Gigi Hubbard thought she was doing smart estate planning when she and her husband, John, set up revocable trusts in 1984. Instead, she was making it easy for him to disinherit her.
That's exactly what happened when he died in 1994, leaving her a widow after 16 years of marriage.
"I'm still totally in disbelief that he did it after being married to him all that time and getting him through his illnesses," said the 49-year-old Palm Harbor woman. "When I think that he took my money and gave it to his kids, I get real irate."
Even his grown children were surprised to find out John Hubbard had left everything to them, changing his will and trust without ever telling Gigi, his second wife.
His decision turned the children and Mrs. Hubbard into adversaries and launched a lengthy legal battle that has nearly depleted the assets both sides thought rightly belonged to them.
Florida law says a surviving spouse is entitled to at least 30 percent of a person's estate no matter what his or her will has to say about it. In legal terms, that minimum guarantee is known as the "elective share."
However, Florida courts have acknowledged that there's a giant loophole. In recent decisions, judges have applied the elective share only to property that passes through probate. People who arrange their affairs to avoid probate, a popular strategy among retirees, risk ending up impoverished widows or widowers.
Legally, all it takes to disinherit your spouse is to put your assets in a trust with someone else as the beneficiary. Other strategies include putting property into joint accounts with right of survivorship or into "in trust for" or "payable on death" accounts naming someone else as joint owner or beneficiary.
Mrs. Hubbard challenged her husband's trust and lost. Her lawyer, Steven G. Nillson of Clearwater, said the trust was void because it is contrary to public policy and was formed to deprive Mrs. Hubbard of her elective share rights.
Pinellas Circuit Judge George W. Greer said the law doesn't stop somebody from using a trust to reduce a spouse's elective share. She appealed the decision, but the 2nd District Court of Appeal ruled this month that Greer was right.
Some judges and lawyers say the situation isn't fair, but it's up to the Florida Legislature to correct it.
"Although we believe this to be a manifestly unfair result and poor public policy, we recognize that we are not the appropriate forum to correct the same," the 3rd District Court of Appeal said in a decision on a Dade County case in 1994. That case (Friedberg vs. SunBank/Miami) confirmed the right to be a "mean-spirited, no good curmudgeon," cutting your spouse out of your estate.
The court said it found it particularly strange that trusts are fair game for divorcing spouses dividing their assets, but are out of reach for widowed spouses, no matter how long or how loving and devoted the relationship.
The Legislature considered a bill to change the law last session, but it never got out of committee. The Florida Bar, which backs the reform effort, plans to try again next year. If the bar's plan becomes law, it would prevent others from doing what Hubbard did.
"Most couples acquire and save their money by joint efforts," said St. Petersburg lawyer Louie N. Adcock Jr., chairman of the bar committee that wrote the reform proposal. "If you dissolve your marriage by dissolution of marriage, or divorce, there is a division of property. There should be a similar provision to protect the surviving spouse from being left a pauper."
The bar wants to calculate elective share based on an expanded estate that includes revocable trusts, the cash value of life insurance policies and a share of property held in joint accounts. Some gifts to individuals or charities made during the last year of life without the spouse's written consent also would be counted.
Instead of a flat 30 percent, the bar wants to base elective share on a sliding scale, starting at 10 percent for marriages of less than five years and going to 40 percent for marriages of 25 or more years. The minimum share would be $50,000 or half the estate, whichever is less.
A final rewrite
Adcock says it's rare that people decide on their own to disinherit a spouse.
"What I do see is a lot of demand on the part of children when there is a second marriage," he said. "They want those assets and they put pressure on mom or dad even though the second marriage may have lasted 35 years."
That was not the case with Hubbard, said Daniel B. Hubbard, one of four children from Hubbard's first marriage.
"We didn't discuss it before he did it," he said. "I didn't know what the particulars were. When he died, I was kind of astounded. I was just carrying out his wishes."
Their marriage was his second and her first, said Mrs. Hubbard. They married in 1977 and she moved from Fort Lauderdale to Clearwater, where he worked as a representative for mutual fund companies. She is a guidance counselor at San Jose Elementary School in Dunedin.
The Hubbards set up wills and trusts in 1984, naming each other as beneficiaries. Mrs. Hubbard said she divided bank stock her grandfather had given her, putting $65,000 worth in her husband's trust. She says she did it with the understanding that his trust would provide for her.
They updated their wills and trusts in 1991, and Mrs. Hubbard says she thought those documents were still in effect when he died in June 1994 at the age of 59.
However, wills and revocable trusts can be revoked or changed at any time by their creators. That's what Hubbard did seven months before his death, signing new documents naming his children from his first marriage as beneficiaries. Hubbard said in his trust that he intentionally left Mrs. Hubbard nothing because he already had given her other property, a claim she disputes.
"Mr. and Mrs. Hubbard had split up their assets and agreed to separate," said Tampa lawyer Steven L. Hearn, who represents two of the children. "Mr. Hubbard bought a separate condo that he lived in. They set up separate lives and I truly believe that in his mind they had divided up everything fairly.
"He simply did his trust to give his property to his kids," Hearn said. "I see nothing wrong with allowing a person to do that even if they are not officially divorced."
Mrs. Hubbard says she and her husband were living apart, but were not estranged or legally separated. She says he did not want to continue living in their house on Clearwater Beach because of his health problems. He had had both heart and kidney transplants as well as cancer surgeries. She says she paid him $50,000 for his interest in the house, which she sold shortly after his death.
"I saw and talked with him about every day and spent weekends with him," she said. "I was taking care of the house until we could get it sold."
She says two weeks after he cut her out of his estate, they celebrated their 16th wedding anniversary in Savannah, Ga.
"We spent Christmas in Hawaii and New Year's in Washington at his brother's," she said. "We were spending a great deal of time together. I never suspected that he had done anything. That's why it came as such a shock."
Mrs. Hubbard says she can only speculate about why her husband did what he did.
"From the time he was divorced, he had a very strained relationship with his children," she said. "I'm sure there was a lot of guilt and a lot of fear after all the surgeries, when he knew he was facing death."
At the time he rewrote his trust, Hubbard was still at odds with one child, whom he left a token $25.
Daniel Hubbard agrees that his father didn't get along with the children, but says Mr. and Mrs. Hubbard also went through difficult times.
"He was an alcoholic and when he stopped drinking, he had a big change of heart," Daniel Hubbard said. "He wanted to make sure he did something for his kids. He knew she had more than enough money to take care of herself. She had life insurance money. He just decided not to give her any of his assets."
The appeals court said its decision leaves Mrs. Hubbard free to pursue any claims she might have that she was cheated out of the stock she gave her husband.
However, Hearn, the lawyer representing two of the children, doesn't think she has a valid claim.
"Even if she did agree to put that in the trust, she knew that the trust allowed her husband without contacting her or getting her signature to take money out," he said.
Mrs. Hubbard did win one point in her case. Because her husband's condo was considered homestead property, Hearn and the children did not contest her right to use it for her lifetime.
However, it was a hollow victory. Neither Mrs. Hubbard nor the children wanted to make the mortgage payments, and neither side could sell the property without the other's consent. The condo is now in foreclosure proceedings.
The children haven't fared any better with their inheritance.
"After two years of legal action, there's nothing left," Daniel Hubbard said. "It's just a shame the whole thing ever happened."