Posts Tagged ‘Florida’

Do-It-Yourself Will May Not Save Costs After All

APRIL 7, 2014 VOLUME 21 NUMBER 13

From time to time we devote our weekly newsletter to a story about estate planning gone wrong — often (but not always) because of an individual’s decision to forego the help of a lawyer in drafting a will or trust. Lawyers also make mistakes, of course, but they are trained and paid to anticipate most of the kinds of issues that might arise. Untrained individuals may not have the skill or luck to foresee problems.

Consider Diane, who decided to write her own will. She bought a pre-printed will form at a bookstore, and opened up the package. In the middle of the form was a big open space with the language:

“I direct that after payment of all my just debts, my property be bequeathed in the manner following:”

Below that awkward introductory sentence, on the lines in the form, Diane wrote in:

“To my sister Mary Ann, my BigBank Checking and Savings Account, my house at 123 Poplar Street and its contents, my 2010 Dodge Truck and my Friendly Investments IRA. If Mary Anne dies before me, I leave all listed to my brother John.”

Diane completed the form properly, signed it, had it witnessed by two people and had the entire document notarized. She felt pleased that she had accomplished this task efficiently and inexpensively.

Do you already see what was wrong with Diane’s will? If you are a lawyer, you probably do — but you might not if you are not a lawyer.

Three years later Mary Ann died — before her sister, and before Diane’s will could leave anything to her. In fact, Mary Ann left her own home and bank account to Diane. Diane took the $120,000 she inherited from her sister and opened a new brokerage account at Friendly Investments (the same brokerage house where her IRA was located). Then, two years after Mary Ann’s death, Diane died.

Diane’s brother John did survive her. So did the two daughters of her other, deceased brother Jim. So who inherits what?

Those are essentially the facts of a recent Florida Supreme Court case, Aldrich v. Basile, (March 27, 2014), except that we have changed the names and a few of the details. In that case, the probate judge decided that Diane intended to leave everything to her brother John, and ordered that her nieces would receive nothing. The Court of Appeals ruled that Diane had died without a complete will, and that her nieces would receive a share of the undesignated part of her estate — the home and account she had inherited from her sister. The Florida Supreme Court had to decide between those two views, and ultimately sided with the Court of Appeals. Diane died “partially intestate” and the unspecified part of her estate would pass to her living brother and her late brother’s children. Her nieces received a share — a small share, to be sure — of her estate.

Now you can more easily see what was wrong with Diane’s will. She did not include a “residuary clause” providing for assets not listed in her will. If she had added a few short words to the end of the dispositive language she could have provided for distribution of “all the remaining assets I might own” or something similar.

Perhaps Diane actually did want to leave her inheritance to all of her relatives, and the failure to provide for it was not oversight but intentional. Well, there are more facts in the Florida case that we haven’t shared with you yet. After Mary Ann’s death, Diane grabbed a note pad (ironically, with the pre-printed heading “Just a Note”) and wrote out her additional instructions: “I reiterate that all my worldly possessions pass to my brother” John. She signed it, dated it, had it witnessed by one person (John’s daughter) and put it in the envelope with her will. Her wishes were pretty clear: she wanted to leave everything to John. That wasn’t what happened, however.

Diane’s will would actually have worked in Arizona. Unlike Florida, Arizona recognizes “holographic” (handwritten) wills even when they are not properly witnessed. Her “Just a Note” note would probably have been treated as an amendment or codicil to her will, and would probably have been admitted in Arizona probate court.

What is the lesson to be learned from Diane’s story (and case)? Even if you think your estate is small, and you want a “simple” will, you should see a lawyer. As we said at the beginning of Diane’s story, we’re trained and paid to think of how things might go wrong, or at least change, if circumstances change, and we’re familiar with the rules for wills, trusts and probate proceedings. Ultimately, Diane’s estate would have saved a lot of legal fees for the very modest cost of a lawyer at the outset — and what she wanted could actually have happened.

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Despite Guardianship, Ward May Have Capacity to Marry

MAY 2, 2011 VOLUME 18 NUMBER 16
We have written in previous installments about differing state laws regarding the ability of a guardian (of the person) or conservator (of the estate) to file a divorce proceeding “for” an incapacitated adult. The question that comes up more often from our clients is a little different, though. In its most direct form, it might be phrased like this: “if I get a guardianship over my demented mother, will that prevent her from getting married without my permission?”

