Probate in Florida
There’s been much written about probate and why it should be avoided. Some of it is accurate, but much of the propaganda is designed by attorneys and others to sell probate-avoidance trusts.
Consumers need an accurate picture of what probate is about to make informed decisions. Probate involves opening a legal action to distribute the assets and pay the debts of the deceased. Probate can be filed if the deceased had a will (“testate”) or died without a will (“intestate”).
Why avoid probate in Florida?
Probate will cost the loved ones left behind money in court costs, attorney fees and other related expenses. It will also delay the transfer of assets to the heirs while the case works through the legal system, which is often slow-moving and over-burdened. For many, there’s also a privacy concern. In probate, the will is made part of the court file and private family information may be made public.
How do I avoid Florida probate?
The main way to avoid probate is for the person who will die (the only sure thing in life) to not own any assets. If you don’t own anything when you die, there will be no need for probate.
This doesn’t mean you have to become destitute to avoid probate. It means you need to title and structure all of your assets or as many as possible in ways that automatically pass title of that asset to another outside of probate.
Here are some examples of assets that don’t pass through probate:
- Marital property, known as “tenancy by the entireties,” has title pass to the last surviving spouse upon the death of the first one. Probate will only happen when the final co-owner dies (unless the survivor does something with the asset to avoid probate). Other assets (often real estate) may be jointly-owned by people not married to each other with survivorship rights (known as “joint tenants”)
- Insurance policy benefits, retirement accounts, “Pay on Death” bank accounts and other assets with a beneficiary clause written into them stating who’ll receive the money upon the death of the owner
- Assets held in a trust. Probate is avoided because the legal title owner is not the person who died, but rather, the trust, that doesn’t die. A succession plan is written into the trust documents to determine who receives the asset after someone’s death.
Who should avoid probate?
Generally speaking, “more money, more problems.” A good (though not always accurate) rule of thumb is, the more assets you have, the more seriously you should consider probate-avoidance strategies.
Wealthier people have more complex estates. They usually own a lot of assets, corporate entities, investments, real estate and, often, debts and other financial obligations. It’s understandable that these complicated lives will unwind slowly and expensively in the probate process. Personal and business records need to be located, heirs notified and creditors paid.
More often in complex estates, disputes arise. These may be between family members fighting among each other for control or outsiders such as business partners and people with claims against the estate. If you want to avoid the expected hardship that delays and costs will put on your surviving loved ones, you may want to design an estate plan to avoid probate.
Probate avoidance, however, is not just for rich people. Families of any means may have legitimate concerns about delays, costs, privacy or other issues that motivate them to avoid probate, including the ways described on this site. This is a cost-benefit decision families should consider.
What’s the downside to probate avoidance?
There are two forms of money—cash and time. To avoid probate, you’re likely to pay more of both kinds. This means you’ll set up a family trust to hold title to your assets instead of owning them individually and having them pass through to heirs through a will.
Trusts are more complicated and costly estate planning tools than wills. The costs don’t end when you pay to have a trust prepared. The time version of money comes into play when you have to do an inventory of all your assets and actually transfer title of them out of your name and into the trust. This means looking for files, making calls, getting transfer forms, going to DMV, preparing deeds, etc.
Many families pay hard-earned money to have trusts drafted, but then fail to “fund” the trusts with assets. It’s better to have done nothing at all.
What do I do if I inherit property in Florida?
With a higher than average senior population in Florida, it’s very common for heirs to find themselves, often suddenly, in the position of dealing with their loved one’s estate. Frequently, they’ll inherit real estate and other assets.
Many heirs are from out of state. The stress of losing a loved one, combined with being far away and having to deal with the business of the estate can be too much to bear.
Very commonly, heirs will inherit real estate and not know what to do. It may be the home of the deceased or an investment property. Many will want to sell, especially if they’re from out of state or another country, rather than become landlords.
The problem is, in most cases, probate will be needed before title of the property may be passed to heirs or sold. At CPC Law, we work with heirs to help guide them through probate and the eventual sale.
If there’s a safe amount of equity in the property, we may defer collecting legal fees for the probate work until after the sale, so the heirs can pay our fees from the proceeds. Considering how many of the heirs we worked with may be short on cash, this arrangement is often exactly what they need.
At CPC Law, we represent and guide our clients throughout the entire probate process beyond the court filings. Our representation should begin before death to design the best plan to suit each family. Our legal and financial counseling helps families solve a wide variety of problems involving business, creditor and real estate issues, among others.