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Elective Share and Spousal RightsJeffrey S. GoetheBarnes Walker, Goethe, Hoonhout, Perron & Shea, PLLC3119 Manatee Avenue WestBradenton, Florida 34205(941-741-8224)[email protected]
Marriage
Other Jurisdictions
Divorce• Wills & Trusts• POA’s• IRA’s, POD,
Insurance
Separation
Domestic Partnership
Florida
Dissolution
Fraudulent Marriages
§ 732.805
Annulment
Waivers
Prenuptials
Post-nuptials
§ 732.702
Deeds?
437
1.a. Requirements Under Florida Law• § 741.04 – Application
• With premarital preparation course – effective immediately• Without premarital preparation course – 3 day delay• Male & Female (2018 FL SB 140)• Over 18, unless…. (2018 FL SB 140)
• § 741.01 – License issued by county judge or clerk• § 741.041 – License is valid for 60 days• § 741.07 – Ceremony by clergy, judge, clerk, notary• § 741.08 – Certificate of solemnization within 10 days & return
to clerk or county judge.
• Hall v. Maal, 32 So. 3d 682 (Fla. 1st DCA 2010)
1. b. Same Sex Marriages & Civil Unions
• Prohibition Against Same-Sex Marriages is unconstitutional.• Windsor v. U.S. - Estate Tax Return• Pedersen, et. al. v. Office of Personnel Management • O’Connor v. Tobits – ERISA• Obergefell v. Hodges – fundamental right to marry• Senate Bill 2017 – 1774 would have repealed §742.212• Senate Bill 2018 – 130 would have repealed §742.212
• A “Marriage” is still required, as opposed to a civil union.• Cohen v. Shushan, 212 So. 3d 1113 (Fla. 2d DCA 2017)
448
1. c. Divorce• Final Judgment
• Effect: • No surviving spouse• § 732.507(2) – Wills• 736.1105 – Trusts• § 732.703 – Life insurance, TOD, POD, & retirement plans• § 689.15 – TBE becomes TIC
1.d. Common Law Marriage• § 741.21 – Common law marriages void after 01/01/1968
• Pierre v. Trelles (In re Estate of Sterile), 902 So.2d 915 (Fla. 2nd
D.C.A. 2005) – Haiti
• American Airlines, Inc. v. Mejia, 766 So. 2d 305 (Fla. 4th D.C.A. 2000) - Columbia
1.e. Reputed Spouses• Cohen v. Shusan, 212 So. 3d 1113, (Fla. 2d DCA 2017)
• Israeli law requires a religious ceremony for a valid marriage
• Compliance with the civil requirements results in a “reputed spouse” relationship
• Florida law requires a marital relationship
1.f . Separation1.g. Annulment• Separation ≠ Divorce
• Kuehmsted v. Turnwall, 103 Fla. 1180, 138 So. 775 (Fla. 1932)• Void ab initio
1.h. Simultaneous Death Act§ 732.601 - Simultaneous Death LawUnless a contrary intention appears in the governing instrument:(1) Title to depends on priority of death(2) Designated beneficiaries take property of another
depending upon survivorship(3) Joint Tenants / Tenants by the entireties(4) Insured and beneficiary of life insurance policy
• NOTE: Family allowance for spouse and elective share rights end with surviving spouse’s death.
• Homestead, family allowance for dependents and exempt property do not.
444
1.i. Guardianship Statutes• Smith v. Smith, 224 So. 3d 740 (Fla. 2017) – if the right to
contract has been removed, court approval required.
• § 744.3725 – Guardian can seek dissolution of marriage
• Laws of Fla. 2017-16 – spouse’s consent no longer required
1.j. Fraudulent and Void Marriages• Section 732.805 - 2010• Marriage procured by fraud, duress or undue influence is not
entitled to: • Rights under the Probate Code (elective share, family allowance,
preference as PR; intestate rights; homestead; exempt property; pretermitted spouse;
• Bond, life insurance, or other contract, unless spouse is provided for by name;
• Will, trust, power of appointment, unless provided for by name;• Immunity from the presumption against undue influence by
spouse.
1.j. Fraudulent and Void Marriages• Unless
• decedent voluntarily resided with spouse “with full knowledge of the facts constituting the fraud, duress or undue influence; or
• Both spouses otherwise subsequently ratified the marriage.
• Spouse is treated as predeceased.
1.k. Slayer Statute• Section 732.802 – “all rights”• Section 736.1104• File v. Hoffman, 169 So. 3d 1274 (Fla. 4th DCA 2015)– children
and grandchildren of killer still inherit.
• §733.105; Rule 5.385- Petition to Determine Beneficiaries• §86.041 - Actions by executors, administrators, trustees, etc.
