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 certain 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 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 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.