In this article, we examine whether an estate’s creditor may compel a Florida personal representative to produce an estate tax return in a probate proceeding.

On Hilda’s Passing & Packers’ Tickets

When your Great-Aunt Hilda died, Uncle Bill was appointed as her co-personal representative along with Hilda’s long-time paramour, Wilhelm Müller, a “special friend” of Hilda’s from back in the hinterland. We discussed some of Uncle Bill’s potential issues in previous articles including “Nonqualified Disclaimers to a Charity as a Planning Technique” and “Deducting Charitable Contributions from a Trust that Does not Permit Charitable Contributions.”

When Hilda was on her deathbed, she confided in Bill (who, in turn, confided in you) that she took great personal solace in the fact that once she cashed in her life’s chips, went to meet her maker, and gave up the proverbial ghost, the substantial gambling debts she had accrued over the years—oh, how she loved the ponies—would fade into the ether a lost memory. In the end, you didn’t have the heart to tell Uncle Bill to tell Hilda that neither Tommy “the Knuckle” Baldalino nor her other more “legitimate” creditors (read: “non-loan-sharky”) would be so forgiving.

When Helga finally breathed her last breath, you took the Cheesehead Express flight north, and you and Bill set about putting her affairs in order—learning all you could about the Sheboygan, Wisconsin mafia and Hilda’s indebtedness. It turned out that the Knuckle could be bought off with a pair of 35-yard-line season tickets to the Packers and a Holstein calf. So, you had that going for you. Hilda’s bank, however, was not so easily tempted or satisfied by bovine-based alms (and you were fresh out of Packers’ tickets).

As a swansong, Hilda had purchased a condo overlooking the beach in Florida, uncomfortably close to where you lived. To her credit, you only were asked to bail her out of jail once, and the assistant state attorney found it so funny that an 87-year-old woman inflicted so many injuries on a 22-year-old would-be purse snatcher, that the state ultimately dropped all charges against her.^[1] Notwithstanding Hilda’s eventful, albeit brief, presence in Florida, because of Hilda’s beach condo (which she failed to title in her trust, which you begged her to do for this precise reason), you opened an ancillary estate in the local probate court.

Despite Hilda’s substantial debts, she had amassed a rather impressive fortune—in part thanks to Brett Favre’s magical run in the 1990s and early 2000s,^[2] and in part thanks to Hilda’s savant-like ability to predict dairy futures. As a consequence, Hilda’s estate was taxable, and you prepared and timely filed a Form 706, Federal Estate Tax Return.

Though it should have come as no surprise that if an issue could arise with the ancillary administration of Hilda’s estate, it would arise, nevertheless, when you received a call from the holder of the condo’s first mortgage call, an issue arose that you had not encountered before: In Florida, may a valid creditor of an estate compel a personal representative or a bank to provide an unredacted, complete copy of the decedent’s Form 706?^[3]

Contractual Terms

If a decedent-debtor previously entered into a contract with a creditor, whereby the decedent agreed to the ongoing disclosure of financial information including tax returns, the creditor may enforce the terms of the contract against the estate.^[4] Moreover, if the indebtedness is subject to a promissory note, which contains terms for the survival of obligations under the note after the death of the debtor, such disclosure would now be the personal representative’s obligation.

Discovery Through Litigation

If the creditor brings a civil lawsuit seeking to foreclose on and collect the indebtedness of the decedent-debtor from the estate, two additional avenues for discovery of the estate tax return may arise.

First, under the Florida Rules of Civil Procedure in prejudgment discovery in a civil suit, “[p]arties may obtain discovery regarding any matter…that is relevant to the subject matter of the pending action.”^[5] Nevertheless, courts in Florida consider personal financial information to be particularly sensitive and private, and such courts often prohibit or substantially limit the discovery of financial matters, including tax returns.^[6] These limitations may preclude discovery of the returns altogether, or they may permit the estate to heavily redact any portions of the returns not directly related to the creditor’s claim.^[7]