A. 2. Waiver of Marital Rights• Section 732.702
• Written• Two witnesses• “All rights”• Prenuptial – no disclosure; Postnuptial – disclosure• Counsel
• City Nat’l Bank of Fla. V. Tescher, 578 So. 2d 701, 703 (Fla. 1991)
• Deeds as homestead waivers:• Stone v. Stone, 157 So.3d 295, 304, (Fla. 4th DCA 2014)• Lyons v. Lyons, 155 So.3d 1179, 1181 (Fla. 4th DCA 2014)
732.2075 –Waiver of Homestead Rights(Senate Bill 2018 – CS 512)
• Section 1. Section 732.7025, Florida Statutes, is created to read:
• 732.7025 Waiver of homestead rights through deed.—
• (1) A spouse waives his or her rights as a surviving spouse with respect to the devise restrictions under s. 4(c), Art. X of the State Constitution if the following or substantially similar language is included in a deed: “By executing or joining this deed, I intend to waive homestead rights that would otherwise prevent my spouse from devising the homestead property described in this deed to someone other than me.”
732.2075 –Waiver of Homestead Rights(Senate Bill 2018 – CS 512)
• (2) The waiver language in subsection (1) may not be considered a waiver of the protection against the owner’s creditor claims during the owner’s lifetime and after death. Such language may not be considered a waiver of the restrictions against alienation by mortgage, sale, gift, or deed without the joinder of the owner’s spouse.
• Section 2. This act shall take effect July 1, 2018.
Validity of a Waiver• Don King Productions, Inc. v. Chavez, 717 So.2d 1094 (1998) A
statutory presumption is considered to be a rebuttable presumption.
• Estate of Roberts, 388 So. 2d 216, 217 (Fla. 1980) An irrebuttable or conclusive presumption would render the proposed statute unconstitutional. (addressing F.S. 732.702)
• Chames v. DeMayo, 972 So. 2d 850 (Fla. 2007) – A waiver of homestead rights is not purely personal.
• Chames v. DeMayo, 972 So. 2d at 861 (Fla. 2007). A waiver of a constitutional right “must be made knowingly, voluntarily, and intelligently.”
Surviving Spouse Rights
Intestate Share § 732.102
Elective Share § 732.201-732.2155
Pretermitted Share § 732.301
Homestead Art. X, s. 4 § 732.401
Exempt Property § 732.402
Family Allowance § 732.403
Appointment as PR § 733.301
B. 1. Intestate ShareSpouse’s Intestate Share
Before 10/1/11 On or After 10/1/11
(1) No surviving descendants of the
decedent.
100% 100%
(2) All of Decedent’s descendants are
also the only descendants of
surviving spouse.
The first $60,000, plus 50% of the
balance
100%
(3) At least one of the decedent’s
descendants is not a descendant of
the surviving spouse.
50% 50%
(4) At least one of the surviving
spouse’s descendants is not a
descendant of the surviving spouse
If all of decedent’s descendants were
also descendants of the spouse, the first
$60,000, plus 50% of the balance;
otherwise, 50%.
50%
B. 1. a. Spouse’s Intestate Share
• The Brady Bunch – 50%
• The Waltons - $60,000 + 50%
• The Goethes - 100%
• Homestead – Life Estate or 50%
B.1.b. Procedure• § 733.105 Determination of Beneficiaries
• Formal Notice• Probate Rules• In rem jurisdiction
• § 86.041 Actions by executors, administrators, trustees, etc.• Summons• Civil Rules • In personam jurisdiction
• Rule 5.385 Determination of Beneficiaries and Shares
B.2. Pretermitted Share
If Testator makes will
beforemarriage, then
Spouse receives
intestate share unless:
Spouse is provided for by• Prenuptial or
Postnuptial; or• Will; or• intentional
omission.
Pretermitted Share• Policy – protect against forgetful spouses• § 732.310
• Marriage after the will is executed• Intestate share• Exceptions:
• Waiver• Spouse is provided for• Will discloses and intent to exclude spouse
• Pour-over wills?• 100% to spouse?
Homestead, Exempt Property & Family Allowance
732.2105 Elective Share is in addition
to other rights
Until July 1, 2017
2017 Amendment
Homestead is part of the
elective estate
B.3. Homestead, Exempt Property & Family Allowance
HomesteadExcluded from
the Elective Estate (until
7/1/17)
Does not count toward
satisfaction (until 7/1/17)
Exempt from claims and admin. Exp.
Exempt Property
Excluded from the Elective
Estate
Does not count toward
satisfaction
Subject to Admin. Exp., but
not claims
Family Allowance
Included in the Elective Estate
Does not count toward
satisfaction Class 5 claim
TBE, JTWRSDecedent’s
share included in the Elective
Estate
Decedent’s share counts
toward satisfaction
Not subject to claims or admin.
Exp.
