Answers for Your Probate and Trust Administration Questions
There are a wide variety of legal options and potential pitfalls when it comes to probate and trust administration. The experienced lawyers at DeLoach, Hofstra & Cavonis, P.A. have been offering guidance and preparing plans for individuals and families so they can protect their assets and leave a lasting legacy. Here, we address many common questions families ask, drawing on our combined 60 years of probate and trust service to Floridians.
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What if my loved one’s will included a testamentary trust?
Understanding Florida Trusts
A trust is a special sort of fiduciary relationship, in which the grantor (i.e, trust creator) grants another party—known as the trustee—the right and duty to hold property for the benefit of a third party. Trusts can receive and retain ownership of almost any sort of asset, including but not limited to:
- Real property
- Motor vehicles
- Cash accounts
- Investment portfolios
In estate planning, trusts are often used to:
- Avoid probate. If a Florida resident passes away without a trust, their assets will usually be subject to probate, the time-consuming process whereby a court oversees the payment of the estate’s debts and the distribution of assets from the estate to heirs and beneficiaries.
- Exercise control over assets. Some trusts allow for the trustor to transfer assets into the trust’s possession while they are still alive, allowing them to retain partial or total control over the assets until they pass away.
- Protect privacy. Probate proceedings take place in court, which means they become part of the public record. Since most trust transactions take place behind closed doors, a trust can help protect heirs’ privacy.
However, unlike conventional living trusts, testamentary trusts are still subject to probate.
People often believe that wills and trusts are mutually exclusive. However, the testamentary trust provides something of a common ground between these two popular estate planning instruments.
Specifically, Florida law allows for living persons to sanction the creation of a trust in their last will and testament. If done correctly, the will allots certain assets to the trust’s care. Once the trustor passes away, the designated assets are transferred to the trust.
People sometimes create testamentary trusts because:
- Testamentary trusts seem simple. People may establish testamentary trusts because they seem simple. After all: the trust is established by the will, allowing the grantor to create a trust without drawing up separate documents.
- Testamentary trusts are controllable. Although conventional living trusts still allow the trustor to retain rights of access to any assets they transfer to the trust, they still necessitate a change in ownership. However, testamentary trusts allow the grantor to keep assets titled in their own name.
Why Testamentary Trusts Can Be Problematic
Since testamentary trusts are created by the provisions of a will, a probate is needed to admit the will to probate. In Florida, probate is the process that:
- Recognizes a will and establishes its validity
- Accounts for the entirety of the estate’s asset
- Pays the deceased person’s remaining debts
- Oversees the distribution of assets in accordance with the terms of the will, if any exists
Under most circumstances, probate is overseen by the court and carried out by a personal representative (or executor) named in the will. However, probate can present unexpected challenges—for the executor, and for heirs—if the deceased person sought to establish a testamentary trust. This is because the trust necessitates a second level of administration above and beyond probate.
If the grantor’s last will and testament was not recently revised, or was written without the assistance of an estate planning attorney, the personal representative may struggle to complete the transfer of assets into the trust’s care, especially if the deceased person did not clearly explain the conditions of the trust or nominate presumptive trustees.
When to Use Testamentary Trusts
We typically use testamentary trusts in more simple estate planning situations, such as where someone wants to leave assets to a minor beneficiary. Here, the trust would typically say "I give my assets to my child/children." If, however, this child is under a certain age (like 25), then his or her share is held by someone trustworthy until that child reaches an older age. This trust is known as a testamentary trust as it only comes about once the testator dies.
Contact an Attorney Today
If your loved one’s will includes a testamentary trust, DeLoach Hofstra & Cavonis P.A. could help you navigate the complexities of Florida probate to receive a hassle-free inheritance. Please send us a message online or call us at 727-777-6842 to schedule your consultation as soon as possible.
Do bank accounts go through probate in Florida?