If the creditor obtains a judgment, Florida law also permits postjudgment discovery. This discovery is “concerned with information that will enable the judgment creditor to collect the debt.”^[8] Broad discovery of a debtor’s assets is permitted postjudgment—because the debtor’s assets, whether held individually or jointly, are relevant to collecting the debt owed.^[9] Not only are returns discoverable, but courts may not permit any redactions of postjudgment discovery responses.^[10]

Discovery in Florida Probate

Even if the creditor does not initiate litigation seeking a judgment against the estate, the rules that apply to discovery in probate proceedings cite directly to the Florida Rules of Civil Procedure, including Rule 1.280 (general provisions governing discovery).^[11] Having said that, the probate rules expressly do not incorporate the Florida Rules of Civil Procedure concerning postjudgment discovery in aid of execution,^[12] as a creditor of an estate must first bring an independent action to prove its claim and obtain a judgment. Only after obtaining such a judgment in the independent action—which, itself, would be subject to the Florida Rules of Civil Procedure, would postjudgment discovery apply.

Thus, in a standalone Florida probate proceeding, without initiating an independent suit against the personal representative seeking a judgment against the estate based on default or violation of the loan agreement, a creditor’s ability to compel the personal representative of a Florida estate to provide an unredacted Form 706 is limited. Furthermore, the Florida Probate Rules expressly provide that a Florida probate court “has broad discretion to limit the scope and the place and manner of the discovery,” effectively limiting the creditor’s discovery as an interest person in the probate proceedings even further.^[13]

Course of Action for Personal Representative if Creditor Makes Demand

If the creditor demands that the personal representative provide a copy, the personal representative should file a motion for protective order with the probate court. A hearing would be set, the personal representative’s attorney and the creditor’s attorney would argue their respective positions, and the probate court would then balance the creditor’s legitimate need for the information on the Form 706, whether such information could be obtained by other means, and the intrusiveness of the discovery request on the decedent’s (estate’s) privacy rights.

Conclusion: The Creditor can Pound Sand, Respectfully

Although a creditor may obtain the Form 706 from a bank under the Florida Probate Rules, the likelihood that the probate court would compel a personal representative to produce an estate tax return is low. The likelihood that a probate court would grant the request to an unredacted copy is even lower.

If an independent action is filed seeking a judgment against the estate, the likelihood that a court would require the production of at least a redacted version of the Form 706 grows larger. Finally, it is likely that the creditor could reach the full Form 706 if it obtains a judgment against the estate.

As an interested person in a probate proceeding, the probate court technically could compel the personal representative of a Florida estate to produce the Form 706, without the creditor being forced to bring an independent action for a monetary judgment against the estate. Nonetheless, a general, noncontingent creditor will face a significant uphill battle in its attempt to persuade a probate court to “compel” the production of even a heavily redacted copy of the estate’s Form 706.

Footnotes:

1. You didn’t have the heart (or the legal obligation) to tell the assistant state attorney that her purse was so heavy because she was packing a Glock and a quarter wheel of aged gouda. ↑
2. Eleven playoff appearances, seven division titles, four NFC Championship Games, two consecutive Super Bowl appearances, and one championship title in Super Bowl XXXI. ↑
3. By “valid creditor,” we mean a creditor that has timely filed its claim under Florida’s nonclaim statute, Fla. Stat. § 733.702. ↑
4. See, e.g., Gridley v. Galego, 698 So. 2d 273, 276 (Fla. 2d DCA 1997). ↑
5. Fla. R. Civ. P. 1.280. ↑
6. See Regions Bank v. MDG Frank Helmerich, LLC, 118 So. 3d 968, 969 (Fla. 2d DCA 2013). ↑
7. Id. ↑
8. See Citibank, N.A. v. Plapinger, 461 So. 2d 1027 (Fla. 3d DCA 1985). ↑
9. See, e.g., Fla. R. Civ. P. 1.560 (discovery in aid of execution). ↑
10. See Regions Bank, 118 So. 2d at 970. ↑
11. See Fla. Prob. R. 5.080. ↑
12. Fla. R. Civ. P. 1.560. ↑
13. Fla. Prob. R. 5.080(b). ↑

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