Florida Appellate Court: Surviving Spouse Had Standing To Challenge Payment Of Expenses Even Though She Had Received Full Distribution From Estate

In Duff Esformes v. Mukamal, a November 24, 2021 opinion from the Florida Third District Court of Appeal, the Court determined that a surviving spouse had standing to object to the payment of expenses from the Estate even though she had received her full distribution from the Estate.  The surviving spouse was the beneficiary of the Decedent’s Trust, and the co-trustees were the co-personal representatives of the Estate, making the surviving spouse a beneficiary of the Estate by virtue of her interest in the Trust.

The Facts Of Duff-Esformes v. Mukamal

Elizabeth Duff-Esformes is the surviving spouse of decedent, Nathan Esformes.  The beneficiaries of Decedent’s estate were Decedent’s wife, and the Nathan J. Esformes Living Trust (the “Trust”).

Barry Mukamal and David Appel were the co-personal representative of the Estate and the co-trustees of the Trust.  The sole residuary beneficiary of the Estate was the Trust, of which the surviving spouse was the lifetime income beneficiary.

In January 2020, the Florida probate court entered an agreed order of final distribution.   The order of final distribution directed the distribution of all remaining Estate assets “except for the sum of Fifty Thousand Dollars ($50,000.00)” which was to be held as a reserve to pay additional estate administration expenses of the personal representatives, including legal and other professional fees.

After the distribution, the personal representatives filed a petition to pay additional administration expenses from the reserve amount. The surviving spouse filed objections based on the reasonableness of the charges.

The Florida probate court struck the surviving spouse’s objections finding that she lacked standing to object to the payment of Estate administration expenses because she had already received her complete distribution from the Estate. The court then entered an order granting the personal representatives’ petition, ordering the bank to pay over $100,000 to the co-trustees and in attorney’s fees.

The surviving spouse appealed.

The appellate court relied on the axiomatic principle “that all parts of a statute must be read together in order to achieve a consistent whole” to determine that the surviving spouse had standing to object to the payment of Florida Estate administration expenses as an interested person.

Who Has Standing To Object To a Fee Request In Florida Probate?

Section 733.6171(5) of the Florida Probate Code, which governs the compensation of attorneys for the personal representative, confers standing to object to a fee request upon an “interested person,” providing:

Upon petition of any interested person, the court may increase or decrease the compensation for ordinary services of the attorney or award compensation for extraordinary services if the facts and circumstances of the particular administration warrant. In determining reasonable compensation, the court shall consider all of the following factors, giving weight to each as it determines to be appropriate . . .

Interested Persons Under the Florida Probate Code

“Interested person” is defined in the Florida Probate Code as:

any person who may reasonably be expected to be affected by the outcome of the particular proceeding involved. In any proceeding affecting the estate or the rights of a beneficiary in the estate, the personal representative of the estate shall be deemed to be an interested person. In any proceeding affecting the expenses of the administration and obligations of a decedent’s estate, or any claims described in s. 733.702(1), the trustee of a trust described in s. 733.707(3) is an interested person in the administration of the grantor’s estate. The term does not include a beneficiary who has received complete distribution. . . .

§ 731.201(23), Fla. Stat. (2021).

Here, the surviving spouse was the lifetime income beneficiary of the Trust.  The Court stated:

By virtue of her status as lifetime income beneficiary of the residuary Trust, Duff-Esformes is “expected to be affected by the outcome” of the fee petition. Every dollar the co-personal representatives expend from the administration of the Estate will reduce her resultant income from the residuary Trust. As such, Duff-Esformes qualifies as an “interested person” under section 731.201(23) with standing to contest the petitioned increase in compensation.

Surviving Spouse Had Standing To Object Because Of Her Interest Under the Trust

Although the term “interested person” does not include a beneficiary who has received a complete distribution, and it was undisputed that the surviving spouse received her complete distribution, the statutory definition of the term “beneficiary” dictated that she be regarded as a beneficiary of the Estate:

“Beneficiary” means heir at law in an intestate estate and devisee in a testate estate. The term “beneficiary” does not apply to an heir at law or a devisee after that person’s interest in the estate has been satisfied. In the case of a devise to an existing trust or trustee, or to a trust or trustee described by will, the trustee is a beneficiary of the estate. Except as otherwise provided in this subsection, the beneficiary of the trust is not a beneficiary of the estate of which that trust or the trustee of that trust is a beneficiary. However, if each trustee is also a personal representative of the estate, each qualified beneficiary of the trust as defined in s. 736.01032 shall be regarded as a beneficiary of the estate. 731.201(2), Fla. Stat. (2021) … Importantly, the statute carves out an exception for persons to be regarded as beneficiaries in circumstances where “each trustee is also a personal representative of the estate.” In the instant case, both co-personal representatives, Mukamal and Appel, are also co-trustees of the Trust. As such, Duff-Esformes, as a qualified beneficiary of the Trust entitled to lifetime distributions, must be “regarded as a beneficiary” of the Estate even though her interest in the Estate has been satisfied.

Therefore, based upon the plain language of the Florida Probate Code, the surviving spouse had standing to object to the payment of the additional administration expenses from the Estate.  Even though she had received her distribution from the Estate, her status as the beneficiary of the Trust, and the co-trustees’ statuses as co-personal representatives of the Estate, made the surviving spouse an interested person despite having received her full distribution from the Estate.

 

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