How Bank Accounts Are Treated During Florida Probate
Probate is used to gather, record, and retitle assets owned by a deceased person so they can legally be passed on to new owners. Probate assets generally include assets that are in the decedent's own, individual name, and that account does not have a beneficiary designation. That said, the ownership documents of some properties—including bank accounts—allow another person to inherit directly if the principal owner dies without the necessity of probate.
Bank accounts that could avoid probate in Florida include:
- Accounts with a named beneficiary. When you open a bank account, you can add a payable on death (POD) designations to your bank account so that when you die, the asset is distributed to that beneficiary upon your death. This avoids probate.
- Shared accounts between spouses. Florida probate laws give married couples the "right of survivorship" on jointly-held assets, meaning any property held in both spouses' names will pass to the remaining spouse without probate.
- Joint accounts. A bank account can be opened that allows people to own it as "joint tenants with rights of survivorship." If one co-owner, the asset is owned by the survivor, all without probate.
- Accounts naming a trust as beneficiary. If the deceased person set up a trust during their lifetime, they may have named the trust as a beneficiary on bank accounts, retirement accounts, life insurance, or other assets. If done correctly, all assets poured into the trust would pass outside of probate and into the immediate control of the successor trustee. We generally prefer to have assets flow to a living trust under most circumstances.
Should All of My Accounts Have Joint Owners?
A good estate planning attorney can discuss account ownership, jointly held beneficiaries, and more, in order to make sure your assets go to the right place upon your death. We usually DO NOT want all assets jointly held with someone else unless very specific reasons exist. Avoiding probate is generally a good goal, but there are good ways and bad ways to avoid probate!
Let Us Guide You Through Estate Administration
At DeLoach, Hofstra & Cavonis, P.A., we know how complex probate can be and the complications that make the process longer and more costly. Our Florida probate attorneys have years of experience helping relatives through estate administration as quickly and efficiently as possible.
How much is an executor (personal representative) paid in Florida?
Compensation for a Personal Representative in Florida
Let Us Guide You Through Estate Administration
Do I have to pay my loved one's debts in a specific order?
As the personal representative to an estate, you have many duties to perform during estate administration. One of the most important responsibilities is to pay off any outstanding creditor claims. The state requires that these debts be paid based on their priority, and Florida statutes include the order in which creditors’ claims must be settled.
Tiers for Paying a Family Member’s Debts During Florida Probate
In Florida, a deceased person’s debts are paid according to certain tiers. During the probate process, you should settle these debts starting with the first tier, ensuring that all debts falling under each group are settled before moving on to the next tier.
- Tier 1. Any expenses incurred as a direct result of estate administration, any attorney fees required to assist in the closing of the estate, and your compensation for acting as personal representative are all paid first from the estate account.
- Tier 2. Florida law allows a payment of up to $6,000 from the estate for funeral and burial expenses. These costs are usually paid by you (or another family member) before probate starts, but you can collect reimbursement after Tier 1 costs are covered.
- Tier 3. Tier 3 covers your loved one’s outstanding federal income tax payments, estate taxes, and unpaid court fees, fines, or expenses. It also encompasses debts with a preference under federal law, including debts owed to Medicaid or other government assistance programs.
- Tier 4. Payment for any necessary and reasonable medical care that your loved one received in the 60 days prior to death is paid out under this tier. In addition, a family member may collect payment at this time if they acted as a carer or tended to your loved one at the end of their life. If your loved one passed away in a nursing home, hospital, hospice, or other treatment facility, any costs not covered in care incurred in the last 60 days will also be paid.
- Tier 5. Tier 5 is reserved as a family allowance for your loved one's surviving spouse and children. Surviving family members can receive up to $18,000 to supplement their income and help them maintain their household. This amount doesn’t have to be settled immediately, but can be paid for up to a year after your loved one's death.
- Tier 6. This tier covers the payment of any outstanding or past due child support payments (arrears) your loved one owed at the time of death.
