed in this blog post.

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. .

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 may automatically affect the validity of 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 died at the time of the divorce, unless the will or divorce judgment expressly provides otherwise. This means that when your divorce is official, any portion of your will devising any of your assets 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.

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.

Estate Planning for Young Professionals: Don’t Wait to Start Planning

Discussing one’s death can be an awkward and uncomfortable experience at any age. It is a topic that most individuals avoid at all costs, especially young adults, as if the mere discussion of one’s future demise will somehow bring it about. While it may not be pleasant dinner conversation, discussions of what will and should happen in the event of death should take place sooner rather than later.

Most young professionals do not feel a sense of urgency when it comes to estate planning, and believe that they have all of the time in the world.  Many young professionals also do not have much of an estate to speak of, maybe some bank accounts, some property if they are lucky, and likely a lot of student debt. Many individuals with few assets do not see the need for any type of estate plan. However, such an outlook is shortsighted and fails to take into account assets that will be acquired in the future. Early estate planning can protect the estate an individual does have, maximize the value and income of both their current and future assets, and also ensure seamless transfer of assets to loved ones in the event of death.

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