## Facts

- James Ollis Woodward died in 2002 leaving a will.
- James had two sons, Brian Woodward and Jay Woodward.
- James and Jay operated four sugar-cane farms through a general partnership.
- Shortly before James’s death, James and Jay consolidated existing debt on all four farms into a single loan secured by the farm properties.
- James’s will made a specific devise to Jay of James’s partnership interests in three of the farms.
- The fourth farm (“Home Farm”) fell into the residuary estate.
- The residuary estate was to be divided equally among five beneficiaries, including Brian and Jay.
- The will did not mention the consolidated loan, but it included a general direction that the estate should pay James’s debts.
- Ellen C. Smith, the personal representative, sold Home Farm (a residuary asset) and used the sale proceeds to pay off the consolidated loan in full, which would leave the three specifically devised farms unencumbered for Jay.
- Smith filed a final accounting and plan of distribution.
- Brian objected, arguing (1) the personal representative improperly used residuary assets to retire the consolidated loan and (2) Jay should take the specific devise subject to the encumbrance that existed at James’s death.
- The probate court rejected Brian’s objections, concluding the will did not state the devise passed “subject to” the debt and accepting Smith’s position that she could choose how to pay the estate’s debts during administration.
- Brian appealed.

## Issues

1. Whether the personal representative could satisfy the consolidated, farm-secured loan entirely from residuary assets so that Jay received the specifically devised farm interests free of the encumbrance.
2. Whether a general will clause directing payment of “debts” shows an intent to exonerate a specific devise from a mortgage or similar secured obligation when the will does not expressly address that encumbrance.

## Decision

- The Second District Court of Appeal reversed the probate court’s approval of the plan to pay the consolidated loan solely from the residuary estate.
- The court held that the probate court erred by allowing residuary assets to be used to discharge the secured loan in a way that relieved the specific devise of its share of the encumbrance.
- The case was remanded for further proceedings consistent with the appellate court’s construction of the will and applicable Florida law.

## Legal Principles

- In Florida, a specific devise of property subject to a mortgage or other security interest generally passes with the encumbrance unless the will clearly directs that the debt be paid from other estate assets.
- A general testamentary direction to pay the decedent’s “debts” is not, by itself, a sufficiently specific instruction to shift a secured obligation off the specifically devised property and onto the residuary estate.
- A personal representative’s authority to manage estate assets and pay obligations must be exercised consistently with the will’s allocation scheme and governing probate law; administrative discretion does not permit reallocating the economic burden of a secured debt to favor a specific devisee at the expense of residuary beneficiaries.
- When an encumbrance benefits or burdens multiple properties and classes of beneficiaries (specific devise and residue), paying the entire obligation from the residue can distort the intended division of the estate and is improper absent a clear testamentary direction.

## Conclusion

The appellate court reversed the probate court because the personal representative’s use of residuary sale proceeds to pay the consolidated farm loan improperly shifted the burden of the secured debt away from the specifically devised farm interests and onto the residuary beneficiaries, and a general “pay debts” clause did not clearly authorize exoneration of the specific devise.


Woodward v. Smith (In re Estate of Woodward), 978 So. 2d 865 (2008)