Lanford v. Phemister
| Decision Date | 08 April 2022 |
| Docket Number | Case No. 5D21-1015 |
| Citation | 338 So.3d 1049 |
| Parties | J. Scott LANFORD, TRUSTEE OF The KIRK FAMILY FOUNDATION, Appellant, v. Robin PHEMISTER, Personal Representative of the Estate of Mary L. Dillard and as Trustee of the Testamentary Trust of Mary L. Dillard, Appellee. |
| Court | Florida District Court of Appeals |
Robert C. Wilkins, Jr., of Robert C. Wilkins, Jr., P.L., Orlando, for Appellant.
Scott Krasny, of Krasny and Dettmer, Melbourne, for Appellee.
J. Scott Lanford, trustee of the Kirk Family Foundation Charitable Trust ("Lanford"), appeals the probate court's final order authorizing reimbursement from the sale of the homestead property of Mary Lee Dillard ("Decedent"). We have jurisdiction. See Fla. R. App. P. 9.170(b)(21), (23). The probate court awarded Robin Phemister and her attorneys their reasonable fees and costs incurred while Phemister performed two discrete functions: 1) administering Decedent's estate as personal representative; and 2) acting as trustee to the testamentary trust Decedent created in her will.1 It also awarded Decedent's estate expenses Phemister advanced to maintain the homestead after Decedent died.2 Because Florida's constitutional homestead protections forbid it, the probate court erred by authorizing reimbursement of Phemister's personal representative fees and costs from the homestead sale proceeds. The probate court correctly determined, however, that Phemister and her lawyers could be reimbursed from the sale proceeds for fees and costs incurred on the testamentary trust's behalf. Finally, Lanford does not meet his appellate burden to show these fees and costs were unreasonable. We therefore affirm in part and reverse in part.
Decedent died in 2016, leaving certain personal property to her sister, Billie Jo Schell. She left the residuary of her estate,3 including her homestead, to a testamentary trust. Schell was the testamentary trust's primary beneficiary and the Kirk Family Foundation Charitable Trust ("Kirk Trust") was the testamentary trust's contingent remainder beneficiary.4
Although Decedent's will designated Lanford as her personal representative and the testamentary trust's trustee, the probate court appointed Phemister to both these roles.5
In separate final orders, the probate court determined Decedent's home constituted exempt homestead property, and that constitutional homestead protections inured to Phemister, as testamentary trustee, for Schell's benefit. Nobody appealed either final order. See Fla. R. App. P. 9.170(b)(12)–(13). The probate court thereafter authorized Phemister, as testamentary trust trustee, to sell the homestead property. Lanford and Phemister stipulated that the sale would occur, and Phemister would place the sale proceeds in escrow. The property later sold.
In 2018, Schell died, and the residuary of Decedent's estate passed to the Kirk Trust. Phemister thereafter petitioned the probate court to disburse the homestead property's sale proceeds to pay for her fees as personal representative, her fees as testamentary trustee, and her attorney's fees and costs incurred in both capacities. She later filed two amendments to this petition. Lanford objected, contending that homestead sale proceeds could not be used for these purposes. He also argued the amounts Phemister and her attorneys sought were categorically unreasonable. He contended, for example, that Phemister did not distinguish between the work she and her attorneys performed for Decedent's estate and the testamentary trust. The probate court conducted an evidentiary hearing on the amended petitions, at which it heard testimony on the necessity and reasonableness of the fees incurred. The hearing transcript is not part of our record.
Following the hearing, the probate court issued an order reflecting that the parties agreed to the hourly rates of Phemister's lawyers. It also directed Lanford to submit objections to Phemister and her attorney's fees, "either by timeline or line item entries, as to the necessity or reasonableness of the line items ...." Lanford did not comply with this directive.
The probate court granted Phemister's amended petitions. It awarded reimbursement of Phemister's and her attorney's fees and costs. The probate court's order did not, however, differentiate between fees and costs incurred by the estate and the trust. To the extent Decedent's estate had insufficient funds, the probate court authorized payment to Phemister and her lawyers from the escrowed homestead sale proceeds. The parties agree Decedent's estate cannot comply with the probate court's order without drawing on the homestead sale proceeds. Lanford challenges the trial court's authorization of payments from the homestead sale proceeds and the reasonableness of the awards to Phemister and her attorney.
