Recent changes to Florida’s intestate succession laws make drastic changes to the amounts that spouses and children receive from individuals who die without a will in Florida.

Brief Overview of Intestacy

A Florida Last Will and Testament is essentially a set of instructions about how a person’s assets should be distributed.

Some people die without Wills. Others die with Wills that they thought were valid, but are defective in some way and cannot be probated. In either case, the deceased person is said to have died “intestate.”

Without a Will, the court has no way of knowing how the deceased person wanted his or her assets to be distributed. In that case, the court will rely on a default system of rules known as intestacy laws.

Each state has its own set of intestacy laws. These laws represent the state legislature’s best guess about how most people would want their assets distributed if they die without a Will.  (This best guess is wrong in many cases, which is why everyone should have at least a simple Last Will and Testament.)

Intestacy laws typically distribute the estate to the spouse and/or children of the deceased person.  The key question is usually how much of a deceased person’s estate his or her spouse is entitled to take. In October 2011, the answer to that question changed for individuals with assets in Florida.

Changes to the Florida Intestacy Laws

Before October 2011, the law provided that if the decedent died intestate and no surviving descendants, the surviving spouse receives the entire estate. This much has not changed.

But a significant change was made to the treatment of a spouse if the decedent had descendents that are also descendants of the surviving spouse.

Under prior law, if all of the decedent’s lineal descendants (children, grandchildren, etc.) are also descendants of the surviving spouse, then the spouse would inherit the first $60,000.00 and one-half of the balance of the estate.  The descendants share the balance, per stirpes.

The new law changed this.  Instead of giving the surviving spouse half of the estate and $60,000.00, the new law gives the spouse the entire estate.  The new law will apply in situations where:

• The decedent died intestate;
• The decedent is survived by a spouse and descendants;
• All of the decedent’s descendents are also children of the surviving spouse; and
• The surviving spouse has no descendants who are not descendants of the decedent.

In other words, if a couple had children only with each other, then the entire estate is awarded to the surviving spouse.

If either the decedent or the surviving spouse has children from another relationship, then the spouse would take half of the estate, and the other half would go to the children shared by the decedent and the surviving spouse.

If your relative died intestate and you’d like to discuss the distribution of the estate with a Florida probate attorney, contact our firm for a free phone consultation.

The Florida legislature recently adopted changes to the state laws governing powers of attorney.  The new laws, which took effect on October 1, 2011, make some significant changes to the treatment of powers of attorney under Florida law.  And because some provisions or retroactive, they could affect people who already have a power of attorney in place.

What is a Power of Attorney?

A “power of attorney” is a legal document executed by one person, called a principal, giving another person, called an agent, the ability to act on the principal’s behalf.

Powers of attorney are most often used for incapacity planning.  If the principal becomes unable to manage his or her own affairs, the agent can step into the principal’s shoes.  For example, the agent can access the principal’s bank accounts, sell the principal’s real estate, or take other actions to pay for the principal’s care.

Powers of attorney can automatically terminate when the principal becomes incapacitated—for example, when the principal is declared insane or is in a persistent vegetative state.  But this would defeat the purpose of having a power of attorney to begin with.  In practice, post powers of attorney are durable, meaning that the power of attorney will continue to be effective even after the principal’s incapacity.

Powers of attorney must be given before the principal becomes incapacitated.  By definition, a person who is already incapacitated lacks the ability sign a valid legal document.  To be effective, the power of attorney must be signed by a principal who is “competent” at the time she signs it.  This usually means that the principal must understand:

1. that she is signing a power of attorney;
2. what a power of attorney is;
3. the agent to whom she is giving the power of attorney; and
4. what property is covered by the power of attorney.

Note: We occasionally get calls from people who have been told that they need a power of attorney to manage an incapacitated spouse or loved one’s affairs.  At that point, it is too late.  The incapacitated person cannot sign a valid power of attorney.  At that point, the only alternative is to pursue a guardianship proceeding through the court system. To avoid this in your own estate, you should include a power of attorney as part of your estate plan.

Changes to the Florida Power of Attorney Laws

The recent amendments to the Florida power of attorney statutes made several changes in the way powers of attorney can be used in Florida.

Agents May not Take Any Actions not Clearly Granted to Them

Under prior law, it was common for powers of attorney to include general language that authorized the agent to take “any action not otherwise mentioned in this document” or “any action that I could take myself.”  Courts recognized these provisions as granting broad powers to the agent.

