The Horrors of Homestead at Death

homestead
A little planning can prevent homestead horrors at your death.

Did you know that your Florida homestead could be a problem when you die? Most people don’t, and this results in pretty constant income for probate attorneys. As much as I appreciate having your children pay me for the probate of your home, I’d prefer to help you avoid this (usually) unnecessary hassle and expense.

What exactly do I mean by “homestead”? In Florida, that’s a broad legal term that has different meanings and different ramifications under the laws. Our homestead laws fall into three categories: exemption from forced sale (creditor protection), restrictions on transfer and devise (protects spouses and minor children), and property tax exemptions (reduces property taxes). Once you die, your property tax exemption is not longer applicable – that’s not the homestead law I’ll be discussing here. Exemption from forced sale and restrictions on who you can leave your homestead to are the biggies once you’re dead. They’re both addressed in Article X, Section 4, of the Florida Constitution.*

What qualifies as “protected homestead” under Article X? First, it has to be your primary residence and you have sole ownership (not joint, not in a trust, etc.). If the real estate that’s your primary residence is located within a municipality (within city, town, or village limits) your homestead is limited to one-half acre of contiguous land. If located outside a municipality (such as in a county), your homestead can include up to one hundred sixty acres of contiguous land. If your home fits into one of these categories, you’re covered under Florida homestead laws  – whether you want them or not. So, what does that mean?

First, it means that if you’re the sole living owner of protected homestead and you’re married and/or have a minor child when you die, you can only leave your home to the people Florida mandates. If your Will or Trust gives the property to someone else, the probate judge will void that gift and distribute the home to whoever is entitled under FL law. If you’re not married and have no minor children when you die, you can leave the home to anyone you wish.

Second, assuming that you’ve devised your home to a legally-approved person, and he or she is your spouse or a blood relative who would be entitled to inherit under Florida’s laws of intestacy, then your home will not have to be sold to pay off the debts you died owing (except for a mortgage or home equity loan). The home and any loans against it will go to the heir. However, if you die single, with no minor children, and leave the home to your boyfriend, the homestead will no longer be “protected” and could be forced into a sale to pay off your debts.

Okay, that’s all fine and dandy. But what people don’t realize is that, due to a weird quirk in Florida law, homestead property owned by a sole individual – whether it’s “protected” or not – has to go through the probate process before it can get to the rightful heir. And while a Personal Representative can sell an investment property very quickly (as long as the Will gives him that power), the Personal Representative CANNOT sell the protected homestead. Under the law, the spouse, minor child, or other heirs inherit it as soon as you die, but, due to scam artists and other criminals, our laws now require that a probate judge sign and record an Order declaring who is the rightful owner under the law. A formal probate is a strictly defined process, so it can take 5-6 months from when the probate was opened to get that Order, which allows the heir to sell the homestead. In the meantime, who’s paying the legal fees, mortgage, insurance, property taxes, pool and yard maintenance, etc.? Where’s that money coming from? If your home will land in probate, so should all your other assets so there’s cash to pay your debts and the home’s upkeep for several months until it can be sold.

I often have married couples tell me, “Well, we’re joint owners on the house, so there won’t be a probate. It’ll go right to the survivor.” And they’re correct – assuming they both don’t die at about the same time. Or assuming that the survivor will actually take steps to prevent the homestead horror from happening before he or she dies.

This is all very easily avoidable – the key is planning. Give us a call at 941-444-5958 to make sure you don’t leave behind a homestead horror for your family.

* Mobile homes on rented land aren’t covered under Article X, but they have some protections under Florida Statute 222.05.

Other articles you may find interesting:

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Ready to make sure everything’s in order for your loved ones in the event you become incapacitated or die? Give Manasota Elder Law a call at 941-444-5958. We’ll help you determine whether you’re all set, or whether there are still some things that need to be done to protect what’s most important to you … your family.

Why You Might Not Get What’s in Mom’s Will

In this video, Cindy discusses why sometimes beneficiaries don’t actually receive what Mom left them in her Will.

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***Want to learn more about how to protect your family from the government, lawsuits, accidental disinheritance, or nursing homes? Click THIS LINK to book a seat at one of our upcoming fun and educational workshops.***

How Can I Move On after a Loved One Dies?