The exact dimensions of the question, of course, vary with each asking. Sometimes there is familial anxiety about a late-life romance blooming in the assisted living facility or nursing home where a parent has been placed. Sometimes the concern is over a developmentally disabled 17-year-old about to acquire, at least theoretically, the legal right to make foolish decisions. Sometimes the question is focused on a particular dangerous suitor, and sometimes it is more generalized.

The short answer to the question: the mere fact of a guardianship probably will not prevent the ward from getting married, or the marriage from being determined to be valid. The level of capacity required to enter into a marriage agreement is not exactly the same as the level of capacity required to make one’s own placement or medical decisions — or even to enter into other kinds of contracts. But the facts underpinning the guardianship proceeding are likely to be the same facts utilized in any later challenge of the validity of a marriage.

Take the recent example of Christopher C. Oakley, who lives at Lamplight Village, an assisted-living facility in West Plains, Missouri. Mr. Oakley suffered a childhood traumatic brain injury in 1986, and has required supportive assistance with bathing, housekeeping and personal care ever since. His father was apparently appointed as guardian of his person in a Florida proceeding in 1995. A professional fiduciary was appointed as conservator of Mr. Oakley’s estate at the same time, and continues to manage the proceeds from settlement of a personal injury lawsuit filed in connection with the original accident.

As Mr. Oakley reached his early 20s he became involved with Melissa Warren, another resident of Lamplight Village. She, too, had a guardian and conservator — the Howell County, Missouri, Public Administrator was appointed to handle her finances, medical and placement decisions after the probate court determined that she was unable to do so herself.

In 2006 Mr. Oakley and Ms. Warren decided they wanted to get married. They each asked their respective guardians for permission, and both refused. They then had a friend drive them to a neighboring state, where they were married. Upon their return they began to live together in a shared apartment at Lamplight Village, and they identified themselves as a married couple.

The two guardians responded quite differently. The guardian for Ms. Warren (now Mrs. Oakley) did not initially approve, but sat down with the couple and discussed what they had done. The guardian decided that they really did want to get married, that they understood the emotional and financial meaning of their decision, and that the marriage should be allowed to stand. In fact, she told the judge, if the marriage was annulled she would intend to immediately file a petition to secure court approval for a new marriage.

Mr. Oakley’s guardian reacted to the news of the wedding by filing a petition to have the marriage annulled. He argued that his original Florida guardianship was based on a finding that his son was incapacitated, and that the marriage therefore was invalid in the first place. In testimony, he explained himself by asking, rhetorically: “what happens if he decides ten years from now that if somebody else — another girl comes into his life and it’s better and bigger and everything than what he had?” He also filed a Missouri guardianship proceeding, which was granted while the annulment proceeding was pending.

The judge hearing the annulment petition denied Mr. Oakley’s father the relief he sought. The fact of a Florida guardianship, reasoned the judge, did not prevent the ward from having the capacity to understand the meaning and effect of marriage. Neither did the fact that his intellectual functioning was well below “normal” intelligence, with an IQ estimated at about 70.

The Missouri Court of Appeals agreed, and allowed the marriage to stand. The burden of proving that Mr. Oakley lacked capacity to marry was on his guardian, ruled the appellate judges, and he had failed to carry that burden. The existence of a Florida guardianship was not adequately shown, and neither was the effect of that order. The evidence considered by the trial judge was sufficient to support his finding that Mr. Oakley, despite any guardianship order, understood the nature and effect of marriage well enough to enter into this most personal of contractual arrangements.

There are a number of other interesting side-issues involved in Mr. Oakley’s marriage annulment proceeding. At least, they are interesting to lawyers — everyone else might find them less bracing. One such issue: the lawyers, the trial judge and the appellate judges all agreed that Mr. Oakley’s capacity to marry should be assessed under the law of Arkansas, where the marriage took place, rather than the law of Missouri, where the couple lived and the legal action was filed. Meanwhile, Mr. Oakley’s father insisted that the law of Florida should govern the question of whether a ward automatically loses all capacity to marry upon the appointment of a guardian; that argument was lost, however, when the Missouri courts decided that he had not proven the existence of a Florida guardianship as required by Missouri law. In Re Marriage of Oakley, April 27, 2011.

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“Spendthrift” Trust Protects Against Beneficiary’s Creditors

MAY 17, 2010  VOLUME 17, NUMBER 16

What makes a trust a “spendthrift” trust, and what does it mean? A recent Florida Court of Appeal case gives a good snapshot of the significance and the effect of the categorization.

Elizabeth Miller wanted to leave her property to her two sons, but wanted to protect against her money being subjected to the claims of their creditors. This was particularly important to her because one son, James F. Miller, had already been sued over a business deal gone bad. In fact, there was a million dollar judgment on record and the plaintiffs were trying to collect from James.