- Tier 7. If your loved one owned a business and owed outstanding payments to suppliers, customers, or creditors, these would be paid after child support arrears. This amount is not paid with your loved one’s personal assets, but settled using any assets owned or acquired by your loved one’s business.
- Tier 8. Any claims that fall outside of Tiers 1 through 7 are paid out in this tier. For example, court judgments against your loved one would be settled last. If there are still funds in the estate at this stage, Tier 8 may also cover any excess on burial expenses and your loved one’s medical care.
What If Paying All of the Creditors Leaves Nothing in the Estate?
Under Florida law, if the debts are settled in order but the estate is insufficient to pay the entirety of the next tier, the creditors in the latter tiers shall be paid ratably in proportion to their respective claims.
It’s vital to understand that not all of your loved one’s debts will necessarily have to be paid. Once you have notified all creditors about your loved one’s death, creditors are required to file claims for payment with the probate court within 30 days (occasionally this period is extended to 3 months). If any creditor allows this period to expire without a response, the estate may not have to pay any amount outstanding.
You also have the right to dispute any creditor claims that don't have merit. This is where our experienced estate administration attorneys can really make the difference. We carefully investigate each claim, including the balance on the debt, the validity of any fees, and whether the creditor engaged in unethical collection practices. We may be able to negotiate the outstanding amount owed or force the creditor to surrender the right to collect.
If you need help with your responsibilities as a personal representative, our attorneys can guide you through the necessary steps of closing the estate and ensure everything is done in accordance with the law. Contact us today to set up a consultation and get answers to your questions, or read through our free book, Navigating the Florida Probate Process.
How much will it cost to hire a Florida probate attorney?
If you are the nominated personal representative to an estate, you will probably be looking for a probate attorney to help you in this difficult time. You need an attorney for a formal probate administration - i.e., when the probate estate exceeds $75,000 - to assist you. In this situation, you may be wondering about attorney's fees, among other matters. In Florida, the probate attorneys generally gets paid a fee of around 3% of the probate inventory, as explained a little better below.
Estimating the Cost to Hire a Florida Probate Attorney
Florida's probate rules were created to help define a reasonable attorney's fee based upon the size of the estate/probate. It's worth noting that the "value" of the estate includes only the assets that go through probate (and any income they earn during the probate period). The value of a homestead property and assets that avoid probate may not be counted.
Florida statutes set forth what are considered reasonable fees for Florida probate attorneys at the following rate:
- $1,500 for estates up to $40,000
- $2,250 for estates between $40,000 and $70,000
- $3,000 for estates between $70,000 and $100,000
- $3,000 plus 3% of the value over $100,000 for estates between $100,000 and $1 million
- $3,000 plus 2.5% of the value over $1 million for estates between $1 million and $3 million
- $3,000 plus 2% of the value above $3 million for estates between $3 million and $5 million
- $3,000, plus 1.5% on the value above $5 million for estates between $5 million and $10 million
- $3,000, plus 1% of the value above $10 million for estates over $10 million
Many attorneys have a minimum fee to do a probate that may exceed this schedule. One key to understanding the attorney's fee portion is that attorneys may be up for negotiating their fee depending on the size/complexity thereof. If the family is talking to a good probate attorney, that attorney will discuss the nuances of the work, their fees, expected costs, etc., before that attorney is hired. The 3% fee as mentioned above is not binding on the attorney or the family but it is a starting point for what is reasonable under most situations.
The fee schedule mentioned above is what is considered a reasonable fee, but fees may rise for what are considered extraordinary services. This may include dealing with taxes, litigation, real estate matters, how good the attorney is, etc., among other matters. The rules for all of this are set forth in Chapter 733, Florida Statutes, if you want to learn more.
