COMMUNITY PROPERTY…Helping a Client who Moves From a Community Property State Is Not as Easy as You Think…
Moving from a Community Property State to Florida…Be Sure to Review Your Estate Planning Documents…
Community Property is a concept which Floridians are not well acquainted. There are 9 community property states. The concept of community property is that, during a marriage, even if property is titled in an individual name, the spouse has a 50% interest to such property. Although Florida is not a community property state, a recent case sheds light on issues every planner and individual need to understand if they move to Florida from a community property state.
In the case of Johnson v. Townsend, Husband died on January 21, 2015, Wife was appointed personal representative on March 19, 2015 and Wife published the notice to creditors on March 31, 2015. Thus, the 3 month period for filing a claim was June 30, 2015. The absolute bar to filing a claim was 2 years from the date of death or January 21, 2017.
On September 6, 2017, Wife filed a “Petition to Determine and Perfect Surviving Spouse’s Community Property Interest in Estate Assets” (the “Petition”) to confirm her 50% community property interest in certain investment assets acquired and titled in the Husbands name while they were domiciled in Texas, a community property state. Under the Florida Uniform Disposition of Community Property Rights at Death Act (the “Florida Community Property Act”), upon the death of a married person, 50% of community property is property of the surviving spouse and such property is NOT subject to testamentary disposition by the decedent.
Husband’s daughters filed an objection, arguing that the Petition was actually a claim and was not filed within the proper time period. Wife argued that her interest was not a claim as defined in the Florida Statutes and the Florida Community Property Act did not define a period of time within which to bring her action and, even if her interest was a claim, such an interest fell into the “trust exception” and “lien exception” of the probate code deadlines.
The lower court held for the daughters and the appellate court affirmed the lower court.
The appellate court determined that the community property interest was a claim, the claims period barred the claim, and that the exceptions did not apply.
The court dismissed the “trust exception” as Wife relied on a case, Quntana v. Ordono, which predates the probate code and interpreted a statute that was repealed in 1974 as part of the probate code which was enacted in 1976. A later case, Scott v. Reyes, clarified that the “trust exception” only applies when the decedent holds property on behalf of the actual owner either in an express trust or some other clearly defined means. The court held the “trust exception” did not apply to these facts.
The court also dismissed the “lien exception” as Wife showed no evidence that her interest satisfied the statute and Wife showed no authority for her argument that her interest gave rise to an equitable lien.
After ruling for the daughters, the court certified a question to the Florida Supreme Court the following question of great public importance.
“Whether a surviving spouse’s vested community property rights are part of the deceased spouse’s probate estate making them subject to the estate’s claims procedures or are fully owned by the surviving spouse and therefore not subject to the estate’s claim procedures?
ADVICE: If you move from a community property state, then property, if any, that was purchased or otherwise obtained in that state will be subject to a spouse’s community property rights under the Florida Community Property Act. Attorneys should specifically ask whether clients have lived in a community property state. If changing estate planning documents, then the Florida Community Property Act could affect such transfers. Individuals should also confirm with their community property state attorney any rights they may be giving up.
For example, Bob and Joan are married and have lived in Texas for 30 years and all of their assets are community property. They then move to Florida and Bob wants to provide a percentage to his wife and a percentage to his children from a prior marriage. Bob needs to be aware of the Florida Community Property Act and that Joan actually owns 50% of that property from Texas. They need to consider how that interest works into the estate plan and whether they want the Florida Community Property Act to apply or not.
WORD OF THE WEEK: Certification of a question to the Florida Supreme Court. When a case is not clear or the question is novel, the Florida Supreme Court can answer a question that would be of great public importance. For a good article on this see http://www.flabarappellate.org/images/CertifyingQuestions.pdf.
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