Ms. Miller left James’s share of her estate in a trust with her other son, Jerry Miller, as trustee. The language of the trust authorized Jerry to give James any or all of the trust’s assets, but ordered that he not turn over anything to James’s creditors. Within weeks of making that change, Ms. Miller died and her estate passed partly to Jerry as trustee of James’s trust.

James’s creditors sued Jerry and the trust, claiming that James really exercised control over investments, distributions and trust decisions. The trial court agreed, and ruled that James had so much control over the trust and his brother that his interest in the trust had effectively “merged” into an ownership interest. The court’s order allowed James’s creditors to get to his inheritance.

Not so fast, said the Florida Court of Appeal. The appellate court agreed that James had effectively made trust decisions in place of Jerry, but noted that Jerry had the power to take back control at any time. It is the language of the trust itself and not the behavior of the trustee or the beneficiary that must control whether a spendthrift provision is effective, said the judges.

Had Ms. Miller’s trust given James the right to demand principal (or income) from the trust, that would have been a different matter. Because the decision to make those distributions ultimately rested with Jerry as trustee, James’s creditors could not reach behind the trust to gain access to the assets directly.

The appellate court agreed that “the facts in this case are perhaps the most egregious example of a trustee abdicating his responsibilities to manage and distribute trust property.” Nonetheless, the failure of the trustee to exercise control over the trust did not invalidate the spendthrift provision itself, and James’s creditors could not gain access to his inheritance. Miller v. Kresser, May 5, 2010.

Would Arizona courts have the same high regard for spendthrift provisions? Probably, if the trust’s property did not originally belong to the beneficiary. An individual can not create a spendthrift trust to protect his or her own property from creditors — though there are some exceptions. The most important exception under Arizona law is for trusts established for a beneficiary with a disability — so-called “special needs” trusts.

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DNA Test Might Be Useful To Establish Decedent’s Paternity

FEBRUARY 15 , 2010  VOLUME 17, NUMBER 5

Despite being cloaked in arcane terms and arguments, the legal system usually makes sense in the real world in which it operates. Sometimes, however, it may take the legal system a few years — or a few centuries — to catch up with that real world. One illustration: the difficulties that can arise in trying to answer the deceptively simple question of paternity, especially after the death of the putative father.

Five (or so) centuries of common law developed before DNA testing for paternity became possible. During that long period courts frequently focused on the importance of protecting the family — a child born to a married woman was presumed (and almost conclusively so) to be the child of the woman’s husband.

Another important development in that long history centered on the privacy rights of all the interested parties. It became extremely difficult to force any contesting person to submit to medical testing to determine paternity. Of course, there were no particularly precise tests available until quite recently.

Today, of course, genetic testing is much more precise and useful in determining parental relationships. Does that mean that the legal system has embraced DNA tests as a means of settling disputes about paternity? Not yet.

Consider Adrian Doe, Jr.’s trusts. Mr. Doe set up a series of trusts which, upon his death, divided into equal shares for his children. At the time of his death he had two children born while he was married to their mother — Adrian III and Evelyn. He also left behind two possible children from Costa Rica, whose respective mothers both asserted that he was the father. What was the trustee to do about Maria and Madelin?

Maria’s birth certificate named Mr. Doe as her father, but Madelin’s was silent about paternity. Should the trustee assume that the records were correct, and create a trust share for one of his possible daughters but not the other?

The trustee asked the Florida probate court what it should do, and the court appointed an attorney to represent the interests of the two minor girls. One filed a request that Evelyn and Adrian III be ordered to submit to cheek swabs in order to determine whether they shared DNA with the girls. The probate court agreed with the request.

The Florida Court of Appeals, citing some of the history of paternity and privacy laws, disagreed and quashed the DNA testing order — for the moment. It did, however, note that with slightly better-developed facts Madelin’s lawyer might be able to procure a new testing order. The appellate court even went so far as to suggest some of the evidence that might demonstrate the need for the testing.

If Madelin’s mother were to explicitly state that Mr. Doe was the father, evidence before the court showed that testing the two acknowledged children would be likely to establish Madelin’s and Maria’s paternity (or prove that they were not Mr. Doe’s children), and there were an explanation as to why Mr. Doe’s DNA could not be obtained (there was some indication that he might have been cremated), then the court might approve the testing. It also would want, however, to give Evelyn and Adrian III a chance to explain any particular privacy concerns they might want the probate court to consider. Doe v. Suntrust Bank, January 29, 2010.

