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Carmen Arenz-Rodriguez de Gomez-Gonzalez is the widow of the fabulously wealthy international entrepreneur, Carlos Gomez-Gonzalez They were married in Miami in 1965, two years after Carlos left his native Colombia and acquired resident alien status in Miami. The couple had a long and loving marriage prior to his death. Although Carlos had three children (two naturally born and one adopted) by a previous marriage in Colombia to Maria Martinez, it was his intention that his estate go only to Carmen and his two children by her. This was so because Carlos had already transferred many millions of dollars inter vivos to his former wife and their three children in Colombia.
In planning his estate, Carlos had placed the bulk of the assets he acquired after moving to Miami jointly in the names of himself and his wife. As for the remaining assets that stood in his name alone and which he had acquired before he moved to Miami, Carlos executed a will in Florida, naming Carmen his personal representative, distributing all of his worldly goods to Carmen and his two children by her, and disinheriting his three Colombian children.
The estate was substantial since Carlos had been a rich man, having inherited substantial sums of money from his father when Carlos was still quite young. Part of Carlos' wealth could be attributed to good fortune. For example, a $5,000 Venezuelan gold certificate, given to him as a child by his father, had steadily appreciated in value and was worth over ten million dollars by the time of his death. However, it was also through a combination of hard work and shrewd investments, first in Colombia and later in the United States, that Carlos had compounded his initial inheritance many times over.
Carlos had amassed much of his fortune during his marriage to Maria Martinez in Colombia primarily by acquiring interests in corporations and real estate throughout Colombia and Venezuela. However, by Colombian judicial decree, Carlos and Maria were separated in 1960. In connection with their separation, Carlos, complying with Colombian law, gave his first wife over five million dollars representing one half of his Colombian community property assets.
Carlos' generous support of his Colombian family did not end with his separation from Maria and his move to Miami. Although the three children from his first marriage had shown him little love or affection after his separation from their mother, Carlos continued to permit his eldest Colombian son to use a power of attorney Carlos had granted to that son in Colombia prior to the separation. The son used the power of attorney to transfer an additional $25,000,000 of Carlos' property to his children in Colombia. The transfers were effected during Carlos' second marriage to Carmen. The property transferred was primarily Florida real estate Carlos had acquired after his move to Miami.
In addition, Carlos transferred certain monies to José Martinez, Maria's estranged brother, who had moved to Miami around the same time as Carlos and who had subsequently become quite close to Carlos, Carmen and their two children. Carlos had deposited those funds in Miami banks in various joint accounts labelled "Carlos and José, as joint tenants with right of survivorship and not as tenants in common.
Carmen obtains letters of administration appointing her personal representative of Carlos' estate. She identifies the following assets for purposes of filing the inventory for the estate.
A. PROBATE ASSETS [in Carlos' name alone]
Value US$ | ||
1. | Colombian coffee plantation | 3,000,000 |
2. | Shares of stock in Venezuelan oil production co. (located in Carlos' Venezuelan lawyer's office) | 1,500,000 |
3. | Shares in Costa Rican commercial fishing venture (located in safe deposit box in Miami) | 4,500,000 |
4. | Bank accounts in New York | 2,000,000 |
5. | $5,000 Venezuelan gold certificate (issue date 1875) (located in safe deposit box in Miami) | 10,000,000 |
US$21,000,000 |
Under Carlos' Florida will, Carmen and her two children would inherit a gross estate of US$21,000,000 consisting of realty and personalty located throughout the world.
The following transfers of Carlos' assets outside probate upon Carlos' death:
B. JOINT ASSETS PASSING TO CARMEN (outside of probate)
Value US$ | ||
1. | Carmen & Carlos' home in Coral Cables | 5,000,000 |
2. | Bank accounts in Miami | 1,000,000 |
3. | Florida Real Estate | 10,000,000 |
4. | Commercial paper (stocks, bonds & promissory notes) (located in safe deposit box in Miami) | 4,000,000 |
US$20,000,000 |
C. JOINT ASSETS PASSING TO MARIA'S ESTRANGED BROTHER (outside of probate)
Value US$ | ||
1. | Bank accounts in Miami | 1,000,000 |
Carlos' estate plan called for approximately $40,000,000 going to Carmen and their two children, both through probate and outside probate, and for $1,000,000 to go to José outside probate. Of course, by his inter vivos transfers to Maria and her children upon his separation from Maria and thereafter, his Colombian family had already received over $30,000,000 from Carlos.
Shortly before the deadline for filing the inventory, Carmen learns from Maria's estranged brother, José, that Maria and her children are not content with their $30,000,000. They have initiated probate proceedings in both Colombia and Venezuela to assert their alleged rights to Carlos' estate in those countries. Maria contends, in effect, that she is entitled to recover from the estate (and from any of Carlos' transferees) a one-half community property share of the assets that were not partitioned in the course of their separation proceedings, i.e., the property Carlos owned outside Colombia at the time of the separation. In addition, Maria claims that her Colombian separation proceedings did not terminate her status as Carlos' spouse or her right to take a spouse's share of Carlos' estate. Maria has retained a lawyer in Miami to assert her claims under Florida law to a spouse's elective share of the estate and to recover a community property share of the assets Carlos had transferred to Carmen through joint ownership. Finally, under the forced heirship laws of Colombia and Venezuela, Maria's children contest their disinheritance by Carlos' will.
As in many multinational probate cases, the above situation requires that counsel for all parties evaluate a host of choice of law rules, substantive principles of several legal systems, and complex jurisdictional issues. Although Carlos died domiciled in Florida with a majority of his assets located in Florida, representation of his Florida wife plainly can no longer be confined to the Florida courts and to Florida law. Indeed, in virtually every Florida probate proceeding where a decedent leaves property in various jurisdictions and has family ties outside Florida, it will be critical for attorneys to familiarize themselves with the choice of law rules of Florida and any other domestic forum involved, as well as with the substantive principles, choice of law rules and procedural law of each jurisdiction where the decedent had ever maintained property or residence. In such cases, the importance of the foreign elements cannot be overemphasized. For example, the courts of other states or foreign countries may not recognize and enforce the decree of a Florida probate court purporting to determine title to property within their jurisdiction. In the case of Carlos' Colombian plantation and Costa Rican fishing venture stock, for example, or his Venezuelan gold certificate and oil company shares, or even his New York bank accounts, the courts in Colombia, Venezuela and New York might not defer to a Florida court's determination as to the rightful distributees of those assets. Similarly, although Carlos died a Florida resident with a will prepared and executed in Florida, courts in Florida, and a fortiori courts outside of Florida, may not apply Florida law to all questions raised as to the proper distribution of Carlos' assets.
