FLORIDA TRUSTEE’S INVOLVEMENT IN FLORIDA DIVORCE SUBJECTS TRUSTEE TO JURISDICTION OF FLORIDA COURT
This is a recent Florida trust case involving a wealthy Florida man who got divorced from his spouse, and the former wife’s attempt to have her alimony paid from the wealthy man’s Florida trusts. This case deals specifically with whether a Florida court has personal jurisdiction over a Florida trustee and is a “sister” or companion case to a Florida appeals court opinion involving the same parties and issues.
The companion case deals with whether an ex-wife, or former spouse, may receive, or take money from, a discretionary Florida family trust of one’s former spouse, to satisfy a court order of child support or alimony. In other words, the companion case dealt with whether an ex wife can get money from her ex-husband’s Florida trust to satisfy court ordered alimony. If you are interested in reading the full opinion of this case, or the companion case, please email Michelle@pankauskilawfirm.com. Yesterday, I provided commentary about the companion case, and the Florida trust law regarding creditors, and the ability of a creditor to get money from a Florida discretionary trust. Specifically yesterday’s commentary of Florida trust law dealt with a specific Florida trust law that permits Florida trust funds, in some circumstances, to be used to pay alimony or child support pursuant to a court order.
This present or different case involved a wealthy Florida resident who got divorced, entered into a marital settlement agreement and then stopped paying alimony. This case, and the companion case, really, dealt with the husband’s attempt to thwart his ex-wife’s ability to get Florida trust funds. He was the beneficiary of some discretionary Florida trusts, some irrevocable Florida trusts. The husband did not want those Florida trust funds to be used to pay alimony to his ex-wife. The Florida divorce judge had other ideas.
A well-known Florida bank was serving as Florida trustee, and was replaced as trustee, of the discretionary Florida trust. The new trustee, or the successor Florida trustee, was a Florida lawyer. This new Florida trustee objected to the jurisdiction of the Florida court. This new opinion of the Florida appeals court stated emphatically that the Florida trial court had jurisdiction over the new, successor Florida trustee.
Here are the facts: the ex-wife was trying to garnish trust assets, and to obtain trust money to get her alimony paid, which was $16,000 a month in permanent alimony. The husband stopped paying alimony, so the ex-wife filed a motion, including a motion to enforce the marital settlement agreement, and a motion for contempt. Evidently, there were a number of court filed documents before the Florida court and a number of court hearings in Collier County, Florida. Here’s what the Florida appellate court said about the husband’s efforts to avoid paying alimony “Although a wealthy man, [ husband ] undertook an inordinate amount of legal maneuvering to avoid his support obligation to [ ex wife ] . To thwart [ her ] attempts to enforce his support obligation, he appointed his attorneys, including [ name of attorney ] , as trustees to the [ ] Discretionary Trusts and discreetly transferred his residential property, worth $1,386,000, into a previously undisclosed trust, the [ ] Irrevocable Life Insurance Trust, of which he was the sole beneficiary. Attorney [ ] enlisted the assistance of his longtime friend, [ ] , to prepare the deeds and set up the new trust.”
Does this paint a picture of a wealthy Florida husband trying to use the Florida legal process, Florida civil procedure, and Florida trust law, and Florida trusts, to thwart, or to avoid complying with, a court order from a Florida judge? I presume that the marital settlement agreement was approved by the Florida judge and reflected in a Florida court order. Do you think the Florida judge was upset that his or her order was not being complied with, and that the alimony was not being paid?
Is thwarting a known creditor, actually, more than a known creditor, thwarting court required alimony payments, with the use of a Florida discretionary trust, acceptable? As I said in yesterday’s commentary, there is a specific Florida statute which deals with the rights of a former spouse or even a child to pierce a Florida trust to be paid alimony or child support. The Florida trust code, by that trust law, supports Florida’s public policy of permitting Florida discretionary trusts to satisfy support obligations and alimony. This case, but more so the companion case which I wrote about yesterday, support the proposition that, at least in Florida, you cannot place assets into a trust, or be the beneficiary of an existing trust, and not pay your child support or alimony.