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High-Stakes Guardianship Case Illustrates Multistate Conflicts

APRIL 9, 2007  VOLUME 14, NUMBER 41

Mark Glasser and Suzanne Glasser Matthews, brother and sister, have spent the last two years battling for physical and financial control over their mother, Lillian Glasser. The 86-year-old Mrs. Glasser, who at one point had an estimated net worth of $25 million, has been the subject of proceedings first in Texas and more recently in New Jersey, where a trial judge heard thirty-four days of testimony and argument last fall.

Nearly six months after the extended proceedings, New Jersey Judge Alexander Waugh has issued his ruling, appointing a guardian of the person and estate for Mrs. Glasser. Rather than appointing any of the family members who might have been candidates, Judge Waugh appointed New Jersey attorney Joseph Catanese as guardian of the person. Mr. Catanese had served as court-appointed counsel for Mrs. Glasser during the trial, and the judge indicated that her condition could worsen if yet another new party was injected into her life.

Judge Waugh also appointed a guardian of the estate (the equivalent of a conservator in Arizona and some other states), turning to the financial management firm Mrs. Glasser and her late husband had used before his death. Mrs. Matthews, her daughter, was ordered to return control of approximately $20 million she had transferred to a family limited partnership just before initiating guardianship proceedings in Texas (see the San Antonio Express-News report), and the judge made clear that at least some portion of the costs incurred by Mrs. Matthews to set up that entity would have to be reimbursed as well.

All of that is very interesting, and Judge Waugh’s written opinion reads like a fictional saga (for more detail and an excellent running commentary on the case, consider Texas Tech College of Law Prof. Gerry W. Beyer’s blog coverage of the case). What the Lillian Glasser case points out even more clearly, however, is a growing problem in guardianship matters—the conflicts that can arise between jurisdictions with the increased mobility of families, support systems, caregivers and assets.

Guardianship proceedings were initiated in Texas when Mrs. Matthews sought appointment as guardian of both her mother’s person and her estate. After Mrs. Matthews’ appointment as temporary guardian, another relative initiated the New Jersey case, arguing that Mrs. Glasser was a New Jersey resident and the question of her capacity—and management of her affairs—should be handled there.

In an earlier ruling Judge Waugh determined that his court should have primary jurisdiction over the guardianship. Luckily, the Texas judge assented, staying the proceedings until a hearing could be completed in New Jersey. Although neither state’s laws include explicit provisions permitting such an action, the two judges’ cooperation saved considerable expense and duplicative legal proceedings.

Arizona law also lacks a provision for resolution of interstate guardianship conflicts. In practice, such conflicts are handled on an ad hoc basis, considering the strength of the proposed ward’s ties to each of the jurisdictions, the location of principal witnesses, and other factors. Frequently the result is that the state where proceedings are first filed has priority, even though the stronger contacts are elsewhere.

The National Conference of Commissioners on Uniform State Laws (NCCUSL), which proposes uniform statutes for consideration by the states, has addressed this growing problem. A provision of the Uniform Guardianship and Protective Proceedings Act, proposed in 1997, would specifically permit the judge in one state to notify and consult with the judge in another state, and to decide whether to accept or decline jurisdiction based on the best interests of the proposed ward (see section 107(b) of the UGPPA).

Another growing problem involves movement of wards after appointment of a guardian or conservator. Under current law and practice, it may be necessary to initiate a whole new guardianship proceeding in the new state after a move, at considerable expense and duplicating much legal effort The proposed uniform law would also address that problem, permitting the final guardianship order of one state to simply be lodged with, and become an order of, the ward’s new state.

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“Full Faith and Credit” Applies In Two-State Probate Actione

APRIL 5, 2004 VOLUME 11, NUMBER 40

A Florida court found Alvarado Kelly incompetent in 1960, and appointed a guardian to manage his property. Fifteen years later Mr. Kelly moved to a facility in Mississippi operated by Sarah Cuevas; he lived in that facility until his death twenty five years later. After his death Mr. Kelly’s brother William and Ms. Cuevas became embroiled in a legal dispute involving the courts of both states.

Mr. Kelly had signed a will while he lived in Mississippi, and he had named Ms. Cuevas as executrix (what we in Arizona would call “personal representative”). Shortly after his death Ms. Cuevas filed the will for probate with the Mississippi courts, gave notice to William Kelly as the next of kin, and secured a court order appointing her as executrix and finding the will to be Mr. Kelly’s valid will.

William Kelly then filed a proceeding in the Florida courts. He acknowledged that there had been a finding in Mississippi, but he argued that it was invalid both because he had not actually participated and because his brother had never been a resident of Mississippi.

