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. These are assets in the decedent's own, individual name. These assets are distributed according to the decedent's will if they had one, and if not, then according to the 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 a terrible 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. Florida also allows transfer-on-death designations on stocks and bonds, allowing beneficiaries to directly inherit brokerage accounts.
- Should I do this on all of my assets? Generally, this can be a mixed bag. With all of the assets jointly held, who is in charge of the funeral expenses? Who is in charge of the decedent's taxes? If nothing goes through probate and all of the assets are jointly held, no one is in charge, and this may create huge problems!
- Living trusts. In Florida, assets that are held in a living trust may 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 trustee until your death, at which time your named successor will be control the assets in the trust.
- 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 pass automatically to beneficiaries without probate—meaning that assets cannot be taken by the state to recoup any Medicaid benefits used by the decedent.
- We use enhanced life estate deeds for simple estate matters and living trusts for more complicated matters. We will discuss the difference with you, of course.
Some estates won't need to go through formal probate at all. If a deceased person doesn't leave behind any real estate, and his or her total assets don't exceed funeral expenses and other end-of-life costs, then probate isn't 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 method of administration, beneficiaries must go through formal probate. The key here is seeing a good probate attorney to direct you when the time comes.
Let Us Help With Your 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.