In view of the proceedings that Maria has already commenced in Colombia and Venezuela, and in view of the tremendous amounts at stake in those countries as well as in New York, it is essential to retain Colombian, Venezuelan and New York counsel to assist in evaluating Maria's claims under the laws of those jurisdictions. Nevertheless, despite the assistance of local counsel, a working knowledge of foreign law and procedure is becoming increasingly important to the U.S. attorney's ability to defend a decedent's out-of-state property from foreign claimants. In fact, such knowledge also will be important in protecting a foreign decedent's Florida estate from foreign claimants, because rulings by foreign courts could affect substantially the outcome of the probate proceedings in Florida.
III. THE RIGHTS OF THE PARTIES IN LATIN AMERICA
A. Economic and Legal Consequences of Decedent's Marital Situation
Under the laws of Colombia, as in most civil law jurisdictions, property acquired by either spouse during marriage is classified as community property in which each owns an undivided fifty percent share. We will assume for purposes of the following discussion that all property acquired by decedent during his first Colombian marriage is community property under Colombian law. In 1960, decedent and his Colombian spouse were separated by judicial decree. Although similar in many respects to divorce in the United States, these separation proceedings did not constitute a vinculo divorce and decedent was not permitted, under the laws of Colombia, to remarry. Thus, under Colombian law, the Colombian wife remained decedent's spouse until his death. Economically, however, decedent's separation was very similar to a vinculo divorce. Their community property ties were terminated, and the community was definitively severed by that decree. However, and of critical importance to our case, Colombian law requires that at the time of their separation, all community property owned by the spouses, whether acquired in Colombia or elsewhere, be divided between them, or partitioned. In our hypothetical, only Colombian community property was partitioned in the course of the separation. To the extent the Colombian spouse can demonstrate that non-Colombian community assets were not partitioned in the Colombian separation, she would have the right under Colombian law to bring a proceeding to obtain her community share of these non-Colombian assets. Indeed, this is one of the principal claims of the Colombian spouse in her present action in Colombia.
B. Succession to Decedent's Colombian Estate Under Colombian Law
1 - Colombian Choice of Law Rules
The Colombian Civil Code provides that succession to a decedent's assets, both personal and real, generally should be determined under the law of the decedent's last domicile. However, there are certain important exceptions to this general rule. When a Colombian national dies domiciled in a foreign country, the Colombian courts will recognize the succession rights of his Colombian forced heirs under Colombian law to the exclusion of the law of decedent's last domicile, at least to the extent necessary to protect the Colombian forced heirs. Moreover, Colombian courts will apply Colombian law with respect to the succession to real or personal property located within the borders of Colombia.
In our hypothetical case, Florida law would not affect the disposition of decedent's Colombian coffee plantation and his shares in the Costa Rican commercial fishing venture, since Colombian courts would be likely to apply Colombian law to this Colombian property. Thus, another reason for the Colombian wife to proceed in Colombia is to insure that decedent's attempt to disinherit her and her children, in his Florida will, fails by virtue of the forced heirship provisions of Colombian law.
2 - Colombian Substantive Law of Succession
If the Florida spouse retains counsel in Colombia to present decedent's Florida will to a Colombian court, the formal validity of the will will be the preliminary issue to be addressed. If the Colombian courts hold that decedent's Florida will was not validly executed under Colombian law, or if the Florida spouse does not present her claims based on the Florida will in Colombia, the Colombian laws of intestate succession will apply. Under Colombia intestacy laws, the Florida wife would take nothing because under Colombian law the Colombian spouse, not the Florida wife, would be recognized as the surviving spouse. In any event, under the Colombian laws of intestacy, the surviving spouse does not take as an intestate heir when the decedent is survived by his children, although she may take a conjugal portion, which in intestate estates, is a forced share equal to that of a legitimate descendant. The conjugal portion, however, is not available to a spouse who has received her share of the community property.
Even if the Florida spouse does present, in a Colombian court, the Florida decree admitting decedent's will to probate in Florida, and even if the formal validity of the will is recognized in Colombia, Colombian restrictions upon testamentary disinheritance must still be considered. Under Colombian law, the decedent's children, as forced heirs are entitled to take against the will, an equal per capita share of one half of the estate as their legitima or legitimate portion. This is true under Colombian law for both adopted and illegitimate children.
Therefore, decedent's adopted child, as well as the "illegitimate" children decedent had with his second wife in Florida, will have the same right in Colombia to a forced heirship as the legitimate children of decedent's first marriage. The Colombian spouse, however, in all likelihood would not be able to claim an interest in the Colombian estate, because she has already received her community property interest in connection with her separation from decedent.
C. The Rights of the Parties Under Venezuelan Law
In Venezuela, as in Colombia, the Colombian wife and her children seek to acquire their interest in the property decedent owned in that jurisdiction at his death, including their rights to decedent's $10,000,000 gold certificate. As in Colombia, Venezuelan courts will apply their own law with regard to the distribution of decedent's forum property, whether or not the decedent or his heirs have any relationship to Venezuela. Moreover, Venezuela will apply its own law to determine the spouse's community interest in the decedent's property. If the Florida spouse presents the decedent's Florida will in Venezuela, and assuming Venezuela recognizes the formal validity of the will, the Venezuelan restrictions upon disinheritance as well as Venezuela's community property laws must be examined. Under Venezuelan law, a surviving spouse is entitled to a fifty percent share of the couple's community property. The surviving spouse's community share is not considered part of the decedent's estate. The Colombian wife's share in the Venezuelan community property will pass to her independently of the estate. However, because of her separation, she will have no rights as a forced heir to the decedent's property.
