Est. of Pounds v. Miller & Jacobs, P.A., No. 4D21-1362, 2022 WL 39211 (Fla. 4th DCA 2022).
If a will does not specify who should serve as personal representative of an estate, parties can fight over this position through litigation. But what happens if one person obtains a settlement on behalf of an estate, and then another person is appointed as personal representative? The court answered this question in Estate of Pounds v. Miller & Jacobs, P.A., No. 4D21-1362, 2022 WL 39211 (Fla. 4th DCA 2022), giving us insight into why these situations are problematic and why good estate plans need to be carefully drafted.
The decedent died in a motorcycle accident, leaving behind his minor child as the sole heir of the estate. The child’s mother and the decedent’s mother both showed interest in serving as personal representative of the estate, which comes with certain perks, such as earning a personal representative fee, and responsibilities, including distributing estate property. The child’s mother was not married to the decedent.
The decedent’s mother quickly hired a law firm to pursue a wrongful death claim on behalf of the estate. After the firm secured a $145,000 settlement, the child’s mother quickly petitioned to become personal representative of the estate. After being appointed personal representative by the court, the child’s mother quickly moved to set aside the $145,000 settlement because it was obtained, allegedly improperly, by someone unauthorized to act on behalf of the estate. In response, the decedent’s mother sought to remove the child’s mother as personal representative of the estate.
The court faced the interesting questions on appeal of whether the wrongful death settlement of $145,000 was properly obtained and whether the decedent’s mother should relinquish the funds. If properly obtained, then the law firm that obtained the settlement would be entitled to a significant contingency fee of $48,285.00, or 33.3% of the total recovery.
First, the court considered whether the child’s mother was properly appointed as personal representative. The central question in this analysis was whether, as mother of the decedent’s child, she had statutory preference over the decedent’s mother to serve as personal representative. The court recognized that the child’s mother had only served as guardian of the child and not guardian of the property of the child, an important statutory distinction that comes with heightened financial responsibilities. Because neither the child’s mother nor the decedent’s mother had this important title of guardian of the property of the child, neither had statutory preference to serve as personal representative. As the court recognized, the appropriate step under Fla. Stat. § 733.301(1)(b)(3) was to send the matter back to the trial court to decide which claimant was best qualified to serve as personal representative. As of now, the matter is still ongoing in the lower court.
Next, the court considered whether the decedent’s mother’s acts in securing the $145,000 settlement on behalf of the estate were proper when she had not been appointed as personal representative. The court recognized that there are only two scenarios when an act occurring before the appointment of a personal representative will be valid: (1) the eventual personal representative acts before his or her appointment in a manner beneficial to the estate; or (2) the eventual personal representative ratifies and accepts proper acts by another person. The court recognized that the decedent’s mother did not currently satisfy either of these two categories. Thus, the court found that the decedent’s mother’s actions were improper, and the law firm’s contingency fee was invalid.
The trial court now has to decide whether the child’s mother or the decedent’s mother is best qualified to serve as personal representative. If the decedent’s mother wins, then the wrongful death settlement will become a proper act by the eventual personal representative, thus satisfying the first category. If the child’s mother wins, then the settlement will officially be an improper act (unless ratified by the child’s mother), and the law firm will not be entitled to a contingency fee.
There are several lessons to be learned from this case. For one, it is likely better to conduct official acts on behalf of an estate once one has already been appointed personal representative. The personal representative is authorized to make decisions, pursue legal claims, sign documents, and make distributions on behalf of the estate. Therefore, it is often best to ensure that one officially wields this power before making legally binding decisions, particularly if another might challenge one’s right to serve as personal representative.
The biggest takeaway, however, is the importance of designating a personal representative in a will. If the decedent had designated a specific individual to serve as personal representative, then this ordeal could have been avoided completely. As a testator, or the creator of a will, you have the power to name any qualified person to be personal representative. Moreover, you can name several successive personal representatives in the event that the primary specified person is unavailable, unable, unwilling, or deceased. An effective, trusted personal representative is a key component of the probate process and an essential aspect of a well-crafted estate plan.
For more information on personal representatives and trust litigation, click on https://www.miamifloridaestateplanninglawyer.com/trust-litigation.html .
Call Bart Chepenik now at 305-613-3548 or Brad Trushin at 305-981-8889 to inquire about your fiduciary responsibilities as a named personal representative.