Grieving has no time limit. But sometimes doing tasks can help you move through the grieving process.

There are no rules about when you should “get back to normal” or “move on” after a loved one dies. Everyone deals with grief differently. But there are many financial and legal tasks that will require your immediate attention, and sometimes dealing with menial tasks can help you move through the grieving process.

Here are some things that will need to be done:

  • Gather important information, such as the deceased’s Social Security number, birth certificate, marriage certificate, divorce decree, and military discharge papers.
  • Locate the deceased person’s original “wet-ink” Will (and Trust, if applicable).
  • Obtain at least 10 copies of the death certificate. In Florida, we have both short-form (no cause of death listed) and long-form death certificates. Generally, only life insurance companies require the long-forms in case there’s a suicide, workplace death, or something else that voids the policy. Everyone else will require a short-form due to privacy laws. So, request a long-form for each life insurance policy and lots of short-forms for everything else.
  • Inform the Social Security office about the death (if the funeral home didn’t) and file a Social Security benefits claim form to qualify for the death benefit. Surviving spouses will also want to find out what will happen to their benefits due to the death of their spouse.
  • Notify the deceased person’s supplemental Medicare insurance plan of the death of the insured (Social Security will notify Medicare and Florida Medicaid, but not any supplemental health insurance companies).
  • Find the titles and registrations for all automobiles. If there’s a loan, find the loan documents. If leased, find the lease contract.
  • Print out up-to-date statements for all bank, brokerage and retirement accounts.
  • Find all evidence of debts and their balances – loans, credit cards, mortgages, medical bills, etc.
  • Find the beneficiary forms for all insurance policies, IRAs, 401(k)s, bank accounts, annuities, and investment accounts.
  • Deposit the deceased’s original Will (if there is one) with the Probate Court in the county of the deceased person’s residence, even if no probate is expected. Make a copy first because the clerk will keep the original. In Florida, there’s generally no charge to deposit a Will.
  • File a death claim with the deceased’s life insurance company, if applicable.
  • Request, complete, and submit paperwork for any accounts that named you as a beneficiary.
  • Contact the Employer’s Benefits department about survivorship pension, health insurance, unpaid salary and life insurance benefits, if applicable.
  • Change the name on the utilities, if applicable.
  • If the deceased person was a party to an ongoing lawsuit, or the beneficiary of a probate that hasn’t yet settled, gather all the pertinent paperwork.
  • Prepare a preliminary monthly budget and income summary.
  • Contact an experienced estate planning or probate attorney to determine whether a probate and/or trust administration will be needed. While trust administration is much less onerous than probate, Florida does have some legal requirements for trustees after a person dies.

Be aware that anyone convicted of a felony – anywhere, anytime – cannot serve as a Personal Representative (known as an Executor in other states) in a probate under Florida law.

Hold off for a bit before you retitle any joint accounts into your name only  – random checks made payable to the deceased can appear for a few weeks after death as things settle out and you’ll want to be able to deposit them.

Contact your financial advisor about transferring any inherited IRAs into your name and taking out a required minimum distribution (RMD), if applicable. New beneficiaries should also be named and title for any real estate previously held jointly with the deceased should be updated (your  estate planning attorney can assist you with that).

And don’t forget about taxes. A final income tax return may need to be filed, and if the deceased person was very wealthy, you may also need to file a federal estate tax return within nine months of death.

You don’t need to go it alone. Contact an experienced estate planning/estate administration lawyer for help.

Other articles you may find interesting: 

How Family Dysfunction Can Wreck Your Estate Plan

Why is This Probate Taking So Long?

***Want to learn more about how to protect your family from the government, lawsuits, accidental disinheritance, or nursing homes? Click THIS LINK to book a seat at one of our upcoming fun and educational workshops.***

Death Quest: The Morbid Scavenger Hunt

In this video, Cindy discusses the sad, frustrating process most people have to go through after a loved one dies.

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***Want to learn more about how to protect your family from the government, lawsuits, accidental disinheritance, or nursing homes? Click THIS LINK to book a seat at one of our upcoming fun and educational workshops.***

Co-Owning Real Estate: The Good, the Bad, and the Ugly

In this video, Cindy discusses how co-ownership of real estate can affect your estate plan.