In sum, even if decedent's Florida will were to be considered by Venezuelan courts, it is unlikely decedent's Florida wife and her children would receive anywhere close to the $12,000,000 in Venezuelan assets that decedent intended should pass to them. First, the Colombian children would each be able to take their forced share in decedent's Venezuelan property. Second, Venezuela quite probably would recognize the Colombian wife's community property claim to decedent's Venezuelan assets on the ground they were community property and never partitioned in connection with her separation. Thus, a substantial portion of the Venezuelan assets decedent intended for his Florida wife and children, would pass instead to the Colombian spouse and children.
The law that foreign courts would be likely to apply in the jurisdictions where the first wife is litigating could lead to alarming results for the Florida wife's interests in decedent's estate. With regard to decedent's Latin American assets, there exists a clear and present possibility that the Colombian spouse could succeed in wresting away part of the estate through her community property claims in Colombia and Venezuela. More importantly, the determination by a Colombian court that certain marital rights of the Colombian spouse in decedent's estate survived the separation, if given effect by Florida courts, could prove to be devastating in Florida to decedent's Florida wife. In plotting strategy, therefore, the next step for the Florida wife's counsel is to consider the impact of the Latin American proceedings and law on the Florida proceedings.
THE RIGHTS OF THE PARTIES IN FLORIDA - THE FIRST WIFE'S FLORIDA STRATEGY
A. Preliminary Considerations
1. Jurisdiction
Because decedent died while domiciled in Florida, it is clear that Florida is an appropriate forum in which to probate his Florida estate. In Florida, as in most jurisdictions, real property is properly probated, as a jurisdictional matter, in the forum where it is located. Jurisdiction to probate personalty will lie where such property is located or at the decedent's last domicile. Thus, Florida courts will clearly take jurisdiction to probate decedent's Florida realty, as well as his personalty, wherever located. It is equally clear that if decedent's Colombian wife wishes to pursue her claims to decedent's Florida property, she must be prepared to litigate in Florida.
In addition, because foreign courts are likely to accept jurisdiction over part of decedent's estate, the effect of foreign probate judgments in Florida probate proceedings is an important factor to be considered in establishing overall strategy. There is authority in Florida for the proposition that Florida courts, in probating a non-resident decedent's Florida estate, will give effect to probate decrees from decedent's last domicile. However, if the decedent was a Florida resident, Florida courts would not defer to the probate decrees of courts in other jurisdictions in determining how the decedent's Florida property should be distributed. This is so even if all interested parties were present in the foreign probate forum.
2. Location of Assets
Generally speaking, it is not difficult to determine the location of real property and tangible personal property. However, a preliminary issue often arises as to the location of intangible personal property such as commercial paper, stocks, bonds and notes for jurisdictional and choice of law purposes. For example, in our hypothetical, decedent left commercial paper in Miami evidencing obligations owed to him by debtors in various other countries. The question thus arises as to whether this property is situated in Florida, where the paper evidencing the obligation is found, or elsewhere, i.e., where the debtors reside. The importance of this issue can be appreciated with respect to the Venezuelan gold certificate: the paper is in Florida, but the debtor is in Venezuela. The question is crucial because distribution of the $10,000,000 may differ depending upon whether the certificate is deemed to be located in Venezuela (requiring application of Venezuelan law) or in Florida (requiring application of Florida law). The rule in most U.S. jurisdictions is that the situs of negotiable instruments is the place where the paper is found, while the situs of non-negotiable instruments is where the debtor is found. If this rule applies, the Venezuelan gold certificate will be distributed in accordance with the laws of Florida, since that is where the certificate itself is found, whereas decedent's Venezuelan oil company shares will be distributed in accordance with Venezuelan law because the stock certificates were kept in decedent's lawyer's office in Caracas.
3. Applicable Law
The Colombian spouse ultimately will have to resort to the Florida courts for determination of her various claims to decedent's property. However, this does not mean that her claims will be governed exclusively by Florida law. Florida choice of law rules, which have preliminary applicability in the case of a decedent who died domiciled in Florida, are as follows: (1) the formal validity of a will is governed by the laws of the place of execution; (2) succession to personalty is determined by the law of the decedent's last domicile; (3) succession to real estate is determined by the law of the situs of the property; (4) the validity and effect of prenuptial and separation agreements is determined by the law of the place of execution or the marital domicile at the time of execution; (5) personal status, i.e., the relationship of a person to the decedent, is determined by the law of the family domicile; (6) the status of assets as community property or separate property is determined by the law of the marital domicile at the time the property was acquired; (7) a foreign divorce decree is given effect as to status if either spouse was domiciled in the rendering forum, whether or not the other spouse was present; and (8) a foreign divorce decree is given effect as to financial relations between the spouses, if it meets the requirements applicable to foreign judgments settling personal disputes, i.e., both parties must have appeared before the rendering court.
Like most choice of law principles, those applied in Florida are subject to exceptions more numerous than can be discussed in this article. However, they are applied in Florida often enough to form the basis for predicting the possible outcome in Florida of an international probate contest and for mapping out a preliminary strategy. Application of these basic rules to the foreign spouse's claims will also provide some guidance as to the issues to be addressed when defending the Florida wife's rights in Florida courts.
In our hypothetical, decedent died domiciled in Florida leaving real property with a situs in that state. Thus, Florida substantive law should apply to decedent's real property and would determine: (1) the validity of decedent's testamentary dispositions as to this Florida property; (2) the status of the property acquired by decedent after his separation from his first wife, in Colombia and subsequent move to Miami; and (3) the validity of his marriage in Florida and consequently the legitimacy of the two children he had with his Florida wife. However, under Florida conflicts principles, Colombian law should apply to determine: (1) the status as community or separate property of the assets decedent acquired in Florida during his Colombian marriage; (2) the effect of the Colombian separation agreement and decree upon the Colombian spouse's rights to that property; and (3) the continuing validity vel non of the Colombian first marriage.
