When someone dies, there’s usually a need for an orderly (and legal) distribution of his property. The property the deceased person owned in any manner – whether individual ownership, joint ownership, in Trust, etc. – is called his estate. What happens to his estate depends on the estate plan he had in effect on the day he died.
Probate Administration – The basics
In Florida, probate is not as awful, scary, or expensive as some people seem to think. But it is a public process requiring court oversight and approval every step of the way.
Probate is derived from the Latin word for “proof” or “proving.” Think about it – if you believe you’re entitled to inherit something (get legal title to it), you have to have some proof of ownership so the entire world accepts your legal rights. A valid Will provides that proof.
So, the deceased person’s Personal Representative submits the Will to a Probate Court judge to prove that the Will and the beneficiaries’ claims are valid. The judge then oversees the entire distribution process – which protects the Personal Representative and any other beneficiaries. In fact, in Florida a Will doesn’t prove title to any property until it’s admitted to probate.
But what if the deceased person died without executing a Will (intestate)? Or what if his Will is declared invalid by the judge? In those cases, Florida has a ready-made estate plan for the deceased person – whether it’s what he (or his spouse or children) would have wanted or not. The probate judge will make sure the property is distributed according to the law.
A couple of important things
Only property owned by the deceased person in his individual name without named beneficiaries (not joint, TOD, or POD) will go through the probate process.
Probate isn’t a do-it-yourself project. Florida law requires nearly every Personal Representative to be represented by an attorney. A very limited exception can be made if the sole Personal Representative is also the sole interested party – which means there are no other possible heirs hiding in the woodwork.
No beneficiary (other than perhaps a spouse or dependent child) receives any of the money or property subject to probate until the probate judge closes the case.
Types of probate
Florida’s pretty flexible when it comes to probate. In some cases, the property can be distributed without court oversight or with minimal court oversight. Larger, more complex estates will require a more formal process.
Please keep in mind that the following information is VERY general. Each estate is different, so contact us to find out what type of probate process (if any) is appropriate in your particular situation.
Disposition Without Administration
If the deceased person owned no real estate and just a minimal amount of household goods or personal property, then a very quick, informal process can be used to transfer that property to the person(s) entitled to receive it.
If the deceased person has property subject to probate worth $75,000 or less, including real estate, then his Personal Representative may be able to use Summary Administration, which tends to be quicker and easier than a formal probate. Summary Administration can also be used if the deceased person has been dead for more than two years.
Formal Probate Administration
If the deceased person’s estate doesn’t qualify for Disposition Without Administration or Summary Administration, then the only choice left is a formal probate proceeding. Generally, that means the distribution of the estate property is a little more complex, so there’s more paperwork and court oversight involved. Most formal probate proceedings are completed within nine months, and some a bit earlier. Others can go on for years if there are complications regarding the property or disgruntled heirs are contesting the Will.
This is what happens when you die as a resident of one state and own real estate in your individual name in another state. Your estate goes through probate proceedings in both states! Each state only looks at the property attached to that state, but it just takes more money away from your beneficiaries and may tie things up a while longer.
The good and the bad
Probate is a necessary process in a country that values property rights. The process ensures that all beneficiaries are identified, that creditors get paid in a timely manner, and that legal title passes properly.
But it costs money, interferes with the Personal Representative’s personal and business life, and may delay much-needed distributions to beneficiaries.
Perhaps worst of all, for people who value their privacy, it’s also a public process.
Your Will becomes a public record that anyone can see.
Your nosy neighbor can view it and find out that you disinherited one of your children. Or that you had a child your wife didn’t know about. There are even people out there who look at Wills to find potentially vulnerable wealthy widows, and then arrange to “accidentally” meet them or offer them handyman services.
Again, probate isn’t all bad. In some instances, it can actually expedite the distribution process. And in Florida, it’s not prohibitively expensive for modest estates, although it’s generally more expensive than doing estate planning that includes a revocable living trust.
But it can be a long, aggravating process, and it does infringe on your privacy. So eliminating or reducing the property subject to probate may be desirable for some people. Of course, you have to take the appropriate steps BEFORE you die!
Property held jointly with another person avoids probate, as do Transfer-on-Death (TOD) and Payable-on-Death (POD) accounts. Your IRAs, 401(k) s, and other retirement accounts with named beneficiaries also avoid probate. As do your annuities and some life insurance policies (it depends on ownership and cash value).
A Revocable Living Trust may also help you avoid or reduce probate. Yes, you’d still have a Will, but it would just essentially say, “Everything is in my Trust.”
But don’t just willy-nilly start adding beneficiaries and joint owners all over the place! There may be tax, liquidity, and other consequences waiting to ambush you.
And if any of your beneficiaries are, or will be, receiving needs-based government benefits, you need to be especially careful.
Contact Cindy and together you can begin designing an estate plan that’s just right for you and your family.
Trust administration generally comes into play when one or both of the settlors (trustmakers) of a Revocable Living Trust die or become disabled. Trust administration may also be needed if a trust was created under a Will. The trustee or successor trustee must administer the trust according to the document and state law.
A trustee has many responsibilities. She must provide proper legal notice to all beneficiaries and heirs, collect all the assets, invest and monitor the assets, distribute income and principal to the beneficiaries without violating the terms of the trust, hire and fire advisors, keep meticulous records, file tax returns, and maybe even legally consolidate, separate, or terminate trusts.
For some, the process may seem complicated, confusing, and stressful – especially when dealing with unhappy or high-maintenance family members. For others, lack of time to manage the trust business is an issue. Working with an attorney can help reduce the trustee’s burden and make the process run more smoothly.
Give Cindy Clark at Tannenbaum Scro, P.L. a call to see how she can help you.