We first address the homestead issue, starting from the perspective of Phemister's role as personal representative of Decedent's estate, and then from her position as testamentary trustee. We then discuss whether the probate court's awards were reasonable.
The probate court erred in allowing for reimbursement of Phemister's personal representative fees and costs from the homestead sale proceeds because Florida's constitutional homestead provisions forbade it. We review de novo an issue concerning the constitutional homestead protection. See Anderson v. Letosky , 304 So. 3d 801, 803 (Fla. 2d DCA 2020). The Florida Constitution protects a homestead from "judgment[s], decree[s] or execution[s]," except for payment of certain limited debts. Art. X, § 4(a), Fla. Const. These homestead exemptions inure to the owner's "surviving spouse or heirs." Art. X, § 4(b), Fla. Const. After a decedent's death, her heir "has legal ownership of the property," and "she may sell it without regard to decedent's creditors or administrative expenses." Morey v. Everbank , 93 So. 3d 482, 488 (Fla. 1st DCA 2012) (quoting Est. of Shefner v. Shefner-Holden , 2 So. 3d 1076, 1078 (Fla. 3d DCA 2009) ).
Here, Lanford concedes that Schell, as Decedent's sister and the testamentary trust's beneficiary, was Decedent's heir for purposes of homestead protections.6 When protected homestead7 property is devised to an heir, it passes outside of the probate estate. See § 733.607(1), Fla. Stat. (2016) () (emphasis added); § 733.608(1)(c), Fla. Stat. (2016) () (emphasis added); see also Clifton v. Clifton , 553 So. 2d 192, 194 n.3 (Fla. 5th DCA 1989) (). Phemister insists that the Kirk Trust is not Decedent's "heir" for the purpose of constitutional homestead protections, but this misses the point.
Because the parties did not appeal the trial court's previous order, which found that Decedent's homestead, complete with its constitutional protections, passed to Schell at the moment of Decedent's death, the sale proceeds from Decedent's devised homestead cannot be used to pay the estate's administrative fees and costs. See § 733.608(1)(c). Similarly, a general directive in a testamentary trust instrument—such as Decedent's will—to pay "debts, claims, or expenses" does not subject protected homestead to estate obligations or administrative estate expenses. See § 736.1109(2), (4), Fla. Stat. (2021).
Here, the escrowed funds are proceeds from the sale of Decedent's protected homestead. The homestead passed outside of the probate estate, and the proceeds from the sale became an asset of the testamentary trust to be used for Schell's benefit. See Thompson v. Laney , 766 So. 2d 1087, 1088 (Fla. 3d DCA 2000) (); see also Est. of Shefner , 2 So. 3d at 1078 (). Accordingly, we reverse that portion of the probate court's final order reimbursing Phemister and her attorneys, in her capacity as personal representative of Decedent's estate, their fees and costs from the homestead sale proceeds.
Our conclusions differ as it relates to Phemister and her attorney's services to the testamentary trust. The trial court correctly allowed for reimbursement of Phemister's fees and costs as testamentary trustee from the homestead sale proceeds. Our review of an issue involving the constitutional homestead protection is de novo. See Anderson , 304 So. 3d at 803. We review an order involving trustee fees for an abuse of discretion. See Bronstein v. Bronstein , 332 So. 3d 510, 514 (Fla. 4th DCA 2021) ; Demircan v. Mikhaylov , 306 So. 3d 142, 149 (Fla. 3d DCA 2020). Phemister bore the burden of proof below to prove her and her lawyers’ fees and costs were reasonably necessary. See Bronstein , 332 So. 3d at 514 (quoting Barnett v. Barnett , 340 So. 2d 548, 550 (Fla. 1st DCA 1976) ). She also had to prove that these fees and costs inured to the trust's benefit and not anyone else's. Id .
Under Florida law, trustees have the power to pay trust expenses, their own compensation, and their attorney's fees from trust assets. § 736.0816(15), (20), Fla. Stat. (2021). Decedent's will is silent on how the testamentary trustee will be paid, but it did not contemplate that the testamentary trustee would work...
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...be paid out of proceeds from the sale of constitutionally homestead protected property of the decedent’s estate. [Lanford v. Phemister, 338 So. 3d 1049, 1053-54 (Fla. 5th DCA 2022).] Attorneys’ fees can be increased for the performance of extraordinary services such as involvement in a will......