B. The Colombian Wife's Community Property Interest in Certain Assets of Decedent's Estate
1. Law Applicable to Characterization of Assets
Florida conflicts law provides that assets are characterized as community property or separate property pursuant to the law of the jurisdiction of the marital domicile at the time the property was acquired. This applies regardless of the present situs of the property and regardless of the jurisdiction within which the property was acquired. Therefore, although Florida is not a community property jurisdiction, an asset in Florida will be treated as community property if it was acquired by a married resident of a community property jurisdiction. When the marital domicile changes during marriage, however, the issue is less clear. In particular, the question arises as to the status of property owned by spouses originally domiciled in a community property jurisdiction who later move to a non-community property jurisdiction. Generally recognized choice of law rules provide that only the property acquired by the spouses prior to the change of marital domicile would be treated as community property. Property acquired subsequently in the non-community property forum would be treated as the separate property of the acquiring spouse. In our hypothetical, the status of property acquired by decedent during his Colombian marriage will be determined by the Florida courts in accordance with Colombian law. Like most Latin American civil law countries, Colombia is a community property jurisdiction in which, as a general rule, husband and wife each own an undivided fifty percent share of property acquired by either spouse during marriage or of property that otherwise qualifies as community property under the applicable rules. Accordingly, prior to her separation from decedent, decedent's Colombian spouse owned an undivided one half share of the couple's community property.
2. Effect of Separation
The viability of the Colombian spouse's community property claim will depend, as a preliminary matter, on her ability to avoid the preclusive effect of her Colombian separation. Florida courts will determine the validity and effect of a separation agreement according to the law of the place of execution. Florida courts also will give effect to a foreign judicial decree determining the financial incidents of a divorce, at least when, as here, both parties were present before the foreign tribunal. Consequently, the Colombian spouse's community property claims will fail unless she can demonstrate that under Colombian law, her community property rights survived her separation proceedings with the decedent.
Under Colombian law, her separation from decedent terminated their sociedad conyugal, or marital community. Nevertheless, she could still bring an action in Colombia to recover her fifty percent share in any property that had not been partitioned in connection with the separation. Therefore, her strategy to overcome the effect of her Colombian decree will be to argue that the assets acquired by decedent outside Colombia during their marriage remained community property and must be partitioned. She must demonstrate that under Colombian law she is entitled to bring such an action of "additional partition," and must submit her claim to the Florida court of the situs.
If the Florida court should reject that contention, the only solution for the Colombian spouse is to continue her proceedings in Colombia to have the property declared community property and duly partitioned. She then would attempt to enforce the Colombian decree in Florida.
Procedural Considerations
(a) Tracing. The Colombian spouse's first objective in Florida and in Venezuela will be to recover her community property share of those non-partitioned, community assets owned by decedent outside Colombia at the date of their separation. Moreover, she does not have to limit her community property claim to these assets. By virtue of the doctrine of tracing, she may pursue all property acquired by decedent after his move to Miami which was purchased with those assets or the proceeds of those assets. Florida courts have recognized that when property located within this state is traceable to community assets, such property will itself be subject to community property claims, with the result being that the holder of such property will be deemed to hold it as trustee for the spouse entitled to it. (b) Resulting Trust. Under general principles of Florida law, resulting trust claims lie against all holders of the property of another with the exception of bona fide purchasers for value, i.e., persons who have paid value for the property-and have acquired it in good faith and without notice of any competing claims to the assets. (i) Discovery. One factor that makes it particularly appropriate to bring an action based on a resulting trust claim in order to recover diverted community property is that such an action empowers the court to require the putative holders of community assets to explain how and from whom the assets were initially acquired. An action for a resulting trust thus facilitates the tracing of community assets to which a spouse has been held entitled under community property principles. (ii) Preliminary Injunction. Another advantage of a resulting trust claim to recoup diverted community property is that preliminary injunctive relief is available in appropriate cases to prevent the holder from dissipating the assets. Of course, a temporary injunction will be effective only if it is obtained before the holder learns of the likelihood of suit. Injunctions are particularly important when cash held in a bank account is traceable to community assets or is otherwise subject to foreign claims, as is the case with the funds in the joint account decedent opened with the estranged brother of his Colombian spouse. If the defendant should learn of the plaintiff's intention to sue, he could close out his bank account and leave Florida with the funds. In that case, the plaintiff would be left with no recourse other than chasing defendant and suing him personally wherever he could be found. Moreover, no action would lie against the bank. Even if a bank permitted the defendant to withdraw the funds after the bank was advised of plaintiff's claim, Florida banking law would insulate the bank from liability unless the bank had been enjoined by court order. It is critical, therefore, that a plaintiff, such as decedent's Colombian spouse do everything possible to keep her intentions private until an injunction has issued.
(c) Conversion. If the depository bank that permitted defendant to withdraw alleged community funds prior to the issuance of a temporary injunction was on notice when it accepted the deposits that the deposited funds had been converted, the bank itself would be liable for conversion. Mere negligence by the bank in failing to discover the converted nature of the fund would not suffice: actual notice of the conversion must be shown to expose the bank to liability. If the foreign spouse could show that both defendant account holder and the bank had actual knowledge of her community property claims to the $1,000,000 at the time the bank accepted those funds, the bank would be a converter and as such, liable for the full amount of the deposit.
4. Interrelationship among the Proceedings
A practitioner bringing claims on Florida assets based on the community property laws of Latin America must carefully coordinate the actions to be taken in the various countries. Indeed, in few other areas of international practice will proceedings be so interdependent. The Colombian spouse in our hypothetical has demonstrated her awareness of this interdependence by bringing additional proceedings in Colombia to partition omitted property, thus attempting to avoid any claim, that pursuant to the separation decree, all community property claims were barred. Moreover, courts in the various jurisdictions where community property is located are likely to lend weight to a prior foreign decree determining the community property rights of the claimant spouse as against the holders of alleged community property, because community property claims, unlike probate claims, are personal in nature. When all the parties are before a court in an action to determine community property rights in specific property, a final decree from the forum court is likely to be afforded preclusive effect as to subsequent community property claims in other jurisdictions. Alternatively, even if all of the interested parties are not before the court, principles of international comity might well lead one court to afford greater weight to the claims of a party who has previously been successful in establishing or defeating a community property claim to the decedent's assets in another jurisdiction. In this case, for example, the ability of the Colombian spouse to convince a court to issue a preliminary injunction in Florida would be enhanced if she could demonstrate that in Colombian proceedings she had successfully established her community property claim to specific assets of the decedent. A spouse who has already established a community property claim in one forum may also attempt to enforce the judgment in a second forum based on comity, or may request temporary measures through international judicial assistance. However, it must be kept in mind that these remedies are time consuming and certainly not fool proof. It is prudent, therefore, to pursue a community property claim in every jurisdiction in which putative community assets are located.' In our hypothetical, for example, although United States conflicts principles and section 731.106(t) of the Florida Probate Code suggest that negotiable commercial paper is located at the situs of the paper as opposed to where the debtor resides, the current holder of the paper can always petition a court in the jurisdiction where the debtor resides and request relief which, if granted, would bar the remedy sought by the claimant spouse. The Colombian spouse, then, would be wise to consider pursuing her community property claim to decedent's commercial paper and other certificates both in Florida, where the paper is located, and in the forum where the debtor resides.
