Florida Probate, Trust & Guardianship Litigation

Marital Agreements in Probate

A marital agreement can be enforced after death, in the probate process, if required formalities were observed in the creation of the agreement, and if certain procedures in the probate process are followed.

Requirements for an Enforceable Marital Agreement

Marital Agreements which are often referred to as prenuptial agreements, ante-nuptial agreements, and post-nuptial agreements, can waive or create rights upon the death of a spouse for the surviving spouse.

Waiver

Section 732.702 of the Florida Probate Code requires that an agreement to waive spouse rights must be by written contract, signed by two witnesses, if the waiving spouse was a Florida resident when signed.  If the waiving spouse was not a Florida resident, the agreement is valid if valid under the laws of the state where the agreement was signed.

If the marital agreement is signed before the marriage, no disclosure of assets by each spouse is required.  “Each spouse shall make a fair disclosure to the other of that spouse’s estate if the agreement, contract, or waiver is executed after marriage.”

The rights that can be waived include elective share, intestate share, pretermitted share, homestead, exempt property, family allowance, and preference to serve as personal representative.

Guaranteed Share

Section 732.701 of the Florida Probate Code requires that any agreement, including a marital agreement, where the spouse is, by contract, entitled to receive a guaranteed or minimum share of the estate, be in writing and signed by two witnesses.  If a spouse is not a Florida resident when the agreement is signed, the agreement is valid if valid in the state where the agreement was signed.

Of course, many, if not most marital agreements have a combination of waiver of rights and guaranteed rights.  In such case, both statutes apply to determine the validity of the agreement.

Enforcement

If a surviving spouse of a Florida decedent has a Marital Agreement, it is imperative that his or her attorney file a protective creditor claim to preserve these contract rights of the surviving spouse, within three months of filing the Notice of Publication to Creditors or thirty days from the date of service of a known creditor, even if the surviving spouse is the personal representative.  A common mistake of probate lawyers in handling marital agreements is the failure to file such a creditor claim.  There is no harm in filing a protective claim, and often filing a protective creditor claim results in the payment of benefits to a surviving spouse which may otherwise be lost.  The Florida Supreme Court has even ruled that filing such a claim is necessary to enforce a surviving spouse’s right under a marital agreement. Spohr v. Berryman, 589 So. 2d 225 (Fla. 1991).  The consequence of failing to timely file a creditor claim for a spouse with rights under a marital agreement can be severe.  A spouse who fails to file can potentially lose all such rights under the agreement.

Litigation

Boilerplate

Most lawyers use standard forms for agreements, at least some of the time.  These standard forms are useful so that lawyers do not have to re-draft language that usually remains the same in every agreement.  Such language, often referred to as “boilerplate,” often controls the outcome of disputes over the meaning of an agreement, whether or not the language was specifically tailored for the circumstances of the parties.  A recent Florida appellate decision shows the importance of boilerplate language in a marital agreement in resolving an estate dispute with a surviving spouse, and how marital agreements can influence inheritance rights

In Northern Trust v Shaw (2nd DCA 2016), the surviving spouse, Shaw, sued the estate of her deceased husband for money promised to her under a prenuptial agreement.

The prenuptial agreement provided that Shaw was to receive $500,000 from Mr. Shaw’s estate, plus any testamentary gifts, plus any retirement and pension benefits for which Mrs. Shaw was named as a beneficiary, plus a life estate in any principal residence owned by Mr. Shaw.

Mrs. Shaw received an IRA worth $480,000 as a named beneficiary of the IRA (outside of the probate estate).  She received tangible personal property of about $100,000 from the estate, and $108,977 for her share of the life estate interest.

Mrs. Shaw sued the estate for $500,000, contending that the marital agreement entitled her to $500,000 plus any other benefits received. The trial court agreed with Mrs. Shaw and awarded her $500,000 from the estate.  In reversing, the appellate court parsed through the language of the marital agreement to determine that the $500,000 promised to Mrs. Shaw in the marital agreement had been satisfied via the IRA paid to her.

The language of the marital agreement read, in part, as follows:

12.a.  *** Future Wife shall receive from Future Husband the sum of $500,000.00 from the estate of Future Husband ***

12.b.  *** For purposes of this Agreement, estate is defined to include either party’s probate estate, any living trust created by the party, as well as life insurance, individual retirement accounts, qualified and nonqualified deferred compensation plans and other assets that may pass by beneficiary designation outside of will or trust documents***

***Neither party intends by this Agreement to limit or restrict the right to give or to receive a testamentary gift from the other. Either of the parties may elect to make a gift to the other by will without invalidating this paragraph and may thereafter change or eliminate the gift by a codicil or another will without in any way affecting the continued effectiveness of this Agreement.***

In interpreting the interplay of this language, the court reasoned as follows:

Because these assets have been distributed to Mrs. Shaw and they total more than $500,000, the terms of section 12(a) have been satisfied. Mrs. Shaw is therefore not entitled to a separate $500,000 distribution under section 12. Interpreting section 12 as Mrs. Shaw suggests would allow her to recover the $500,000 distribution from Mr. Shaw’s “estate” twice. She would receive $500,000 from the portion of the “estate” including the IRA and tangible personal property plus an additional $500,000 from the probate portion of the estate. This construction does not comport with the parties’ expressed intent.  Because Mrs. Shaw has received at least $500,000 from Mr. Shaw’s IRA and the items on Mr. Shaw’s tangible personal property list, she is not entitled to an additional $500,000 distribution from Mr. Shaw’s “estate” under the plain language of section 12.