Probate and Homestead
Generally speaking, the 3% fee does not include the value of the homestead property. While this can be pretty complex, the decedent's homestead is not part of the probate process so the attorney's fee is not based upon the value of the homestead property. Here, attorneys will charge a fee to declare the property as homestead, but that fee is generally not based upon the home value.
Other Costs of Probate?
The costs of probate include more than just attorney's fees, although that would typically be the most expensive fee. In going to court, the estate will generally need to have other costs, which may include court filing fees, bonds, publication fees, etc., In Pinellas County, we generally estimate the hard costs for the estate to be around $1,000 in most circumstances.
Could my loved one's estate go through simplified probate?
Florida law requires formal probate proceedings for any estate worth more than $75,000. If the estate is worth less than $75,000, or if the person has been deceased for over two years, it may qualify for a shorter version of probate called Summary Administration.
How to File for Simplified Probate in Florida
Summary Administration is a probate shortcut that allows survivors to receive a deceased relative's property more quickly. The probate court waives many formalities and notices that must be given during formal administration, shortening the timeframe for heirs to get their inheritances.
To create a summary administration, you must:
- Petitioning the court. You must file a document called a Petition for Summary Administration with the court. The document should include a copy of the Will, a list of the deceased person's assets (and their estimated value), a list of who inherits each asset, and a declaration that the estate qualifies for summary administration.
- Asking heirs sign the request. The petition must be signed by the surviving spouse and all beneficiaries. If any beneficiary cannot be located or doesn't consent to the petition, the court may require you to serve notice on the heirs.
- Notifying potential creditors. When you post a public notice of administration, creditors have three months to try to make a claim on any debts. This isn't necessary if the person has been deceased for over two years, since creditors are barred against bringing any further claims after two years have passed. Importantly, if there are exisiting creditors, the summary administration must make sure the creditors are paid before heirs get any remaining funds.
When is a Summary Administration Not Available?
Summary administrations are not a good option, or are not available at all, in a number of scenarios, such as:
- The decedent had creditors that must be paid. Essentially, the summary administration is not a good way to address estates with creditors under most circumstances.
- When the assets are not known - essentially, you must have almost perfect knowledge of the decedent's assets to have a summary administration.
- As an example, Dad passes away and leaves his one bank account to his son. The son cannot find any information on the account and the bank will not share information with the son. The bank tells the son - you need letters of administration but does not tell the son what is in the account. Because the son cannot get any knowledge of the account, the summary adminstration will not be available as the judge will need to know the account value and number before entering a court order.
- The heirs do not get along. All heirs must sign off on the petition for summary administration, so if one heir cannot be found or is difficult, a summary administration may be impossible.
Do you Need an Attorney for a Summary Administration?
While you don't need an attorney to file for Summary Administration, it's a good idea to have legal representation. If some assets are overlooked or there are mistakes in the petition, you and your family may be tied up in probate for much longer than necessary. We have many people come see us after trying to do a summary administration on their own - we are always glad to help them because probates, even the "easy" summary administration, is still not easy!
If you need help going through probate in Florida, the legal team at DeLoach, Hofstra & Cavonis can walk you through all the necessary steps of closing the estate. Contact us today to set up a consultation and get answers to your questions.
How Is the Probate Estate Closed?
Once all assets have been gathered, inventoried, the 90 day creditor’s period has run, and payment of claims, if any, have been made, the estate can usually start making the distribution of assets. Interested parties are provided a Petition for Discharge, setting forth the personal representative’s fee, attorney’s fees, estimated final costs, and an accounting of all of the estate’s income and expenditures. As all of the assets will be known at this point, the beneficiaries will receive the amount of their inheritance.
If all beneficiaries agree to the Petition for Discharge, the estate can be finalized quickly. Assets can then be distributed to the beneficiaries, costs paid, etc. In the event of problems, the beneficiaries have 30 days in order to make objection to the Petition for Discharge. If an objection is filed by a beneficiary, the probate court may require a hearing on the objection’s validity.