Under the new law, general language of this nature has no legal effect.  An agent may only exercise authority specifically granted to him in the power of attorney, as well as any authority reasonably necessary to give effect to express grants of authority.

This is arguably the most critical change to the Florida power of attorney laws.  It will require detailed changes to most existing powers of attorney.  Under the new law, durable powers of attorney should detail all of the powers granted to the agent.

New Springing Powers of Attorney Are No Longer Recognized

One type of power of attorney is known as a “springing” power of attorney.  It is intended to take effect at a later date or upon the occurrence of a future event.

Under the new law, “springing” powers of attorney may no longer be created in Florida.  The only exception is for powers of attorney contingent on military deployment.

Springing powers of attorney executed before October 1, 2011, are grandfathered in, but only take effect when accompanied by an affidavit of the principal’s duly licensed primary care doctor.  The physician must affirm that she believes that the principal lacks the capacity to manage property.

Certain Delegations of Authority Require the Principal’s Initials or Signature

The new law requires the principal to sign or initial certain powers given to the agent.  This new requirement is designed to protect the principal by ensuring that the principal knows what powers he or she is giving.  The new requirement applies to the following powers:

• Creating an inter vivos trust
• Amending, modifying, revoking, or terminating an existing trust (additionally, the trust instrument must explicitly authorize the settlor’s agent to exercise such authority)
• Making gifts, subject to statutory limits
• Creating or changing rights of survivorship
• Creating or changing a beneficiary designation
• Waiving the principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan
• Disclaiming property and powers of appointment

Some Delegations of Authority are Ineffective (Even With the Principal’s Consent)

The new law restricts the principals right to delegate certain powers.  Even if the power of attorney expressly allows it, the agent may not take any of the following actions:

• Perform a contract under which the principal was obligated to provide “personal services”
• Make an affidavit as to the personal knowledge of the plaintiff (in other words, take an oath affirming facts which the principal did or did not know)
• Vote in a public election on behalf of the principal
• Execute or revoke a will for the principal
• Exercise authority granted to the principal in her capacity as trustee or as a court-appointed fiduciary

General Language No Longer Sufficient to Revoke Prior Powers of Attorney

Under the new law, to revoke a power of attorney, the principal must execute a document (it need not be another power of attorney, but it may be) clearly expressing his intent to revoke the power of attorney.

Co-Agents Can Act Independently on the Principal’s Behalf

Prior law required co-agent to act in concert (if two co-agents) or by majority (if three or more co-agents).  Under the new rule, each co-agent may exercise his authority without consulting his fellow co-agents unless the principal provides otherwise in the power of attorney.

The law also clarified the duties of co-agents to report wrongdoing.  If a co-agent has actual knowledge of another co-agent breach of her fiduciary duty to the principal, the innocent co-agent must act to safeguard the principal’s best interests.  Failure to do so could make her liable for the wrong-doers breach of fiduciary duty.

As mentioned above, the new statute applies in most cases to existing durable powers of attorney.  If your durable power of attorney was executed before October 1, 2011, you may need to update it to ensure that the statutory changes described in this post do not alter its legal effect.  Contact us today a free consultation with a Florida estate planning attorney regarding your durable power of attorney, contact us by e-mail or telephone.

Heir property is land that is jointly owned by descendants of a deceased person whose estate was never handled in probate.  These descendants (heirs) have the right to use the property, but they do not have clear or marketable title to the property since the estate issues have not been resolved.

Without a court proceeding to deal with these estates, third parties (like buyers or lenders) have no way of knowing who is really entitled to the property and whether any creditor claims apply.  This means that the heirs cannot sell, mortgage, or otherwise deal with the real estate.  Heir property has the following characteristics:

• It is vulnerable to involuntary loss of the property through adverse possession, tax sales or judicial partitions;
• The heirs cannot sell the property or use it as collateral for a mortgage;
• The property is usually ineligible for federal assistance;
• Most lessees (such as tenants, timber companies, or other people who would want to deal with the real estate) will not do so due to the title issues;
• The heirs are reluctant to repair or improve the real estate since every dollar they spend on the property is divided among all of the other heirs.

Over time, as each generation passes, the ownership of the property becomes more and more fragmented and divided among a larger group of people.  At the same time, the number of unprobated estates in the title increases.  Before long, it isn’t worthwhile for any one heir to pay the property taxes and the group of heirs cannot agree to keep up with the property.  At that point, the property is usually sold for outstanding taxes.  The new owner then acquires the property for a deeply discounted value, none of which goes to the heirs.