C. Inheritance Rights of the Colombian Spouse in Florida
1 - Choice of Law Considerations
Under Florida law, succession to a decedent's real estate is to be determined in accordance with the law of the situs. Succession to decedent's personalty, however, is determined by the law of decedent's last domicile, wherever that personalty may have been located at the date of death. Consequently, the validity of decedent's will and the distribution of decedent's Florida real estate, as well as his Florida and New York personalty, will be determined under Florida law.
2 - Applicable Substantive Law: The Florida Elective Share
In Florida, only the surviving spouse can elect against decedent's will. The surviving spouse's elective share under Florida law is thirty percent of decedent's Florida realty and of his personal property wherever located. In our hypothetical, decedent's Florida spouse, assuming she is found to have that status, would have no interest in opting to take her elective share, because her share under the will is greater than what she would take under Florida's forced heirship provision. Also, in our hypothetical, decedent left a Florida will specifically naming his Florida wife as his principal heir and personal representative. Consequently, a judicial finding in Florida that the Colombian first wife was the surviving spouse would not disinherit the Florida second wife, and arguably would not disqualify her from acting as the estate's personal representative. However, such a finding would reduce the Florida spouse's inheritance as a consequence of the Colombian spouse's right to take thirty percent of decedent's assets against his will. The first question, therefore, is whether Florida courts will recognize the Colombian wife as the surviving spouse for purposes of the elective share provisions of the Florida Probate Code. The incidents of decedent's marital relationship with his Colombian spouse likely will be determined by the law of Colombia, where the parties were married and later separated. Because under Colombian law the effect of the judicial separation decree was to sever only their economic bonds, and because decedent never obtained a divorce in any other jurisdiction, in all likelihood it would be determined under Florida conflicts rules that the Colombian spouse retained her status as decedent's wife through the date of death. The validity of decedent's Florida marriage will be determined according to the law of Florida, the place of celebration. In Florida, marriage by a person already married is bigamous. A Columbian separacion de cuerpos does not destroy the marriage bond. Therefore, when decedent married his Florida wife, he was still married under Colombian law, and his attempted Florida marriage was bigamous. Under Florida law, a bigamous marriage is void and invalid.
Therefore, assuming Florida applies Colombian law to determine decedent's marital relationship with his Colombian wife, the Colombian wife would be deemed decedent's surviving spouse. Furthermore, if in accordance with traditional conflicts rules, Florida courts apply forum law to determine the rights of a surviving spouse to decedent's estate and in particular her right to the elective share, the Colombian spouse would be able to elect to take thirty percent of decedent's probate assets, in Florida and New York, against his Florida will.
Assuming, arguendo, that the Colombian wife will be considered the surviving spouse, her right to take an elective share still will depend on whether she can avoid any adverse effect of her separation from decedent under the Colombian law of testate succession. The question is whether her separation in Colombia terminated her right to claim a forced heirship in Colombia in a case of testamentary succession.
Under Colombian law, it is clear that the Colombian spouse's community property rights were terminated by her separation decree. It is clear also that she remains decedent's spouse. As regards intestacy, in certain cases, she could claim an intestate forced heirship in spite of the separation, although not when there are children. With regard to testate succession, a surviving spouse in Colombia is not entitled to a legitima or legitimate portion, i.e. a true forced heirship, her only claim against a will being be the conjugal portion, generally one quarter of the estate. Under Colombian law, however, the conjugal portion is incompatible with a community property share, that is, a surviving spouse must elect between her community property or her conjugal portion. Because the Columbian spouse in this situation already received her community property in the course of the separation, it is likely that she would not be able to claim a conjugal portion or Colombian elective share in Colombia. If Florida looks to Colombian law, therefore, arguably she should not be entitled to an elective share in Florida.
3 - Potential Windfalls
(a) The Double Whammy. If a Florida court does not accept this consequence of the application of Colombian probate law, the Colombian spouse might well overcome the effect of her separation and establish her status as surviving spouse. She then could elect to take thirty percent of decedent's probate assets in Florida and New York against his Florida will. This result would be clearly anomalous. Community property rights in jurisdictions that have adopted the community property system are designed for much the same purpose as the surviving spouse's elective share rights in common law jurisdictions, i.e., to protect a spouse from total disinheritance by the other. However, neither in common law nor in civil law jurisdictions are the rights of the surviving spouse intended totally to bar the rights of the decedent's other heirs or to eliminate decedent's right freely to dispose of at least part of his or her property. Further, under Colombian law, in the limited number of cases in which inheritance rights are available over and above a surviving spouse's community property, the community property assets received are set off against those rights. In Florida, if a decedent leaves a will disinheriting the spouse, the spouse can take at least thirty percent of the probate estate as her elective share. However, there are no community property rights in Florida. If the Colombian spouse prevails in her contention that the court should apply traditional choice of law principles pursuant to which the status of property is determined by the law of the marital domicile and her inheritance rights are determined by the law of decedent's last domicile, she will get the windfall protection of both the Colombian community property laws and Florida's forced heirship laws. As a result, she would receive property far exceeding that which she could claim under Colombian or Florida law alone.
The Florida Probate Code does contain a provision which can be relied upon as a basis for restricting the potential for such double recovery, at least in cases where civil law spouses have fully settled their community property rights: Section 732.702 of the Florida Probate Code provides that where a spouse has entered into a complete property settlement in connection with a separation, that spouse forfeits any right as an intestate heir in the estate of the other." The statute also provides an analogous forfeiture as to the elective share. Accordingly, in certain cases where, as here, Latin American spouses have separated under a system where only the economic bonds - not the marriage bonds can be severed, and where the parties have, in fact, separated their property, Section 732.702 should be considered as a possible basis for defeating a claim for intestacy or elective share rights.
