Probate Section Report
by
Larry E. Ciesla

The probate section held its regular monthly meeting on September 9, 2009.

Judy Paul began the meeting with a discussion regarding procedures being utilized by the probate courts in Miami-Dade County for summary administration and determination of homestead status of real property. In Judy’s case, the court refused to enter routine orders admitting will to probate and summary administration combined with determination of homestead status of real property (the from promulgated by the members of the probate section and commonly utilized in this circuit).

In lieu of receiving her requested orders, Judy was advised of the following requirements of the probate division: 1) Proof that the funeral bill has been paid 2) An affidavit by a disinterested person attesting to facts establishing homestead status of real property 3) Separate affidavit to be signed by petitioner acknowledging personal liability for payment of valid creditor claims up to the value of the assets received 4) The order of summary administration cannot contain provisions for determination of homestead; a separate order is necessary 5) The order admitting will to probate will not be entered without a consent by the non-petitioning beneficiary 6) Notice to creditors must be published and proof thereof filed with the court in cases involving real property; no order for summary administration or determination of homestead will be entered until after expiration of the creditor claims period.

In the ensuing discussion, it was decided that 1) It is fortunate that we do not live or practice in Miami-Dade County 2) Despite the fact that the probate code does not contain a requirement for any of the 6 items set forth above (and the optional provision for publication of notice to creditors in summary administration cases has been deleted from the probate code), this situation is governed by what we sometimes refer to as “The Golden Rule”, which states as follows: The one with the gold makes the rule. The conclusion being that if you want the probate court in Miami-Dade County to enter your requested orders, you will follow the rules as established by the probate court in Miami-Dade County. It was suggested to Judy that she may want to consult with or retain co-counsel who lives in that jurisdiction, which is always a good idea when handling any type of case in a jurisdiction outside of your regular practice area.

Janie Hendricks raised an issue regarding an estate situation where the only asset is real property having an estimated fair market value and a mortgage balance of approximately the same amount. She expressed frustration in dealing with the mortgage holder in its failure to cooperate for acceptance of a deed in lieu of foreclosure. Your author stated he had a similar situation recently and he simply mailed the house keys to the lender with a note indicating that no further mortgage payments would be forthcoming and if they had any interest in avoiding the cost of a foreclosure action, the client would be happy to consider executing a deed in lieu of foreclosure. Another suggestion was made that since the property was a condominium unit, it may be possible to quit-claim the unit to the condo association, as it may have some interest in acquiring title so as to attempt to collect its condo fees by a subsequent sale of the unit. It was also suggested that the client could execute a quit-claim in favor of the mortgage holder; record it; and mail it to the mortgage holder. This idea was not looked upon with favor, as it was considered to be too close to the line of what could be considered unprofessional or unethical to put title to real property in another party’s name without their knowledge or consent.

The probate section welcomed a new member, Connie Brown, who has been serving as a trust officer for Wachovia Bank (and its predecessors) in Gainesville for many years. During the July probate section meeting Connie outlined several matters regarding the current state of Wachovia’s trust department. For the next two years, Wachovia will continue using the same name (Wachovia Bank, N.A.). It will operate as a wholly owned subsidiary of Wells Fargo. Wachovia’s current annual fee schedule for acting as trustee or as investment advisor for a revocable trust is 1% of the market value of the first one million dollars; .6% on the next three million dollars; and .4% on anything over five million dollars. There is an additional fee of .3% of the value of all real property owned by the trust. For irrevocable trusts, the annual fee schedule is 1.5% of the first three million dollars; 1% on the next two million dollars; and .7% on anything over 5 million dollars. Additional fees are charged for preparation of tax returns and for buying and selling securities.

Wachovia currently has a general minimum account size of $500,000.00, however, they do occasionally accept smaller accounts. To accept an account, Wachovia requires the trust agreement to specify that the trustee shall be paid in accord with its published fee schedule; it will not agree to accept a trust with a clause providing for payment to the trustee of a “reasonable fee”. Wachovia typically also requires a clause allowing it to resign at any time, and will not take on the responsibility of selecting the successor trustee. Wachovia generally believes that active fund managers can outperform the overall market and hence they do not generally use index funds. They negotiate with active fund managers for annual management fees which are heavily discounted from the standard annual fee charged ton retail investors. Wachovia strives to attain diversification among asset classes. Connie will be happy to discuss any of these matters in further detail with anyone who is interested in considering the possibility of choosing Wachovia to serve as a trustee or an investment advisor. She can be reached at 335-3413 or connie.brown@wachovia.com.

A final matter was raised during the July meeting by Peter Ward, who led a discussion regarding use of the “convenience account” for estate planning clients. These accounts are governed by section 665.80, Florida Statutes. Peter explained that the primary reason he likes to use these accounts is that FS 665.80(1) specifically provides that the designation by the account owner of the authority of the convenience agent to make deposits and withdrawals to the account survives the incapacity or death of the account owner. The net effect of which is that the convenience agent is legally authorized to continue writing checks to pay bills following initiation of incapacity proceedings and following death of the account owner. Peter likes this as a solution to the problem that if the account owner executes a power of attorney in lieu of establishing a convenience account, the use of a power of attorney is suspended upon the filing of a petition for determination of capacity and terminated upon a finding of incapacity; also the right to use a power of attorney terminates upon the death of the principal. The use of a convenience account also carries with it one additional benefit. When properly established, the statute clearly provides that the money in the account never passes from the account owner to the convenience agent.

This is in contrast to the situation with so-called “joint accounts”, whereby ownership of the funds is generally held to pass to the surviving joint owner upon the death of the original account owner. The main problem with this type of account is that in many cases disputes arise, leading to litigation, over the issue of whether or not the funds in the account should rightfully pass to the survivor. This issue is usually said to be a question of the intent of the original account owner, which, in some cases, is less than clear, as where none of the little boxes on the bank’s new account form are checked, making it difficult to determine if a true joint account with rights of survivorship was intended. As was pointed out in last month’s probate section article, the RPPTL Section is in the process of drafting a proposed bill which could impose upon a personal representative a duty to institute litigation against a surviving joint account holder in some cases. Use of the statutory convenience account is one way to avoid such post-death disputes.

The probate section continues to meet on the second Wednesday of each month at 4:30p.m. in the fourth floor meeting room in the civil courthouse. All interested practitioners are welcome to attend. If you would like to join the mailing list for notices of the monthly meetings, you may do so by sending an email to lciesla@larryciesla-law.com.

 
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