The best way to avoid this loss is to simply deal with the estates promptly.  This keeps the title clear and allows the heirs to sell or mortgage the property at will.

There’s been a lot of talk lately about helping consumers represent themselves in routine legal matters, without (or with limited) need for attorney involvement.  I think this is a good idea for simple matters that members of the public really can handle themselves.  Why force someone to pay an attorney if they don’t need one?

But this raises an important question, which has not been fully settled: What sort of legal matters are simple enough for a person to handle without attorney assistance?  One of the most-often mentioned is wills.  Aren’t these routine forms that a person can be trusted to fill in themselves?  Or should attorney (or paralegal) assistance be required?

Well … let’s take a look.

In re Estate of Aldrich

In the recent case of In re Estate of Aldrich, the Florida District Court of Appeals (1^st DCA) recently had to sort out the mess left behind when Ann Dunn Aldrich took a shot at making her own will using a pre-printed legal form.

The first sentence of the statement of facts reads: “On April 5, 2004, Ms. Aldrich wrote her will on an ‘E-Z Legal form.’”  (When a case starts like this, you can expect trouble.)

It turns out that Ms. Aldrich didn’t understand the importance of a residuary clause in a Last Will and Testament.  She itemized the assets of her estate and left them to her sister (Mary Jane).  If Mary Jane predeceased Ms. Aldrich, the itemized assets were to go to Mr. Aldrich.  The will left no residuary clause, probably because Ms. Aldrich thought she had listed everything and didn’t understand the distinction between specific and residuary bequests.

Mary Jane died a few years after Ms. Aldrich signed her will, leaving Ms. Aldrich with cash and land in Putnam County, Florida.  Ms. Aldrich died a few years later, without having updated her will.

When the case went to probate, two of Ms. Aldrich’s nieces popped up, claiming that they had an interest in the cash and land that Ms. Aldrich inherited from Mary Jane.  Since the cash and land were not described in Ms. Aldrich’s will, and since the will didn’t have a residuary clause, the nieces claimed that those assets should pass through Florida’s laws of intestacy.

Mr. Aldrich believed that the assets should have gone to him, for three reasons:

1. The will only listed Mary Jane and Mr. Aldrich as potential beneficiaries and left them all of the property that Ms. Aldrich owned at the time.  It was not unreasonable to conclude, then, that Ms. Aldrich did not intend for any portion of her property to pass to anyone other than Mary Jane or Mr. Aldrich;
2. Fla. Stat. § 732.6005(2) provides that a will should be interpreted to pass all property that was owned at death, including property that was acquired after the date the will was signed; and
3. There is a legal presumption that, when someone makes a will, they intend to dispose of everything that they own.  (Again, this is a reasonable assumption).

Even though Mr. Aldrich was probably right that Ms. Aldrich intended him to get everything, he lost.  The will was very clear on who was to receive specific assets and didn’t show any intent to dispose of anything else.  The will’s silence with regard to the cash and land that Ms. Aldrich inherited from Mary Jane was not an ambiguity that left room for interpretation.  The mere fact that the will did not contain a residuary clause did not give the court the discretion to revise it.  The court reasoned:

While the will does not dispose of all the property Ann Dunn Aldrich owned at her death, this circumstance is hardly unique to her or her estate and does not contravene any rule of law or public policy.  Nor does the will reflect any mistake on her part … It does not matter whether or not Ann Dunn Aldrich owned real property in Putnam County or held [cash] at the time she executed her will, or acquired the real property and deposited the cash afterwards.  In either event, the will as written and executed failed to dispose of those unmentioned assets.

Under Florida law, when a will doesn’t dispose of all of a decedent’s property, the property that is not disposed of passes under Florida’s intestacy laws.  Since there was no residuary clause in the will, the court held that Ms. Aldrich’s nieces did have an interest in the cash and real estate that Ms. Aldrich inherited from her sister after she executed her will.

A competent attorney wouldn’t have let this happen.  The will would have had a residuary clause leaving everything to Mr. Aldrich if that was Ms. Aldrich’s intent.  If that wasn’t her intent, the will would have stated that any property not disposed of should pass to her heirs at law.  In either event, her intent would have been clear and this mess would have been avoided.

And here’s the real kicker:  A simple will like this shouldn’t cost more than several hundred dollars. One can only wonder how much of her estate went to legal fees to battle this out in court.

Lessons Learned(?)