Other articles/videos you may find interesting:

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***Want to learn more about how to protect your family from the government, lawsuits, accidental disinheritance, or nursing homes? Click THIS LINK to book a seat at one of our upcoming fun and educational workshops.***

Deciding Who to Name as Your Personal Representative

Personal Representative named in Will
Choosing the right person to be your Personal Representative named in your Will is an important decision.

If you have a Will, someone has to administer it – gather all of your assets and debts, work with lawyers and the courts, take care of your property until it can be sold or distributed, and eventually distribute it to the people you named in your Will. That person is your Personal Representative (called an Executor in some states).

Who should you name to take on this enormous burden and responsibility? Well, in Florida, the absolute minimum requirements are that the person be at least 18 years old, a Florida resident as of your date of death or a family member, and not be a convicted felon. Otherwise, they cannot be appointed.

So, who can you name? You can name a family member who lives anywhere in the U.S. (it’s possible, in theory, to have a foreign PR, but it’s extremely costly and awkward and many probate lawyers won’t handle such a probate), a friend who lives in Florida, a business associate who lives in Florida, a Florida attorney or CPA, a professional fiduciary located in Florida, or a corporate trustee (such as a Florida trust company or bank).

What characteristics should this person or entity have? They will have a legal fiduciary duty to handle your estate (your “stuff”) according to your wishes, so they should be trustworthy, honest, dependable, organized, fair, have common sense, and, if possible, live close by so they can easily control and manage your property.

Being appointed as a Personal Representative is a time-consuming and sometimes frustrating job. So the person you name should have plenty of free time as well as the health and stamina to put in lots of hours, read and understand legal documents, hire professionals, deal with family questions and conflicts, and potentially travel frequently if they don’t live close to your property.

Your Personal Representative is entitled to (taxable) compensation under Florida law – and they should take that compensation! It’s not fair for one child to bear the entire burden for several months or longer, and then end up with the same amount as her siblings who just sat back and waited for their inheritance.

In your Will, you should always name backups after your first choice – bad things happen to good people all the time. If there is no one named in your Will who is willing and able to serve when you die, someone you wouldn’t want or trust could be named by a judge who wouldn’t know any better.

A good option for people who don’t have any family members or friends they want to name – or would prefer to name someone who is completely independent – is to name a corporate trustee. They know all the rules and the process, and have no emotional skin in the game. They can be completely impartial and fair. But they cost money, so there has to be enough money in your estate to make it worthwhile for them to serve – generally a minimum of $500,000. You should talk with any trust company you’re considering now – while you’re alive. If you have less than $500,000, you’ll likely need to rely on family and friends to serve.

Other articles you may find interesting:

NFA Firearms: Why You Should Name a Florida Executor or Trustee

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Would you like to learn more about estate planning, elder law, asset protection planning, probate, and Medicaid planning in an informal, no-obligation setting?

To sign up for one of our free, educational workshops CLICK HERE.

NFA Firearms: Why You Should Name a Florida Executor or Trustee

In this video, Cindy discusses what actually happens when you die in Florida while owning NFA firearms, and you named an out-of state executor or trustee.

Other articles/videos you may find interesting:

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***Want to learn more about how to protect your family from the government, lawsuits, accidental disinheritance, or nursing homes? Click THIS LINK to book a seat at one of our upcoming fun and educational workshops.***

Why is This Probate Taking So Long?

Probate
There are many reasons a probate can take 9-24 months from start to finish.

After a loved one dies, her money and property must be distributed to the right people, either according to her Will or the state’s default distribution scheme (found in its “intestacy” statute). While most people want the settlement process to be done ASAP, probate can take between 9 and 24 months. Yes, you heard that right. The time delays create unnecessary stress, especially for families who need access to those accounts or property.