B. 4. Exempt Property § 732.402
RequirementsFlorida
resident Decedent
Spouse or children
Property Protected
Furniture $20,000
Two Motor Vehicles
Prepaid College
Section 119.1915 Benefits
477
Exempt Property § 732.402
Specific / Demonstrative
Devise
All my household
goods
No Restrictions
Priority All claims
Except perfected security interests
Exempt Property § 732.402• Rule 5.406. Proceedings to determine exempt property• Interested persons
• Beneficiaries• Creditors
• § 733.301 Disposition without administration• Rule 5.240• *Not exempt from administration expenses, which are not a
“claim.”
B.5. Other Rights –Family Allowance
Paid out of Elective Estate
Not counted toward
satisfaction
Up to $18,000
Class 5 claim
487
Rule 5.407§ 732.403
B.6. Community Property• 732.218 Rebuttable presumptions.• 732.219 Disposition upon death.• 732.221 Perfection of title of personal representative or
beneficiary. • 732.223 Perfection of title of surviving spouse.
490
B.7. The Elective Share:
Election
Entitlement
Elective Estate
Elective Share Amount
Satisfaction
492
7.a.i. Applicable Law –
Prior to 1/1/76•Dower and Curtesy
Between 1/1/76 and 9/30/2001
•Elective Share
After 10/1/01•New Elective Share
After 7/1/17•The New, New Elective Share
Applicable Law
Before 10/1/01
4 months to elect
30% of the ProbateEstate
After 10/1/01
6 months to elect
30% of the ElectiveEstate
After 7/1/17
6 months to elect, plus 40 days in
some cases
30% of the elective estate, including
protected homestead
Applicable Law§ 732.2155
Effective 10/1/99
Death on or after 10/1/01
Prior waivers
Elective share trusts
Irrevocable Contracts
Property in trust since 10/1/99
§ 732.2151 732.2151 - Fees and Costs• Actions commenced on or after
7/1/17
All other amendments – death after 7/1/2017
7.a.ii. Elective Share Terms
§ 732.2025
Direct Recipient
Elective Share Trust
Governing Instrument
Probate Estate
Personal Representative’s Duties
Fiduciary Duties
Interested Persons
Inform and Account
Conflict Rules
Section 90.5021
(FINALLY!)
Ethics Opinions
Probate Code
Entitlement• The surviving spouse of a Florida resident• Who has not waived his or her right to make the election• Who makes a timely election
Who May Make the Election
Surviving Spouse of a
Florida resident
With Court Approval: • Attorney in fact• Guardian of
Surviving Spouse
NOT:• The personal
representative of the surviving spouse
7.c. Making the Election
• Election - § 732.2135 – 6 months after service of NOA or 2 years • Extension – Request within 6 months after serve40 days after the
conclusion of proceedings that affect the spouse’s interests, but no more than 2 years.
• Guardian or attorney in fact must petition, then elect• Petition for authority to elect tolls time• Consideration of spouse’s reasonable life expectancy• No election by spouse’s estate
• Day 21 - PR serves notice of election – within 20 days• Day 41 - Objections due within 20 days of notice• Day 41 - Order Determining Entitlement• Day 101 - Elective Estate Inventory within 60 days• Day 131 - Petition to Determine Amount within 90 days• Day 151 - Order Determining Amount
180
201
242
281311331
The Elective Estate
What Counts? (§ 732.2035)
• Probate estate• Protected Homestead – after July 1, 2017• POD TOD ITF• Fractional interest in TBE and JTWRS• Revocable transfers• Retained right to principal or income• Retirement and pensions• Transfers within 1 year of death (except med/ed/annual
exclusion)• Property transferred in satisfaction of the Elective Share
The Elective Estate
What’s Excluded? (section 732.2045)
• Irrevocable transfers prior to 10/1/2000 (but elective share trusts count)
• Transfers for adequate consideration• Transfers with spouse’s consent • Proceeds of life insurance in excess of cash value• Court-ordered life insurance• Decedent’s ½ of community property• Qualifying special needs trusts• General Power of Appt. • Protected homestead (UNTIL 7/1/17)• Protected homestead with waiver & no devise to spouse (AFTER
7/1/17)
Valuation of Elective Estate Assets
§73
2.20
55
(1) Life insurance payable on death(2) Life insurance transferred within 1 year of death(3) Pension & retirement benefits(4) Other transfers within 1 year of death(5) All other property
Valu
atio
n (1) Net cash surrender value prior to death(2) Surrender value at time of transfer(3) Transfer tax value on date of death(4) FMV on date of transfer, less encumbrances(5) FMV on date of death, less claims, liens, mortgages, etc.
Valuation of Homestead After July 1 - 2017
§73
2.20
55(1
)(a) (1) Fee
Simple(2) Life Estate
(3) Waiver + GiftNot TBE or JTWRS
Valu
atio
n (1) Fair Market Value(2) 50% of FMV(3) FMV on DOD* Net Value.