Could better drafting of the marital agreement have eliminated this inheritance dispute?  If the spouses’ intent was to provide Mrs. Shaw a minimum distribution from all assets, whether probate or nonprobate assets, the language of the agreement could have simply said that “Mrs. Shaw is entitled to receive no less than $500,000 upon the death of Mr. Shaw, taking into account all property received upon the death of Mr. Shaw, including but not limited to bequests under will, bequests via any trust, pay on death designations and beneficiary designations.”

If their intent was to provide Mrs. Shaw a bequest of $500,000 from the probate estate, they should have limited the definition of the estate, contained in the boilerplate language of the agreement, to the probate estate.

When spouses are negotiating for death time benefits, in the absence of valuable items such as art or antiques, it would be unusual to include household property in computing the value of property received by the spouse.  Household furnishings and other personal property is typically given to the spouse above and apart from any monetary bequest contracted for under a marital agreement.  The court here counted against Mrs. Shaw the personal property that she received to deny the larger inheritance under the terms of the marital agreement.

Homestead

In the case of Friscia v. Friscia, Nora (Second Wife) is the surviving spouse of Vincent J. Friscia (Decedent), and the personal representative of Decedent’s estate.  Robin Friscia is Decedent’s former wife (Former Wife) and mother of Decedent’s two kids, Nicholas and Thomas.

Decedent and the Former Wife divorced in 2008.  As part of the divorce, the couple entered into a marital settlement agreement (“MSA”) which was incorporated into a final judgment.  The MSA provided for the division of the Florida homestead.  The MSA granted the Former Wife exclusive use and possession of the home until the parties’ youngest child graduated from high school.  At that point in time, the marital home was to be listed for sale and the proceeds divided equally (50/50) between the parties.  The Former Wife also got the option to buy out the Decedent’s interest in the home at any time until it was sold, for one-half (1/2) of fair market value.

Decedent died in 2011, while married to his Second Wife.  When Decedent died, his son Nicholas was still in high school, and both sons were living in the former marital home with Decedent’s Former Wife.  Decedent’s son Thomas asked the Florida probate court to determine the homestead status of the former marital home.  Thomas claimed that the former marital home was Decedent’s homestead, and that title to Decedent’s interest in the property inured to Decedent’s sons and to Nora, the Second Wife.

The court, over the Second Wife’s objection, determined that Decedent owned the marital home as a tenant in common with the Former Wife, and that Decedent’s ½ interest was entitled to homestead protection.  The court ruled that the Florida homestead exemption inured to the Second Wife as a life estate with a vested remainder in Decedent’s sons as lineal descendants.  The result of this ruling was that the Former Wife and the Second Wife each owned a one half interest in the former marital home as tenants in common, with the second wife having a life estate. Holders of life estates are generally entitled to live in the property for life, and when they die, the remaindermen get the property.  But, when the Second Wife attempted to gain entry to the property and “exercise her right in the life estate,” Decedent’s son refused the Second Wife entry and the police escorted her from the property. Why, if the Second Wife had a life estate in the property, did she not get to use it?  Because of the MSA between Decedent and the Former Wife.

Remember, the MSA granted the Former Wife exclusive use and possession of the home until the parties’ youngest child graduated from high school.  At that point in time, the marital home was to be listed for sale and the proceeds divided equally (50/50) between the parties.  The Former Wife also got the option to buy out the Husband’s interest in the home at any time until it was sold, for one-half (1/2) of fair market value.

The Divorce Did Not Transfer Decedent’s Florida Homestead Interest

First, the final judgment of dissolution between the Decedent and the Former Wife did not operate to transfer Decedent’s interest in the former marital home.  The Decedent’s interest in the home retained its homestead protection because the Decedent’s sons, whom the Decedent still supported financially, continued to live on the property.  The Florida Constitution does not require that the owner claiming homestead exemption reside on the property; it is sufficient for the owner’s family to reside on the property.

No Waiver of Decedent’s Florida Homestead Protection in the Divorce Agreement

Second, there was no waiver of Decedent’s homestead protection in the MSA.  The MSA contained “mutual release” provisions where the parties released each other from all claims or demands, but these releases waived any rights either had in the property of the other – not their homestead rights in their own property.  The MSA also directed that the former marital home be sold and the net proceeds divided when the youngest son graduated from high school.  The Florida appellate court noted that while a spouse can waive homestead rights in his own property by contracting to take action inconsistent with those rights (such as agreeing to sell the marital home and pay any outstanding judgments out of the husband’s share of the proceeds), the Decedent in this case did no such thing.

Finally, as to the Second Wife’s rights as a life tenant, the Florida homestead status afforded to the Decedent’s interest in the former marital home did not negate to terms agreed to in the MSA.  The MSA was binding on Decedent and his heirs.  If Decedent had lived, Former Wife would have been entitled to exclusive use and possession, and would have been required to sell the marital home and divide the proceeds unless the Former Wife exercised the option to buy out Decedent’s interest.  Unfortunately for the Second Wife, she has a life tenancy in decedent’s interest in name only.

Why Does the Second Wife Care if the Property is Homestead?

If the Second Wife had been successful in arguing that the former marital home was not Decedent’s homestead, the Second Wife could have possibly used the value of the former marital home to calculate her elective share, and also could have controlled the former marital home as an asset of the estate.  The Second Wife would still likely have been bound by the MSA.

Oral Argument at 5th District Court of Appeals

Florida Probate Attorney Jeffrey Skatoff Arguing in Court

Jeffrey Skatoff

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(561) 842-4868

jeffrey@skatoff.com

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