As previously discussed, the full probate process takes about 6-7 months from start to finish under most circumstances.
What Will I Need to Start the Probate Process?
After reviewing the decedent’s assets, the family will generally determine that they need a probate attorney to get things started. Sometimes a financial institution such as a bank or insurance company will inform the family that they need “letters from the court” or something to this affect. Before seeing an attorney, the family will generally want/need the following information:
- Original Last Will and Testament (if one exists)
- If the original cannot be found, the attorney will have a way of "proving" the copy
- At least original death certificate – short form (2 if real property is involved)
- Preliminary list of decedent’s probate assets
- Names and address of all persons named in the last will and testament, if known, or name/address of intestate beneficiaries
Once the probate attorney is hired, a petition for administration is sent to the court. If all works well, the court then issues letters of administration, which allows the personal representative the legal authority to act on behalf of the estate.
The process mentioned is for a formal probate administration. If the estate is simple and worth less than $75,000, then a summary administration may be available, although the documentation needed for a formal probate is the same as that of a summary.
- Original Last Will and Testament (if one exists)
How Do I Find The Right Probate Attorney?
You should first start by gathering the names of potential attorneys. If you know any attorneys in the area, that is a good place to start. The attorney you know may practice in probate or may be close to an attorney who does. You can also use the internet to find an attorney. Do not type in “probate attorneys” as this will call up a million results. Rather, type in “probate attorney in ___ [your town] Florida.”
Look for lawyers who practice primarily in probate and estate planning. A lawyer who specializes is better than a “jack of all trades” type of firm or lawyer. Today, the law is more complex than ever and you need an attorney who stays on top of his or her primary field. When you meet with the prospective attorney, be prepared to ask the following questions:
- What are their primary areas of practice?
- How many probate cases have you handled?
- Would your past probate clients recommend you?
- How many continuing legal education conferences to you attend each year?
- Do you have experienced paralegals who will help you?
- What are your fees and how do you calculate them?
- Do they bill by the hour or will they use a flat fee?
Of course, you should be comfortable with the attorney you hire, have a good rapport, and feel that you can go to them in the event problems arise.
What Makes an Asset Go Through Probate Upon Death?
Most people know that when they die, they want their assets to avoid the probate process. Most people do not even know what probate is, but they know they want to avoid it. But what is probate and, even more important, when do assets go through probate in Florida?
First, probate is the court process to properly settle your estate upon your death. The probate process was created to make sure the decedent's taxes are paid, legally enforceable bills are paid, and assets go to the right people (i.e., their heirs). Their are four types of probate in Florida, each applying in very specific situations. The four types are:
- Formal Administration: A typical "probate" process where the court appoints the personal representative (i.e., "executor") to settle the estate.
- Summary Administration: A shorter and more simple form of probate when assets are less than $75,000 and all of the decedent's bills are paid (among other matters).
- Disposition without Administration: Not really a probate, per se, but a simple way for a family member or other person to get paid for last funeral costs.
- Ancillary Administration: When the decedent was not a resident of Florida but owned real property here.
We have more on the types of Florida probates here.
Let's get back to the question posted - what makes an asset go through probate in the first place? Probate assets are assets that were either:
- In the decedent's own, individual name upon their death; or
- Did not have a beneficiary designation upon death.
Assets in the decedent's own, individual name would be just about anything - bank accounts, stocks, bonds, brokerage accounts, real property (i.e., land), and more. When someone dies with these assets, no matter what the value, the family/heirs will need to look to one of the processes above in order to take control of the asset.
If someone had a life insurance policy, IRA, 401k, etc., that did not have a beneficiary designation, that asset would also be subject to the probate process.
Example of Probate Assets:
Mom dies with a bank account and her homestead property, both in her individual, individual name. The family/heirs will need to see a probate attorney to gain control of the bank account and to sell the home.
Where are Probate Assets Distributed?