(b) A Bite of What Apple? In addition, the Florida Probate Code may provide another possible windfall in favour of the Colombian spouse. The Code limits the calculation of the surviving spouse's elective share in the testate estate of a Florida decedent to the decedent's Florida realty. Real property located outside Florida is expressly excluded. However, all decedent's personal property wherever located is included. By entitling a surviving spouse to claim thirty percent of all decedent's personalty wherever located, the legislature apparently presumed that the courts in other jurisdictions where a Florida decedent's personalty might be located would simply transfer that property to the Florida probate court for distribution. This may not always be the case.
While the general rule is that distribution of personalty is governed by the law of decedent's domicile at death, courts in other jurisdictions might not agree that a given asset is personalty, that decedent was domiciled in Florida at the date of death, or that an heir has the status to inherit as such. In addition, such jurisdictions may require an ancillary probate proceeding, with the attendant uncertainties of characterization and choice of law. The same problems, and others, can and do arise in connection with personal property located outside the United States. Although state courts in the United States tend to refer distribution of a decedent's personalty to the probate court in the decedent's domiciliary forum, this is not necessarily the practice outside the United States. In addition, Colombia and Venezuela might not recognize a Florida court's decree transferring decedent's personalty within their borders to Florida. Also, they may not distribute decedent's personal property within their borders to the testamentary heirs designated in decedent's Florida will.
Accordingly, a Florida court might be moved to take the Colombian spouse's entire elective share, an amount equal to thirty percent of decedent's Florida realty and of his personalty everywhere, entirely out of decedent's Florida probate assets. A gross injustice would result. Even if the Florida court applied the statutory percentages to the Florida probate assets only (seventy percent to the intended heirs and thirty percent to the Colombian spouse), acting under the assumption that courts in other jurisdictions will divide decedent's personalty located in the forum in like manner, the intended heirs would receive far less than seventy percent of decedent's total estate overall, given their probable inability to obtain those percentages of decedent's personalty in Latin America.
D. The Rights of the Disinherited Colombian Children
Florida does not recognize forced heirship for descendants. Because Florida law will govern the distribution of decedent's Florida property, none of that property will pass to decedent's Colombian children by virtue of decedent's disinheriting them in his will. Of course, they could attempt to claim their legitima against the will in other jurisdictions, although it is unlikely that a Florida court would enforce a Colombian judgment purporting to accord the Colombian children a forced share of Florida real property.
E. Decedent's New York Bank Account
Although in certain cases some jurisdictions have alleviated the need for ancillary administration of a non-domiciliary’ s personal estate within their borders (principally in cases of small ancillary estates), New York and Florida have not. Accordingly, it will be necessary for the Colombian spouse to obtain ancillary letters of administration in New York to obtain title to the money in decedent's New York bank accounts. Whether she will need to appear personally in New York to assert her right to an elective share under Florida law will depend upon whether a New York probate court will determine the distribution of decedent's personal property under New York law, or alternatively, after providing for any local creditors, merely order that the New York assets be transferred to the Florida personal representative for distribution under Florida law. Depending upon how the Florida court determines the right to, and distribution of, the elective share assets, the Colombian spouse or the Florida spouse may want to assert that the Florida ruling on distribution of decedent's personalty should be binding in New York. The rule in Florida is that not only does the law of the decedent's domicile at death govern distribution of personalty outside the domiciliary jurisdiction, but further that the domiciliary decree is binding on the non-domiciliary proceedings as to personalty.
New York choice of law principles clearly provide for the application of Florida law to the distribution of decedent's New York personalty. Therefore, the spouse's right to an elective share will be determined according to Florida law. It is not clear, however, whether a New York court would consider itself bound by a Florida probate decree as a matter of res judicata or alternatively merely would order that decedent's New York monies be transferred to the Florida personal representative. Thus, it is possible that the elective share issue, and even the community property claim, might need to be raised by the spouse in New York with respect to the New York accounts.
If the Colombian spouse can avoid the effect of her separation, application of basic conflicts principles in her Florida and New York proceedings could result in her acquisition of both a fifty percent community property share of a substantial portion of decedent's probate and non-probate assets, and a forced heirship elective share in an additional thirty percent of decedent's probate assets in Florida and New York.
V. THE FLORIDA WIFE'S STRATEGY AND DEFENSES
A. Intervention in Latin American Proceedings
The first and perhaps most important strategic decision for decedent's Florida wife is whether or not she should enter an appearance in Colombia and Venezuela to contest the Colombian wife's claims. A critical objective of the Florida wife's defence in any jurisdiction where decedent possessed property would be to establish the effect of the Colombian wife's separation from decedent. In this regard, the effect of an appearance by the Florida spouse in the Colombian proceedings upon her ability to rely on the extraterritorial effect of the separation decree must be considered. It is also important to consider the property which she might forfeit to the Colombian spouse by failing to intervene in the Latin American proceedings.
1. Intervention in Colombia as It Affects the Florida Spouse's Reliance on the Colombian Separation Decree
If the Colombian spouse is unopposed in her efforts in Colombia to obtain a community property share of the Florida property pursuant to her separation decree on the ground that the property was community property and was never partitioned, she will probably obtain a Colombian judgment establishing her community property claim to a significant portion of decedent's non-Colombian assets.
However, the problem with intervention from the Florida spouse's point of view, is that if the Colombian spouse succeeds in Colombia in the face of opposition by the Florida spouse, this opposition could lead to the Colombian judgment declaring additional assets located outside Colombia to be community property. Partitioning them would be giving effect in tribunals outside Colombia.
If the Florida spouse does not appear in the Colombian proceeding, she could argue in Florida that any decree rendered in that proceeding is not entitled to extraterritorial effect and should not be enforced outside Colombia. The argument might succeed. When determining whether to recognize and enforce a foreign judgment, Florida courts follow traditional principles of comity. Pursuant to these principles a foreign judgment or decree will be recognized in the United States only if the foreign court had personal jurisdiction over all interested parties and all interested parties actually appeared to litigate the matter.