Back to the present case : after some legal wrangling, court hearings, and more documents filed with the Florida court, the new, successor trustee of the Florida trust claimed that the court did not have personal jurisdiction over him as trustee. The trustee lost this argument on appeal. The appellate court noted that the Florida court did have personal jurisdiction over the attorney as successor trustee. Here’s what the Florida appeals court said “Equity will not countenance such an argument that elevates form over substance. [ Successor trustee ] voluntarily submitted himself to the jurisdiction of the family law court when he was appointed as the special trustee of the [ ] Discretionary Trusts, filed motions seeking relief in family court, and voluntarily appeared as the trustee at the November hearing in family court. The general rule in Florida is that a trustee is an indispensable party in all proceedings affecting the estate. In re Estate of Stisser, 932 So.2d 400, 401 (Fla. 2d DCA 2006). In order to exercise personal jurisdiction over the trustee or the trust, either service of process must be made on the trustee or the trustee must voluntarily submit to the court’s jurisdiction. See Beekhuis v. Morris, 89 So.3d 1114, 1116 (Fla. 4th DCA 2012); see also Grand Couloir Corp. v. Consol. Bank, N.A., 596 So.2d 697, 699 (Fla. 2d DCA 1992).
This discussion of personal jurisdiction over a Florida trustee is important for two reasons . First, too many Florida probate lawyers argue for equity, asking a judge to give them “fairness” and to do what’s right. The equity argument, as any Florida trust law judge knows, can only go so far. While it’s true that probate courts in Florida, including Collier County, Florida, are courts of equity, and while it is true that Florida judges have broad discretion and great authority, power, to do what’s right, everybody still needs to follow the law. In this case, it looks like the Florida judge said, in essence, “I’m going to look at the substance of what has occurred and not just look at the legal argument.” My guess is that the Florida judge did not like what he or she saw . Secondly, a Florida trustee, or anyone involved in trust litigation in Florida, cannot simply come into a Florida court, ask for relief, participate in the Florida legal proceedings, and believe they are not subject to jurisdiction of the Florida court. If you consent to the Florida jurisdiction on a Monday, and you ask for relief, or help from the Florida court, then, you cannot, on a Tuesday, claim that you shouldn’t be before the court, or that the court lacks jurisdiction over you.
To object to personal jurisdiction by a Florida court over you as Florida trustee, in certain instances, you can appear limitedly, very limitedly, but you cannot seek relief. One example of this is when a trustee is sued in a state, and the trustee believes that that state’s courts do not have jurisdiction over the trustee. In that instance, you can file a motion to dismiss based on lack of personal jurisdiction. But your lawyer’s appearance needs to be limited, and you need to specifically state this to the court in your court filed documents, and you also should not seek any relief. When a party to a trust lawsuit or any civil, Florida, lawsuit, seeks relief or seeks the help of the Florida court, you then are generally prohibited from arguing that the court did not have jurisdiction over. Of course, the party, including trustees, and trust beneficiaries, can be forced to participate in a Florida legal proceeding, or a Florida trust lawsuit, if they consent to the jurisdiction of the court. Note, that the discussion today is about personal jurisdiction over a Florida trustee. This is a different discussion than subject matter jurisdiction, and whether a Florida court has the ability to hear a case about a trust or trustee or a trust beneficiary. Subject matter jurisdiction is different than personal jurisdiction, although very closely related, specifically regarding Florida trusts.
In 2013, the Florida legislature enacted a new statute under the Florida trust code that deals specifically with the personal jurisdiction of Florida trustees, and also the jurisdiction of a Florida court over third parties who may render services to the Florida trustee or a Florida trust. I’m cutting and pasting this new Florida trust statute below in case you want to read it right now.
Florida Trust Code
Florida Statutes Section 736.0202 Jurisdiction over trustee and beneficiary.
(1) IN REM JURISDICTION.-Any beneficiary of a trust having its principal place of administration in this state is subject to the jurisdiction of the courts of this state to the extent of the beneficiary’s interest in the trust.
(2) PERSONAL JURISDICTION.-
(a) Any trustee, trust beneficiary, or other person, whether or not a citizen or resident of this state, who personally or through an agent does any of the following acts related to a trust, submits to the jurisdiction of the courts of this state involving that trust:
1. Accepts trusteeship of a trust having its principal place of administration in this state at the time of acceptance.
2. Moves the principal place of administration of a trust to this state.
3. Serves as trustee of a trust created by a settlor who was a resident of this state at the time of creation of the trust or serves as trustee of a trust having its principal place of administration in this state.
4. Accepts or exercises a delegation of powers or duties from the trustee of a trust having its principal place of administration in this state.
5. Commits a breach of trust in this state, or commits a breach of trust with respect to a trust having its principal place of administration in this state at the time of the breach.
6. Accepts compensation from a trust having its principal place of administration in this state.
7. Performs any act or service for a trust having its principal place of administration in this state.
8. Accepts a distribution from a trust having its principal place of administration in this state with respect to any matter involving the distribution.
(b) A court of this state may exercise personal jurisdiction over a trustee, trust beneficiary, or other person, whether found within or outside the state, to the maximum extent permitted by the State Constitution or the Federal Constitution.