Probate assets are distributed according to the decedent's last will and testament, if they have one, and if not, then according to the laws of intestacy, which roughly means going to your family in the order set forth in the Florida statutes.
What Should I do to Avoid Probate?
There are a number of ways to avoid probate with your own estate plan. If you want to learn more about how to avoid probate, please download a copy of my book, The Top 20 Rules to Protect Your Florida Estate.
If you want to learn more about probate:
- Do I need to hire an attorney to probate a Florida estate?
- Does probate have a small estate affidavit?
- Download our free book, Navigating the Florida Probate Process!
Does Florida Have a Small Estate Affidavit Process?
The general answer is no, or at least not in the way that is helpful to most families.
We usually get this question when someone dies without a beneficiary of a life insurance policy, IRA or 401K. When the family is trying to claim these funds upon the death of a loved one, the financial company may send a claim form with a statement about a "small estate affidavit" that would be necessary in order for the family to receive the assets. Unfortunately, Florida does not have a small estate affidavit process, with one exception, which means the family will more than likely need to consult a probate attorney to help gain control of the assets.
In order for the family/heirs to take control of a decedent's probate assets, Florida generally has three types of probate to discuss:
- Formal Probate Administration: Full blown probate, going to court, need an attorney, generally used under most probates, taking 6-9 months under most circumstances.
- Summary Probate: Reserved for estates under $75,000 in very simple estates. An attorney is advised in these situations due to complexity. A court order is also done.
- Disposition without Administration: Used in very specific situations, typically where the decedent's funeral expenses are unpaid. Here, the family can go to the local probate court and file an Petition to release funds held in a bank (typically) so that the petitioner can be reimbursed for paying the decedent's funeral bill. An example of the Disposition without Administration is as follows:
Mom died with a bank account of $3,000 in her own, individual name. The bank will not give the family access to this bank account. The decedent's son paid for mom's funeral expenses of $4,000 out of his own pocket. With the proper petition to the court, the court will order the bank to pay the $3,000 to the son to reimburse him for paying the funeral bill. Here is Pinellas County's petition.
In all three types of Florida probate, the court process is involved - some probates processes are easier than others. But there is no form or affidavit in Florida that an heir can sign that will give that heir legal rights to estate assets - only the Court can sign an order to this effect.
To learn more about the difference between the disposition without administration/summary administration, I have written more on the types of Probate in Florida that would be helpful if you cannot get control of an assets upon someone's death. This may or may not mean you need to hire an attorney upon the death of your loved one.
If your loved one has passed and you are trying to access their assets, our free guide to Navigating the Florida Probate Process will be very helpful. This guide reviews the Florida probate process from start to finish.
If you asked this, you may want to know:
Does Florida Have a Minimum Amount Needed for Probate?
When someone dies in Florida, how do we know if probate will be necessary? The answer is if someone had an asset in their own, individual name. The size of the asset does not matter for Florida purposes, just the titling. So if the decedent dies with a bank account worth only $2,000 in their own name, the family/heirs will need some type of help from probate and the court system. Depending on the size of the estate, the probate process differs greatly. Florida generally has three probate processes to consider:
- Disposition without Administration: This process is available some very small estates and technically does not involve the probate process. It does, however, involve the Florida Court system. It is available for someone who is seeking to get reimbursed a funeral bill or for medical expenses within 60 days of death. Here is a link to the Disposition without Administration process in the Pinellas County Clerk of Court's website.
Example: Mom dies with $2,000 in a bank account in her own name. The bank will not let anyone access the funds and tells people they need to get "letters from the court." If someone paid for mom's funeral out of their own pocket, that person can go to the Clerk of Court where mom passed and get a court order directing the bank to pay them the $2,000.
- Summary Administration: This is a more simple probate process that is available only when:
- the probate assets are worth less than $75,000;
- all the heirs consent to the petition;
- all of the decedent's bills are paid (a big issue with summary administrations); and
- all of the decedent's assets are known (if something else is found in the future, you have to go back to court again!)