William Kelly argued that since his brother had been adjudged incompetent and the Florida courts had never given specific permission for him to relocate to Mississippi, he remained a resident of Florida for the rest of his life. He also insisted that the will was invalid because Ms. Cuevas had exercised undue influence.

Ms. Cuevas filed a motion to dismiss the Florida probate, but the Florida court agreed with William Kelly that her appointment by the Mississippi court was invalid. A Florida bank was appointed as personal representative of Mr. Kelly’s estate and authorized to collect his assets.

The Florida Court of Appeals reversed the probate court’s decision, however. In doing so, it relied partly on the U.S. Constitution, which requires the courts of each state to give “full faith and credit” to the courts of sister states in most situations.

In this case, ruled the appellate court, Ms. Cuevas had given William Kelly notice of the pending Mississippi proceedings, and an opportunity to file pleadings and present his argument that any proceedings should be in Florida. When the Mississippi court admitted Mr. Kelly’s will to probate it made a determination that he was domiciled in Mississippi; if William Kelly disagreed with that conclusion he needed to make his argument in Mississippi, rather than just filing his own proceeding in Florida. Cuevas v. Kelly, March 26, 2004.

Mr. Kelly’s probate proceedings provide an interesting illustration of the “full faith and credit” clause of the Constitution, and of its application to probate proceedings. It also demonstrates that it is unwise to ignore the proceedings in another state, hoping to later file a competing action in a more friendly jurisdiction.

December, 2005, update: In a related case in the Mississippi courts, that state’s Court of Appeals ruled that probate proceedings were proper in Mississippi. William Kelly, the decedent’s brother, had argued in the Mississippi proceedings that there was no jurisdiction for a probate there, since (he insisted) all of Alvarado Kelly’s assets necessarily belonged in Florida where he had resided when he had last been competent to select a residence. The Mississippi chancery court (where probate proceedings are tried) had ruled that it would be “impossible” to imagine that Alvarado Kelly had lived in Mississippi for thirty years without accumulating clothing or other personal items. His death in Mississippi, coupled with the existence of any assets at all, gave Mississippi courts jurisdiction over his estate, and the Court of Appeals agrees that those probate proceedings were properly initiated. In the Matter of Estate of Kelly, December 6, 2005.

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Powers of Attorney: Draft With Care and Use as Instructed

APRIL 7, 2003 VOLUME 10, NUMBER 40

Recently two different state courts addressed the exercise of authority made pursuant to a durable financial power of attorney. These cases illustrate why care should be taken both in drafting a power of attorney and in choosing an agent.

In Florida, after David R. James II died, four children from his first marriage tried to evict their father’s widow from the home the couple had shared. Mr. James’ children argued that they could evict Rosalie James because David James, III, using his father’s power of attorney, had taken title to the home during Mr. James’ life.

The Florida Fifth District Court of Appeal upheld the lower court ruling in Rosalie James’ favor. The Appellate Court based its decision in part on Rosalie James’ argument that her husband’s power of attorney did not authorize gifts in excess of $10,000 per child — an amount far less than the value of the home. Robert James v. Rosalie Kaye Bruno James, March 7, 2003.

Meanwhile in North Dakota, Rodger and Paul Marquardt also ended up in court after their mother, Laura Marquardt, died. Rodger claimed that all proceeds from an annuity his mother had purchased should belong to him since his mother named him as beneficiary. However, the agent his mother named under her power of attorney, First Western Bank & Trust, had changed the annuity beneficiary prior to Mrs. Marquardt’s death.

Rodger argued that his mother’s power of attorney did not authorize her agent to change the beneficiary. The trial court agreed with Rodger about the power of attorney and that his mother’s will made clear that the annuity was his. While brother Paul appealed the ruling, he did not challenge the lower court’s decision about the power of attorney. First Western bank & Trust v. First Lutheran Church Foundation, Supreme Court of North Dakota, February 19, 2003.

Elder Law Issues periodically reminds its readers that powers of attorney are important, powerful and potentially dangerous instruments. Since 1998 in Arizona, agents under powers of attorney have been prohibited from taking any step for the benefit of anyone except the person who executes the power of attorney (the principal) unless the power is expressly listed and separately initialed by the principal and a witness. Powers of Attorney must be witnessed and notarized; the witness must be able to say that the principal acted freely and not under duress.

Arizona’s law reflects a growing concern about abuses tied to powers of attorney. Selection of an agent and the choice of powers to grant that agent both require careful consideration.

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