Payment Of Trust Administration Expenses From Homestead Property

PROBATE CORNER

By: David M. Garten, Esq.

ARTICLE:  Payment Of Trust Administration Expenses From Homestead Property

Issue: Can a trustee use the proceeds from the sale of protected homestead property owned by the trust to pay trust administration expenses?  Yes.

In Lanford v. Phemister, 2022 Fla. App. LEXIS 2612; 47 Fla. L. Weekly D 832; 2022 WL 1051583 (Fla. 5^th DCA 4/8/22), decedent died leaving her homestead property to a testamentary trust. There was no dispute that the protected homestead property was devised to an heir (the primary beneficiary of the testamentary trust) and therefore passed outside of the probate estate. Lanford, as the residuary beneficiary of the testamentary trust, appealed the probate court’s final order authorizing reimbursement of the following from the sale of the decedent’s homestead property: (a) the personal representative fees, attorney’s fees, and costs incurred in administering the estate, (b) the testamentary trustee’s fees, attorney’s fees and costs incurred in administering the testamentary trust, and (c) the expenses advanced by the personal representative in maintaining the homestead after decedent died.

The appellate court found that the probate court erred in allowing for reimbursement of the personal representative fees, attorney’s fees, and costs from the homestead sale proceeds because Florida’s constitutional homestead provisions forbade it. However, the appellate court affirmed payment of the testamentary trustee’s fees, attorney’s fees and costs from the homestead sale proceeds. The court reasoned:

“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 for free. Further, Florida law also does not require trustees to work for free. 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). Trustees are “entitled to compensation that is reasonable under the circumstances.” § 736.0708(1), Fla. Stat. (2021); see also § 736.05053(4), Fla. Stat. (2021) (providing that trust administration fees, including trustee fees and trustee’s attorney’s fees, should be paid before estate administration fees). Trustees are also allowed reimbursement for reasonable trust expenses. § 736.0709(1), Fla. Stat. (2021). Similarly, an attorney who provides “services to a trust may be awarded reasonable compensation from the trust” following an application for fees. § 736.1005(1), Fla. Stat. (2021).

Lanford argues that a homestead willed to a trust is entitled to the same constitutional protections against claims from the trustee as it is to estate administration claims. He concedes, however, there is no legal authority supporting this argument, and he otherwise fails to explain why homestead protections should apply against the trustee. Instead, he suggests we rely on a per curiam affirmance without opinion case. Per curiam affirmances without opinion, however, have no precedential value because the reasons for affirmance are indeterminable. Hicks v. Am. Integrity Ins. of Fla., 241 So. 3d 925, 929 (Fla. 5th DCA 2018). Accordingly, Lanford cannot demonstrate the probate court erred in awarding Phemister and her lawyers statutorily authorized fees and costs for administering the trust, including allowing reimbursement from homestead sale proceeds. We therefore affirm that portion of the probate court’s order.”

Note: On 4/25/22, the appellant filed a motion for rehearing/clarification in Case No. 5D21-1015.  As of 5/13/22, the appellate court had not ruled on the motion.