So are wills routine legal documents that can be prepared without assistance?  In some cases, yes.  But when things go wrong, they can go really wrong.  This case is an example of that.  Of course, the person who made the will never knew (she was dead by the time the problem was discovered).  But I’d bet that, had she known what would happen, she would have gladly spent a few hundred dollars to have a proper will drawn up.  It would have been cheap insurance against the risk involved.

I wrote recently about the hurdles a judgment creditor recently had to jump through to enforce a Georgia judgment against a Florida defendant.  In a similar vein, the 5^th DCA recently issued an opinion dealing with a California court’s attempts to force the sale of Florida homestead property that had been placed under a constructive trust.

The Takeaway

While a court in another state does not have in rem jurisdiction to convey Florida real estate, it can have personal jurisdiction over a Florida resident so as to force the Florida resident to convey the real estate.

The fact that the property is being used as a home will not necessarily qualify it for Florida homestead protection if it was acquired as a result of constructive fraud. “Constructive fraud” may include breach of fiduciary duty by someone other than the Florida homeowner.

The Story

1992 – Richard and Edith, a married couple residing in California, create a Trust and transfer their marital home into it. The Trust provides that:

• The Trust will be divided into a Survivor’s Trust and a Residuary Trust after the death of the first spouse.
• The surviving spouse will serve as sole trustee of both the Survivor’s Trust and the Residuary Trust.
• The surviving spouse is entitled to both principal and income of the Survivor’s Trust.
• The surviving spouse cannot access the principal of the Residuary Trust unless all of the survivor’s assets are fully depleted.

1996 – Edith dies. The marital home is divided, with 75 percent going to the Residuary Trust and 25 percent to the Survivor’s Trust.

1998 – Richard remarries to Ann.  He transfers the prior marital home from the Residuary Trust to himself at a time when his assets have not been fully depleted.  He then sells the prior marital home and uses the proceeds to purchase a new home with Ann.

2003 – Richard dies.  Ann sells the California home and uses the proceeds to buy a home in Kissimmee, Florida.

After Richard’s death, the successor trustee of the Trust discovers Richard’s inappropriate transfer of the original marital home from the trust to himself.  The trustee brings suit in California to compel Ann to refund 75 percent of the proceeds from the sale of the original marital home.

The California court holds that Richard’s conveyance of the original marital home to himself was a breach of fiduciary duty.  The California court places a constructive trust over the Kissimmee property to prevent Ann from dealing with the property until the constructive trust is satisfied.

The trustee domesticates the California judgment in Florida.  Ann claims that the judgment was unenforceable since the property qualified for Florida homestead protection.   The Florida trial court doesn’t rule on the homestead argument, though, since the California order did not order a change in ownership of the Florida property.

The California court issues a “Postjudgment Order” requiring Ann to convey the Kissimmee property to a court-appointed receiver so that the property can be sold.  When Ann does not comply with the Postjudgment Order, the California Court has a quitclaim deed executed on Ann’s behalf conveying the property to the receiver.

The Law

• Real estate is governed by the laws of the jurisdiction in which it is located.  No state has jurisdiction over real estate located in another state.
• Unlike property jurisdiction, one court can have jurisdiction over a person that is living in another state. This jurisdiction over the person allows a court in one state to compel a person to convey property that is located in another state.
• Florida’s (generous) homestead exemption prevents a court from forcing the sale of or otherwise encumbering property that meets Florida homestead requirements.
• There is an exception to the Florida homestead exemption for constructive fraud.  “Constructive fraud is the term typically applied where a duty under a confidential or fiduciary relationship has been abused, or where an unconscionable advantage has been taken. Constructive fraud may be based on misrepresentation or concealment, or the fraud may consist of taking an improper advantage of the fiduciary relationship at the expense of the confiding party.”

The Analysis

• Since the California court did not have jurisdiction over the Florida property, the quitclaim deed that the California court had executed is not enforceable in Florida.
• Since the California court did have jurisdiction over Ann, the California order requiring her to convey the property to the receiver is enforceable in Florida.
• Richard’s breach of fiduciary duty was a “constructive fraud” that prevented Ann from taking advantage of Florida homestead protection.  (Note: Richard’s breach of fiduciary duty defeated Ann’s homestead protection.)

The Holding

Remanded to the trial court with instructions to force Ann to convey the Kissimmee property in accordance with the California order.

Hichert Family Trust v. Hichert, 36 Fla. L. Weekly D1290b (Fla. 5th DCA June 17, 2011)