With a summary administration, the family does not need an attorney to do the filing BUT the process is difficult and an attorney would likely be necessary. We help people all the time after they file their summary paperwork and the court does not allow it due to deficiencies.
- Formal Probate Administration: This is the full probate process of appointing the personal representative, dealing with creditors, publishing in the newspaper, etc. This is done when assets exceed $75,000, the estate has debts, heirs do not agree, there are unknown assets, and more.
If your loved one has recently passed and your family is looking to probate an asset, please download our free guide on Navigating the Florida Probate Process to learn more.
How Much Do We Charge for Probate?
Many people are often shopping for attorneys upon a loved one's death. Our preferred method on starting any probate is to get together for a free initial consultation. In our initial consultation, we will likely send you a questionnaire to complete to assist everyone. We would review the completed questionnaire, review the decedent’s assets, the estate planning documents (i.e., will and/or trust), and then quote you a fee for our services.
Our office general charges a fee in accordance with Florida Statutes 733.6171. Under the Florida Statutes, an attorney is entitled to a “reasonable fee” to act as the estate’s attorney. Generally, a reasonable fee under the Florida Statutes is 3% of the probate estate’s inventory value on the first $1,000,000. An example is as follows:
The estate inventory showed a gross value of $200,000, which consisted of bank accounts, stocks and bonds. According to the statute, a reasonable attorney’s fee would be $6,000 (3% of $200,000).
Every situation is different so we will be more than happy to meet, review the probate, and quote you a fee for our services in our initial meeting so that there are no surprises.
People who have read this may want to read:
Will I have to pay income taxes on my Florida Inheritance?
If your loved one recently died, you may be concerned about probate, trust settlement and other issues. Among those includes tax issues - both estate taxes and income taxes. On income taxes, the receipt of an inheritance is not income to the beneficiary. Our income tax system is based solely upon working for your income. An inheritance is not something that you worked for, so the receipt of an inheritance is not taxed to you as income.
One possible exception to this rule is the receipt of an IRA or an Annuity. Once monies are removed from an IRA or an annuity, there may be taxable consequences to the beneficiary as the assets have likely appreciated in value.
The likely tax return that an heir should be concerned with is the estate tax, but an estate tax only applies if the decedent's estate is worth more than $11.20 million (2018). Most people do not need to worry about this as most estates, by far, are below level.
If you want to learn more about probate and the probate process, feel free to download our Free Guide to Navigating the Florida Probate Process.
How can I avoid probate court proceedings in Florida?
Under Florida law, certain assets must go through probate court proceedings after an individual’s death. This is a way to keep track of all of the deceased person’s assets, pay any outstanding debts or taxes, and ensure that property is legally transferred to beneficiaries. The biggest drawbacks of the probate process are that it can take a long time for the beneficiaries to gain possession of assets due to a fairly cumbersome court process.
Some Assets Do Not Go Through Probate in Florida
It is our general opinion that good estate planning generally tries to avoid probate, although there are worse things than actually having assets go through probate. In our opinion, what is much worse than probate is having assets go to the wrong people or having heirs fight over assets upon your death. Compared to probate, having these two things happen can be much worse than the probate process!
In order to know what assets go through probate, you need to look to how each asset is held:
- Probate Assets. Probate assets in the decedent's own, individual name. These assets are distributed according to the decedent's last will and testament if they had one, and if not, then according to the Florida laws of intestacy (i.e., the decedent's family) if no will existed.
- Joint tenancy property. Property that is owned jointly by the deceased and someone else may be passed directly to the surviving owner under a law called the right of survivorship. This can be a house that is owned by a couple, or a joint bank account with two named owners. In order to avoid probate, the survivor must have his or her name listed on the joint tenancy property and no other beneficiaries are on the title.
