Reforming Florida's elective share law is the cure worse than the disease?

• Author: Mora, Abraham M.

The surviving spouse of a Florida domiciliary has the right to a percentage elective share from the decedent's probate assets. The elective share is an amount equal to 30 percent of the fair market value, on the date of death, of all property of the decedent wherever located that is subject to probate administration, except real property not located in Florida, reduced by all valid claims against the estate paid or payable from the estate and all mortgages, liens, or security interests on the assets. F.S. [subsections] 732.201, 732.206, and 732.207. The right to an elective share does not extend to nonprobate assets. For example, survivorship bank accounts[1] and property conveyed by the decedent in which the decedent reserved a life estate[2] are not subject to the elective share. In addition, assets held in a revocable inter vivos trust are not subject to the surviving spouse's right of election because such assets are not subject to administration in Florida.[3]

In trying to overcome certain perceived problems of the Florida elective share law, The Florida Bar has proposed major changes to the elective share law over the past several years. So far, the legislature has declined to adopt the proposed changes. This is partly the result of the difficulty in drafting an equitable elective share law that is not unduly complex. This article will explain the problems associated with Florida's current elective share law, the solutions to these problems adopted by other jurisdictions and by the Florida legislative proposal, and the difficult new problems raised by these solutions.

Current Florida Law

Elective share statutes generally have two key purposes. The first is to provide sufficient assets for the support and maintenance of the surviving spouse. The second is compensatory, in recognition of the fact that a surviving spouse has a claim to a portion of the decedent's estate to compensate the surviving spouse for his or her contributions to the marriage.[4] Both these purposes are considered to promote public policy sufficiently to have caused enactment of some form of elective share legislation in virtually every state.

The problem with the current Florida elective share law is that in substance it allows one spouse, at will, to disinherit the surviving spouse. For example, by placing all assets in a revocable living trust one spouse can readily defeat the surviving spouse's Florida elective share rights. Thus, as a practical matter, there is no elective share law in Florida.

The unfairness of the current Florida elective share law was illustrated in Friedberg v. Sunbank/Miami, N.A., 648 So. 2d 204 (Fla. 3d DCA 1995). In Friedberg, the decedent and the surviving spouse had been married for 38 years at the time of the decedent's death. The decedent's estate was valued at over $7 million with approximately $250,000 passing through probate. The balance of the estate was held in a revocable inter vivos trust established by the decedent two years before the decedent's death. Under the trust, the surviving spouse received a life estate in their residence and income of $1,500,000 in a charitable remainder trust and $500,000 in a medical trust. In holding that the revocable inter vivos trust was not subject to the elective share, the court stated that this result was unfair to the surviving spouse and poor public policy.[5] The court encouraged the legislature to make changes to the Florida elective share law.[6]

The unfairness of current Florida elective share law can be illustrated further by comparing the rights of a surviving spouse to the rights of a divorcing spouse. A divorcing spouse has the right to an equitable percentage of all assets accumulated during the marriage, including assets held in a revocable inter vivos trust and in joint bank accounts,[7] but excluding property acquired by gift or inheritance.

For example, assume a couple has been married for 40 years; the husband is age 70 and the wife is age 65. All assets are titled in the husband's revocable inter vivos trust. If the couple were to divorce, it is likely the wife would receive one-half of all the trust's assets as her equitable distribution. Nonetheless, the titling of the assets in the trust allows the husband to avoid giving the wife any assets at death. It makes little sense to have such dissimilar statutory schemes for rights of a divorcing spouse and surviving spouse.

Augmented Estate Law

Most states have attempted...