The comprehensive guide to probate, trusts, estate planning, and inheritance litigation.

When Is The Personal Financial Information Of A Beneficiary Discoverable In Florida?

The personal financial information of a beneficiary in Florida is only discoverable if it is relevant to the issues as framed by the pleadings.  In Katz v. Riemer, the Florida Third District Court of Appeal dismissed a petition for certiorari review of the trial court’s denial of a law firm’s motion to compel financial disclosures from beneficiaries.

The Facts Of Katz v. Riemer

This case involved a post-nuptial agreement and a Florida estate.  The beneficiaries’ mother and stepfather executed a post-nuptial agreement.  The agreement entitled the beneficiaries to inherit 30% of their stepfather’s net estate upon his death.   The agreement states:

4.  Notwithstanding any other provision of this agreement, [stepfather] agrees that he will make the following provisions if the parties are married at the time of the death of the first of them to die:

. . . .

(b) [Stepfather] will provide for the disposition of his assets so that, after the death of both parties, at least 30% of his Net Estate . . . will pass to or in trust for [mother’s] descendants, provided that if [mother] survives [stepfather] there will be no distribution to her descendants until after her death.

However, the agreement also provided that:

3.  Except as provided in this agreement, each party shall retain sole ownership, control, and enjoyment of his or her property, and he or she may buy, sell, give, devise, use, consume, encumber, create a security interest in or otherwise dispose of or deal with such property at any time and in any manner free from any and all claims and rights of the other party as if no marriage had been consummated.

. . . .

6.  Unless specifically otherwise stated, the word “property” . . . shall mean all earnings and property, of every kind, that a party to this agreement now owns or acquires in any manner at any time in the future.

The beneficiaries’ mother died in 2006.  Despite surviving the beneficiaries’ mother (and being obligated under the agreement to provide for the disposition of 30% of his Net Estate to pass to the beneficiaries) the stepfather engaged in a series of actions – with the purported advice of the attorneys – that diverted or effectively depleted his assets, transferring them to his natural children instead.  When the stepfather died, his net estate had no substantial assets, whereas before the assets had been in the millions of dollars.

The beneficiaries sued the attorneys for malpractice, aiding and abetting breach of fiduciary duties, tortious interference with an expectancy of inheritance, and undue influence. The attorneys, in turn, sought the beneficiaries’ financial disclosure of the funds that they had inherited from their mother’s estate, alleging that this would allow them to raise the legal defense that the agreement’s purpose of ensuring the beneficiaries’ financial health had already been accomplished, rendering the defeat of the 30% gift nugatory. The trial court denied the discovery, finding the beneficiaries’ finances irrelevant to their entitlement to the agreement’s gift.

Financial Information Of A Beneficiary Must Be Relevant To The Issues As Framed By The Pleadings

In order to obtain financial information from a beneficiary, or any party, the information sought must be relevant to the issues as framed by the pleadings.  To be “framed” by the pleadings, an issue attacked by an affirmative defense must be either “alleged” or “referenced” in the complaint itself.

In the complaint, the allegations about the parties’ intent in making the agreement did not reference any intent outside of the text of the post-nuptial agreement.  Therefore, the complaint takes issue with the agreement’s gift of 30% of the stepfather’s net estate, the stepfather’s actions to defeat the agreement, and the attorney’s alleged participation in those actions.  As stated by the appeals court:

The beneficiaries’ inheritance from their mother and their present economic health are not issues framed by the complaint. “In the absence of allegations of this nature,” the attorneys here “cannot establish” that the beneficiaries’ “personal financial information is relevant to the issues framed by the pleadings.”

Often times, in estate planning documents, the document itself will reference a beneficiary’s “other assets” or financial health as a required consideration before distributions can be made.  Arguably, if the post-nuptial in this Florida case had referenced that the beneficiaries’ other assets should be considered before making the gift, then the financial information of the beneficiaries might be relevant.

When Does The Denial of Discovery “Eviscerate” A Defense Under Florida Law?

When discovery is denied, an appellate court will grant relief only where the requested discovery “is relevant or is reasonably calculated to lead to the discovery of admissible evidence and the order denying that discovery effectively eviscerates a party’s claim, defense, or counterclaim.” To determine whether a defense has been “eviscerated,” courts must:

  • Look at the legal elements of the petitioner’s defenses;
  • Compare the legal elements with the discovery the trial court has granted;
  • Review the Complaint; and
  • Determine whether the discovery sought is relevant to the issues as framed by the pleadings.

Here, the appeals court determined that the attorneys’ legal defenses were not eviscerated by the discovery ruling.  Since all of the causes of action related to whether the beneficiaries were entitled to 30% of their stepfather’s net estate, and whether they actually received it, all of the duties and breaches attributed to the attorneys ultimately arise and are with reference to the face of the agreement.

Nothing in the elements of the claims bears any relation to the beneficiaries’ present economic status.  Therefore, the financial information of the beneficiaries was not relevant for this Florida action.

Complete Guide to Florida Probate

Sign up with Probate Stars to receive the latest probate news and information about lawyer sign ups.