- Should you add your children to your property? Generally, the answer is a NO! Adding children as co-owners of your property is frequently (but not always) a bad idea. Before you add a child to your assets, including your home, speak with your estate planning attorney first.
- Beneficiary-designated accounts. Florida law allows residents to add a payable-on-death designation to checking accounts, savings accounts, retirement accounts, certificates of deposit, and life insurance policies. As long as the deceased person has designated a beneficiary, the money in the account may be transferred to the named person without probate.
- Should I do this on all of my assets? Generally, this can be a mixed bag and very problematic in many situations. With all of the assets having beneficiary designations when someone dies, this leaves no one in charge of the estate. For instance, who is in charge of the funeral expenses? Who is in charge of the decedent's taxes? Hiring the accountant? Paying household bills? If nothing goes through probate (where an executor is in charge) or if a living trust is not used (where a trustee is in charge), this may create huge problems! One distinct advantage to having assets that go through probate, or assets being owned by a living trust, is that someone can be in charge of your assets and make sure your final expenses/taxes/costs can all be paid from one common pot of money before being distributed to beneficiaries. One misunderstood aspect of estate planning is that the executor ("personal representative" in Florida) is nominated by your last will and testament but appointed by the probate court. If no assets go through probate, no one is in charge of anything, which can be problematic with families that do not get along, for instance.
- Revocable Living Trusts. In Florida, assets that are held in a living trust pass to beneficiaries without probate court proceedings. These trusts must be created before your death, and all assets—including real estate, antiques, vehicles, and so on — must be transferred into the trust under the terms of the trust document. You'll remain the trustee until your death, at which time your named successor will be in control of the assets in the trust. Generally speaking, trust planning is usually the best way to create your estate plan if you want to avoid probate upon your death.
- Enhanced Life Estate Deeds. Florida is one of the few states that allow enhanced life estate deeds, sometimes referred to as "Lady Bird deeds." These deeds allow residents to preserve their eligibility for Medicaid during their lifetimes while keeping valuable assets in the family. After death, the real property named in a Lady Bird deed passes automatically to beneficiaries without probate—meaning that assets cannot be taken by the state to recoup any Medicaid benefits used by the decedent.
- We sometimes use enhanced life estate deeds for simple estate matters and living trusts for more complicated matters. Basically, enhanced life estate deeds do not cover contingent beneficiaries very well. As an example, Mom creates an enhanced life estate deed transferring her home to her three children upon her death. If one of the children dies before Mom, that child's 1/3rd share would need to be probated. Living trusts cover contingencies while deeds simply do not.
Florida generally has two different types of probate - one is easy, one is much more complicated - and probate can take 5-8 months under most scenarios. Some estates won't need to go through formal probate at all. If a deceased person had no assets in their own, individual name, then no probate is required. If a person leaves behind few assets, beneficiaries may be able to go through a shortened version of probate known as summary administration. If the holdings of the estate aren't eligible for either of these simpler methods of administration, beneficiaries must go through formal probate. The key here is seeing a good probate attorney to direct you when the time comes.
Are you looking at probate now?
If you are looking at a probate situation now, such as when a loved one has passed away, we have a lot more information on our Florida probate page. You can also download our free book, Navigating the Florida Probate Process, as well.
Legal Advice Can be Very, Very Helpful
If you are reading this, you may be trying to avoid probate without using an attorney. While that may work for some situations, attorneys can be helpful for so many reasons. In particular, good legal advice can help avoid conflict between heirs, make sure assets go to the right person, make sure assets go to the beneficiaries tax free, make sure your incapacity planning is done correctly (like your durable power of attorney and advance directives) and so many other things. Do not leave your estate up to chance - get a good attorney to walk you through your plan to make sure you, and your family, are protected!
Let Us Help With Your Estate Planning
The best way to protect your holdings and provide for your family members is to create a Florida estate plan tailored to your specific needs. Contact us today to speak to a member of our legal team about your ideas for the future.