There appears to be no precedent to suggest how a court would respond to the argument that the non-intervention of the Florida wife in a community property proceeding in Colombia should enable her to avoid the effect of a judicial partition of additional community property. However, there is precedent in support of the proposition that the Colombian separation decree precludes Florida courts from entertaining any claim by the Colombian spouse to decedent's property in Florida. In Estabrook v. Wise, the appellate court ruled that it would do injustice to the doctrine of res judicata for a Florida court to recognize a spouse's community property claim to Florida realty in the face of a prior Texas divorce decree severing the parties' community property. The court reached this result notwithstanding the fact that the wife in Estabrook, like the Colombian spouse here, claimed that the Florida property at issue had not been disclosed to her or to the Texas court which entered the decree settling the parties' community claims to each other's property. Thus, non-intervention by the Florida spouse might make it easier for her to argue that a decree declaring additional assets to be community property should not be enforced outside Colombia, and especially not in Florida, the state of the situs. On the other hand, by not appearing in Colombia, the Florida spouse might forfeit any chance to defeat on substantive grounds the attempt in Colombia to establish that Florida and Venezuelan assets actually were community property. In summary, she might gain nothing from her non-intervention strategy, while running the risk that in spite of her non-appearance, a Florida court might recognize the Colombian decree as binding with respect to the status of the property.
2. Intervention in Latin America as It Affects the Florida Spouse's Rights to Decedent's Latin American Assets
A will executed in Florida might not be recognized as valid in Colombia or Venezuela unless a decree admitting the will to probate in Florida is presented to the Colombian and Venezuelan courts. If the Florida spouse fails to introduce the Florida will in Colombia or Venezuela, or otherwise does not contest the Colombian or Venezuelan proceedings, she might forfeit her claim to any of decedent's Latin American property under his Florida will. Of course, both Colombian and Venezuelan intestacy law, applicable in those jurisdictions if the will were rejected, would entitle the Florida children to take an intestate share of decedent's estate, despite any alleged illegitimacy on the grounds that the Florida marriage was arguably bigamous. Nevertheless, the Florida spouse's failure to appear in Colombia or Venezuela might result in the entire estate in those countries being adjudicated to the Colombian spouse and her children.
In determining whether the assets at issue warrant filing an appearance, counsel for the Florida spouse should research the foreign conflicts principles in calculating which assets are "located" in Latin America. For example, in our hypothetical, decedent's Venezuelan gold certificate was physically located in Miami. Under Florida conflicts principles, the certificate is negotiable and therefore would be considered to have a situs in Florida, not Venezuela. One cannot be certain, however, that a Venezuelan court would reach the same result as to location of the certificate. Conceivably, the court might go so far as to direct the Venezuelan government to issue new certificates to persons who qualify as heirs under Venezuelan law. Indeed, when a decedent dies in one jurisdiction holding stock in a corporation located in another, there is always the potential for such inconsistent results. In order to fully protect the client's interest in the stock, the prudent approach would be to intervene in any existing proceedings, or if none have been initiated, to seek court rulings as to situs in both the jurisdiction where the corporation or issuing entity is located and the jurisdiction in which the certificates are physically present. A declaratory judgment proceeding might be indicated.
B. The Florida Spouse's Defences to the Colombian Spouse's Community Property Claims
In our hypothetical situation, there is a distinct possibility that the Colombian spouse claiming a community property interest in Florida and Venezuelan assets would succeed in overcoming a defence premised upon her separation with the decedent. This, would have to be defended against the Colombian spouse's community property claim by a showing that the assets are not community property.
As a general rule, assets acquired during marriage in a community property jurisdiction are subject to the community property rights of the spouses. Also, property acquired with community assets or the proceeds thereof generally becomes community property. The Colombian spouse's community property claim will attach to property decedent acquired during marriage and all property decedent later acquired in Miami with funds earned during the marriage.
Under Florida conflicts principles, the characterization of the following property will depend on Colombian law: (1) property which decedent acquired during the Colombian marriage which was purchased with money decedent had earned prior to marriage; (2) appreciation during marriage of property decedent acquired prior to marriage; (3) income earned during marriage from property acquired prior to the marriage; (4) property decedent acquired during marriage which appreciated in value after separation and the move to Miami; and (5) income earned after the separation and move to Miami from property acquired by decedent during marriage.
Arguments as to whether the various assets are community property must be considered carefully. In particular, counsel for the Florida spouse must be prepared to establish that as many assets in the estate as possible were acquired either prior to decedent's marriage in Colombia or after the date of decedent's separation decree and move to Miami. An expert accountant should be retained because of the complexities inherent in determining when the monies used to acquire a given asset were earned, the extent to which the value of the asset is due to appreciation, and when the bulk of such appreciation occurred.
C. Defences against the Colombian Spouse's Elective Share Claims
Even if the Florida spouse is not successful in using the separation to defeat the Colombian spouse's claim to an elective share under Florida law, she has several other arguments in her favour.
1. Public Policy
For public policy reasons, courts have recognized exceptions to the traditional conflicts rule that the law of the place of divorce applies to property settlements. For example, in numerous cases in which a party has been divorced in a jurisdiction where remarriage is barred, courts have upheld the validity of a second marriage in a different forum where marriage following divorce is permitted. An argument could be made by the Florida spouse that for all intents and purposes, the Colombian separation is tantamount to a divorce barring remarriage, and thus Florida should recognize the validity of her marriage to decedent.
2. Laches and Estoppel
Florida courts have invoked the equitable doctrines of laches and estoppel to prevent first wives from assuming that their divorces are valid and remaining silent over the years while their spouses remarry, only to assert the invalidity of the divorce years later when it best suits them financially. The Colombian spouse, although not divorced in the strict sense, has been silent for fifteen years in the face of decedent's marriage in Florida, and the argument may be made that she is estopped from claiming a spouse's elective share in decedent's estate.
3. Assets Not Subject to Elective Share Set-Off
In the event that the Colombian spouse's right to an elective share is recognized, the Florida spouse must attempt both to reduce the number of assets subject to the thirty percent claim and to offset against the claim, any other property the Colombian spouse receives from decedent's estate as community property. In effect, the Florida spouse will base her arguments on the proposition that to give the Colombian spouse a thirty percent elective share would be unfair because it would ignore both the Colombian spouse's successful recovery of community property from decedent's estate and her own potential acquisition, in numerous other jurisdictions over which the Florida court would have no control, of much more than thirty percent of decedent's overall estate. 4 Such a result would frustrate decedent's testamentary intent.
