In Finlaw v. Finlaw, the Florida Second District Court of Appeal interpreted a partnership agreement under principles of Florida and Ohio contract law to determine that the terms of the agreement controlled over the decedent’s will.
The Facts of Finlaw v. Finlaw
In 1986, the decedent, Twila Finlaw, along with her husband and another couple, the Palmers, entered into a partnership agreement creating an Ohio partnership called Palmer-Finlaw Associates. Among other provisions, the partnership agreement provided that:
Each partner, who shall ultimately become a
surviving spouse, further agrees to have prepared and
execute a last will and testament so as to vest his or her
interest in this Partnership in his or her children (lineal
descendants). Should any partner neglect or fail to execute
such last will and testament, so as to ultimately cause his or
her partnership interest to pass to and vest in an individual,
who is not a spouse or lineal descendant of these partners,
then upon such event, the Partnership shall be liquidated
and dissolved forthwith.
Over the next several decades, the original partners began to die. Decedent inherited her husband’s interest in the partnership. The Palmers’ interests passed to their son.
In 2014, decedent executed a will that named her grandson, Jeffrey S. Finlaw as personal representative of her estate and devised the remainder of her estate to him. The will did not specifically address the partnership, but the decedent’s estate planning attorney testified that her intent was to gift it to her grandson through the will and preserve the family character of the partnership.
Decedent’s son, Roger S. Finlaw, filed a statement of claim in her estate. Roger asserted an interest in the partnership due to the decedent’s failure to execute her will in conformity with the provision in the partnership agreement providing that the interest in the partnership must vest in his or her children. The grandson objected, and the son filed a declaratory judgment action asking the court to construe the partnership agreement and determine that he was the sole beneficiary of decedent’s interest in the partnership.
The Florida trial court entered judgment in favor of Roger, the son, finding that the partnership agreement required the partners to execute wills vesting their partnership interests in their spouses or children who are lineal descendants, not grandchildren, and controlled over the terms of decedent’s will.
Breach of Partnership Agreement Litigated As a Creditor Claim
While this dispute involved the terms of decedent’s will, the real argument was whether or not the will violated the terms of the partnership agreement, and which one controlled.
This action proceeded as an independent action outside of probate court, after the son filed his statement of claim and the grandson objected to it. Read The Complete Guide To Florida Creditor Claims.
Partnership Agreement Controls the Ultimate Outcome, Not the Will
The parties agreed that Ohio law governed the interpretation and effect of the partnership agreement, but that Florida and Ohio law are substantially similar in this regard.
Under both Ohio and Florida law, contracts trump wills. Even though the argument was made that the will was the last expression of decedent’s intent, it went against the agreement she had made in the partnership agreement. The Florida appellate court stated:
Under both Ohio and Florida law, where contracting parties expressly
agree on the disposition of property upon death, that agreement generally controls over
a testamentary disposition of the property. See Barnecut v. Barnecut, 209 N.E.2d 609,
612-13 (Ohio Ct. App. 1964) (holding that where a partnership agreement called for the
settlement of a partnership interest, the interest did not become a part of the decedent’s
estate); Blechman v. Est. of Blechman, 160 So. 3d 152, 159 (Fla. 4th DCA 2015)
(observing “the general principle that express language in a contractual agreement ‘specifically addressing the disposition of [property] upon death’ will defeat a
testamentary disposition of said property”) (alteration in original) (quoting Murray Van &
Storage, Inc. v. Murray, 364 So. 2d 68, 68 (Fla. 4th DCA 1978))); see also Swanda v.
Paramount Com. Real Est. Invs., No. C-030425, 2004 WL 1124587, at *2 (Ohio Ct.
App. May 21, 2004) (holding partner’s attempt to transfer partnership share by will
ineffective where transfer was contrary to partnership agreement).
Thus, having agreed in the partnership agreement to devise the
partnership interest only to her children who are lineal descendants, the decedent’s
subsequent devise to her grandson instead was contrary to the terms of the agreement.
The trial court did not err in so concluding.