Lot 1, Block 2, SUNNY ACRES SUBDIVISION…. 100.00% $1,000,000
.00
$1,000,000.00
TOTAL VALUE OF F.S. 732.2035(2) PROPERTY: $1,000,000.00
Description
Decedent’s
Fractional
Interest
Total
Value of
Asset
Date of Death
Value for
Decedent’s Share
Lot 1, Block 2, SUNNY ACRES SUBDIVISION…. 100.00% $1,000,0
00.00
$1,000,000.00TOTAL VALUE OF F.S. 732.2035(2) PROPERTY: $1,000,000.00
United Engineers Association Savings Account POD to Peter
Brady
100.00% $1,000,000.
00
$1,000,000.00
TOTAL VALUE OF F.S. 732.2035(3) PROPERTY: $1,000,000.00
The Elective Estate
Overlapping Application §732.20235(2)
§ 732.2035(2) (TOD/POD/ITF) is moved up to 732.2035(1)
(probate) if it could be included in both.
Tie goes to the spouse
Total Value of the
Elective Estate
Minus All Valid
Claims*
Minus Mortgages,
Liens, or Security Interests
X 30% =Elective Share
Amount
513
*Administration expenses are not claims
• Blackburn v. Boulis, 184 So.3d 365 (Fla. 4th DCA 2016)• Claims reduce the elective estate. • Estate Tax Appointment under § 733.817 applies• Attorneys fees do not. • Spouse received interest for delay in satisfaction
Satisfaction of the Elective Share
§ 732.2075 - Sources of payment & abatement
The spouse is first credited for what he or she received under the will, trust, TOD, TBE, JTWRS, HOMESTEAD, etc.
For the UNSATISFIED BALANCE, § 732.2075 – class priority
Apportionment within classes
Assets received by the spouse outside the elective estate don’t count toward satisfaction.
Comparable to creditor claims
Unsatisfied Balance
Class 1• Probate & Rev. Trust
Class 2• IRA/401K/POD/ITF/Survivorship (732.2035(2))• TBE / JTWRS (732.2035(3))• Insurance Cash Surrender Value (732.2035(6)
Class 3• All other interests other than protected charitable
interests
Class 4• Protected charitable interests, but only to the extent
charitable deduction is not jeopardized.
• Life insurance payable to spouse (policy not owned by spouse)
• Decedent’s ½ of community property• Special needs trust for spouse• Elective share trust• Property that would have satisfied
elective share but is disclaimed• Homestead passing to spouse
(7/1/17)
Assets Passing
to Spouse
The Surviving Spouse’s Elective Share
• Contribution by direct recipients: 732.2085• Probate is an in rem proceeding• Separate civil action is probably needed to force contribution
of non-probate assets• PR may be relieved of duty to compel contribution• Spouse may pursue contribution• Interest can be awarded if not paid within 2 years of DOD.
524S
The Surviving Spouse’s Elective Share
• Protection of Payors and Third Parties• 732.2115• Third parties may rely upon the governing instrument• Fund Title Notes / Probate Code
Should the Spouse Make the Election?
• Withdrawal of the Election• The earlier of Eight months from death or• Order of Contribution
• Extension of Time – Later of • 6 months from service of Notice of Administration or 2 years
from date of death if no service• 40 days after conclusion of proceedings
• 2009 Law:• Court may assess fees upon finding of bad faith• Encourages spouse to withdraw election• Does not punish spouse for making election
Should the Spouse Make the Election?
• 2016 Legislation • The election is a “floor”, not a “cap.”• The spouse is not treated as predeceased.
• 2017 Legislation• Fees assessed only when election is made in bad faith.
Discovery• Depositions• Interrogatories• Request for Production
• Party• Nonparty
• Request for Admissions
Forms• Notice of Administration• Election• Notice of Election • Proof of Service of Election• Order Determining Entitlement• Elective Share Inventory• Petition to Determine Amount
Other Rights –DSUEA
Expires 12/31/12 Requires “timely-filed 706”
Benefits surviving spouse’s estate
Who pays for 706?
Portability
Other Rights• Ad Valorem Property Taxes• § 225.15 – Final Paychecks• § 768.21 – Wrongful death claims• § 440.16 – Death benefits under Workers Comp
Law• § 295.01 – Education for Veterans’ children• § 112.19 – Surviving spouses of law enforcement
& corrections officers
Other Rights• § 112.191 – Surviving spouses firefighters• § 736.0503 - Exceptions to spendthrift
provision• § 319.28 – Motor vehicle & mobile home titles• § 735.302 – Income tax refunds• § 408.051 - Access to Electronic Health Records• § 742.17 - Genetic Material