With respect to the first approach, i.e., minimizing the assets subject to the thirty percent elective share, it must be kept in mind that the Florida statute requires, in the case of a decedent domiciled in Florida, that the thirty percent be calculated upon the decedent's Florida real property and all his personal property wherever located. 65 It will be critical to call the court's attention to the fact that while the Florida statutory scheme is based on the assumption that the testamentary heirs will receive their seventy percent remainder of the estate after subtraction of the spouse's thirty percent elective share, it is quite probable that in fact decedent's intended heirs will take far less than seventy percent of his Latin American personalty. The Florida spouse and children will argue that distribution to the Colombian spouse in Florida should be made taking into account the distribution of personalty in other jurisdictions, given the legislative intent of the Florida statute that a decedent's testate heirs receive seventy percent of decedent's total estate wherever located.
Another argument in support of minimizing the assets that the Colombian spouse can claim as her elective share is that the court should set off against the elective share all property she receives as her community share of decedent's Florida assets. There is authority in Florida for the proposition that the elective share afforded the spouse of a Florida decedent should be reduced by the assets she has taken in other jurisdictions under a will. It should be argued that the policy underlying these decisions is that calculation of the spouse's thirty percent elective share in Florida must take into account the total assets she receives from the estate. If this is indeed the thrust of the cases, a compelling argument is that community property acquired in other jurisdictions is analogous to testamentary inheritance in other jurisdictions and should be set off against the elective share.
D. The Power of Attorney Transferring Decedent's Florida Realty to the Colombian Children
Issues concerning title to real property are determined as a general rule by the law of the situs. Thus Florida law will govern the validity of the inter vivos transfers of decedent's Florida real property to his Colombian children.
Those transfers were carried out by decedent's eldest Colombian son through a power of attorney granted by decedent in Colombia. As regards execution of the deed transferring the property from decedent to himself and his brothers and sisters, the decedent's son, as attorney-in-fact, will likely have observed the formalities of Florida law. A problem might arise, however, in that Florida law also requires that powers of attorney used to convey real property be executed with the formalities required for the deed itself. Powers of attorney executed in Latin American countries are rarely subscribed to by witnesses. They generally are executed as public documents before a civil law notary. If the power of attorney granted by decedent to his eldest Colombian son indeed was executed in this matter, the Florida spouse may argue, on behalf of decedent's estate, that the power is deficient and all transfers made with it are invalid. Also, because Florida law requires that a power of attorney used to make a gift expressly mention that use, the lack of specific authorization to make a gift might provide another ground for setting aside the transfer of decedent's Florida realty.
The Colombian children may attempt to defeat these arguments by citing the Protocol on Uniformity of Powers of Attorney Which Are To Be Utilized Abroad (Protocol), to which both the United States and Colombia are signatories.1 7 Under the Protocol, a power valid in the contracting state country where executed is valid in all treaty countries, provided they are executed in conformity with the rules of the Protocol. It is not clear, however, whether such a treaty would apply to sustain the validity of a transfer of Florida real property carried out by power of attorney. It might be argued, in effect, that while Florida must recognize the general validity of the power of attorney under the treaty, it may limit its use for purposes of transferring Florida real estate.
Similarly, the Protocol will not be a defence on the issue of the use of the power to effectuate a gift, because the treaty itself requires that for a power of attorney to be utilized to effectuate a gift it must expressly so provide.
Many questions raised in this article have no ironclad answer, although state legislatures, and Florida in particular, have begun to consider potential foreign elements when adopting statutory solutions. The area of transnational wills and estates is thus a field in which attorneys are called upon to argue local and international policy, legal theory, sociology and equitable justice, in sum, to be creative. The central figure of our hypothetical never divorced his first wife. Her claim to a community property share of decedent's assets, based on the source doctrine or tracing, would seem to have a chance of succeeding. Her more imaginative claim to a spouse's elective share against decedent's Florida will is far more uncertain to prosper, although it raises fundamental questions at a point where law, policy and fundamental fairness converge. It is even more difficult to predict the ultimate outcome of the second Florida wife's intervention in the Latin American proceedings. She may be able to secure certain assets, at least for her children, but will face serious obstacles in light of her awkward marital position.
Whatever final strategy is adopted by the attorney confronted with such a transnational hall of mirrors, certain analytical approaches provide a valuable means of ascertaining the position of the parties. The first step is of course to prepare an inventory of the assets and to make a preliminary determination of their nature and status in light of the procedural posture, marital status, nationality and domicile of the parties. Next, possible action to secure assets that may be dissipated must be considered. Once any preliminary protective measures thought to be necessary have been taken, the analysis of law and policy begins.
The analytical process that must be undertaken is far easier to chart than to put into practice. The key factors are the law applicable to the status of the parties, the succession, and the assets of the estate; the probabilities that courts of the various fora would apply such law; the probabilities that the courts whose rulings are necessary to an overall result favourable to the client's interests would accept jurisdiction of the case; and finally, the extraterritorial validity of a judgment recovered in a given forum in all jurisdictions in which execution will be sought. The party who takes the offensive has greater room to manoeuvre and greater flexibility in establishing the parameters of the action and the theory of the case. Being able to impose a structural framework to bring order out of apparent chaos constitutes an important advantage in conceptually complex cases of this type. Until the United States has entered into treaties of private international law addressing the numerous vexed questions that characterize transnational probate, counsel involved in this fascinating but frustrating field would do well to reflect on the conventional wisdom of litigators worldwide: a bad settlement is better than a good lawsuit. As of the date of this publication, an appeal is pending in the Third District Court of Appeal of Florida in the case of In re Estate of Mario Sanchez. On December 39, 1987, the Eleventh Judicial Circuit Court in and for Dade County, Florida, determined that Venezuelan law and not the Florida law of totten trusts applied where the decedent took his Venezuelan assets to Florida before his death and deposited them in trust for two of his fourteen children. In re Estate of Mario Sanchez, 84-2067 (Dec. 30, 1987).
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