5 Reasons Probate Takes So Long

There are many reasons why the probate process takes so long. Here are five of the most common:
  1. Paperwork. Managing probate-required paperwork can be a monumental undertaking with structured timelines and court-imposed deadlines.
  2. Complexity. Estates with numerous or complicated accounts or property simply take longer to probate, as there are more items to be accounted for and valued.
  3. Probate court caseload. Most probate courts were dealing with high caseloads and limited staff before COVID-19, and it’s worse now.
  4. Challenges to the Will. Heirs, beneficiaries, and those who thought they’d be beneficiaries, can object to and challenge the Will’s instructions and legal requirements. While state law dictates the length of the time period during which they must object, Will challenges can add years to the probate process. Some of the most common challenges include assertions that the Will maker was:
    • Lacking testamentary capacity (i.e., lacking the legal or mental ability to make a Will)
    • Delusional
    • Subject to undue influence (wrongful pressure to do something they didn’t want to do)
    • A victim of fraud
  5. Creditor Notification. The deceased person’s creditors must be notified of the deceased person’s passing and the probating of her estate so they have time to submit any legal claims for debts. This time period also varies from state to state, but it is generally four to nine months (three months in Florida). The bottom line is that, while most state probate laws are designed to keep the process moving along in a timely manner, that’s more of a plan than a reality.

Simply Put, Avoiding Probate with a Trust Is Better

Simply put, had the deceased person created a trust to hold her accounts and property, the long, complicated probate process could have been avoided. By creating and funding a trust, those accounts and property would no longer be viewed as being owned by the deceased person and would not be subject to the supervision of the court. Their distribution would be controlled by the instructions left in the trust agreement. Administering a trust instead of a probate is usually quicker –meaning that beneficiaries receive assets more quickly, costs are reduced, and stress levels are kept to a minimum.

Take Action Now

First, if you need help settling a probate estate, we can help you move the process along and remove some of the burden so you can move on with your life. Second, we can help you make sure you never burden your loved ones the way you’ve been burdened. How? We’ll show you how to avoid probate with a trust. Give us a call today. As an added convenience to our clients, we’re able to meet via phone or video conferencing, if you prefer.

Other articles you may find interesting:

9-Step Guide for a Personal Representative

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Would you like to learn more about estate planning, elder law, asset protection planning, probate, and Medicaid planning in an informal, no-obligation setting?

Sign up for one of our free, educational workshops here.

Does Mom Have to Pay Dad’s Credit Card Debt after He Dies?

credit card debt
Consult with a probate attorney before paying a deceased person’s credit card debts.

When a family is grieving after the death of a loved one, the last thing any of them wants to deal with is unpaid debts and debt collectors.

nj.com’s article asks “Is mom liable for my dead father’s credit card debt?” The answer: generally, any unpaid debts are paid from the deceased person’s estate.

In many states, family members, including the surviving spouse, typically aren’t required to pay the debts from their own assets, unless they co-signed on the account or loan. This includes credit card debt.

All the stuff that a person owns at the time of death, which includes everything from money in the bank to their possessions to debts they owe, is called an estate. When the deceased person has debt, the executor of the estate will go through the probate process.

During the probate process, all the deceased’s debts are paid off from the estate’s assets. Some assets—like retirement accounts, IRAs and life insurance proceeds—aren’t included in the probate process. As a result, these accounts may not be available to pay creditors. Other assets can be sold to pay off outstanding debts.

A relative or the estate executor will typically notify any lenders, like credit card companies, when that person passes away. The credit card company will then contact the executor about any balances due. Note: the creditor can’t add any additional fees, while the estate is being settled, and the executor SHOULD NOT arrange to make any payments without first consulting with a probate attorney.

If there’s not enough money in the estate to cover credit card debts, the card issuer may have no recourse. The executor and the heirs aren’t responsible for these debts. Unlike some debts, like a mortgage or a car loan, most credit card debt isn’t secured. Therefore, the credit card company may need to write off that debt as a loss.

You should start learning about the probate process in your state to have the best defense for dealing with creditors and debt collectors.

If you need help, talk to an experienced estate planning attorney.

Reference: nj.com (Jan. 15, 2020) “Is mom liable for my dead father’s credit card debt?”

Other articles you may find interesting: 

College Kids Need Estate Planning,Too

What’s a Lady Bird Deed?

***Want to learn more about how to protect your family from the government, lawsuits, accidental disinheritance, or nursing homes? Click THIS LINK to book a seat at one of our upcoming fun and educational workshops.***

9-Step Guide for a Personal Representative

In this video, Cindy discusses 9 things anyone who is drafting a Will – or anyone who is named as a Personal Representative in a Will – should know.

Other videos you may find interesting:

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***Want to learn more about how to protect your family from the government, lawsuits, accidental disinheritance, or nursing homes? Click THIS LINK to book a seat at one of our upcoming fun and educational workshops.***