Most people know that dying without a Will guarantees probate.What is surprising to many, however, is that dying with only a Will does not avoid the probate process.If someone dies owning property in his or her name alone, there must be an administrative proceeding or probate to “prove” the will, satisfy creditors’ claims and determine beneficiaries. Probate is a court administered public process subject to mandatory rules and regulations and can take from six months to several years to complete, depending on the complexity of the estate.
Common complaints about the probate process include the following:1. It takes too long, 2. It costs too much, and 3. It’s a totally public process. As a result, people go to great lengths to avoid probate, sometimes creating more potential problems than the probate process itself.One common way to avoid probate is to create a Living Trust. However, like probate which is the administration of a will, trust administration is the process of administering trust assets.Each process, both probate and trustadministration, requires three (3) distinct steps: 1. Gathering, identifying and valuing estate assets, 2. Satisfying creditor claims and paying final taxes, and 3. Distributing the balance of the estate assets to the intended beneficiaries. The primary difference between probate and trust administration is that the administration of a trust is a private matter, not open to public scrutiny.This could be an advantage or disadvantage depending on the skill and integrity of the persons nominated as your successors.
Regardless of the means of administration utilized, it is important to work closely with your trusted legal and professional advisors.We are committed to creating and fostering a relationship that will provide long-term assistance to you and your loved ones.
Formal Probate Administration
If a Florida resident dies owning assets in his name alone, there must be a probate proceeding to administer the probate estate.The probate estate consists of those assets that do not pass by beneficiary designation or were not jointly held with another person.Most life insurance policies, retirement plans and annuities have a designated beneficiary who will receive the benefits upon the death of the insured or plan participant If the designated beneficiary is the “estate,” the benefits must pass through probate.Jointly held accounts pass by operation of law to the surviving owner.
Probate is a regulated process and there are many actions within each step, guided by the Florida Statutes.Unlike some legal proceedings, you must have an attorney represent you in a probate proceeding.The benefit of court supervision is that the actions of your successors are monitored by the court to ensure that your wishes and desires are carried out.A formal probate administration is required if your non-exempt probate assets exceed $75,000 in value and/or a person has been deceased less than two years.
A primary advantage of a formal administration is the ability to accurately ascertain creditor claims.One step in the probate process is to publish a Notice to Creditors in the newspaper and formally serve a copy of the notice on any potential or reasonably ascertainable creditors.This procedure reduces the creditors’ claim period from two years to ninety days.It is for this reason that many heirs or survivors choose to initiate a probate even if there are no assets to distribute through the probate process. Probate fees are also governed by statute.The Florida Statutes sets forth the “reasonable” fees an attorney can charge to administer an estate.On average probate fees run three percent (3%) of the value of theprobate estate.
Summary Probate Administration
A summary administration is an abbreviated version of a formal probate administration.Florida Statute 735.201 provides the requirements for a summary administration.If the decedent’s estate does not exceed $75,000 or if the decedent has been dead for more than two years, the estate may qualify for a summary administration.
If the decedent had a will (testate), the assets will pass according to the terms of the last will and testament.If the estate is intestate, the assets will pass according to intestate succession as provided by the Florida Statutes.
Trust Administration
Many people create a living trust with the expectation that their estate will avoid probate and there will be nothing to do when they die.Not true.If an individual’s assets are not “funded” or re-titled to the name of their trust and are held in their individual name when they die, those assets must pass through probate before they can be distributed by the trust.Funding is the process of re-titling assets from an individual’s name to the name of their trust.It may also include re-designating beneficiaries on insurance policies, retirement plans and annuities so that the trust is the primary beneficiary. Even if a trust is fully funded and all the assets are owned by the trust, there must be a trust administration to transfer those trust assets to the beneficiaries of the trust. Unlike probate, a trust administration is a private matter.
The successor trustee has the responsibility to ascertain the claims of potential creditors and make the appropriate distributions to the intended beneficiaries.If an error is made, and assets are distributed prematurely or inappropriately, the successor trustee may have personal liability. We recommend you work with a trusted legal advisor to help you accomplish this administration process.
Definitions
Beneficiary:An heir at law in an intestate estate and devisees in a testate estate.
Decedent:A person who has died.
Devise:A testamentary disposition of real or personal property.To dispose of real or personal property by terms of a will or a trust.
Devisee:Person designated in a will or trust to receive a devise.
Domicile:A person’s usual place of dwelling, synonymous with residence.
Estate:The property of a decedent that is subject to administration.
Fiduciary:A person who has been selected for a position of special faith, trust and reliance.Personal representatives and trustees are fiduciaries.
Grantor:One who creates or adds to a trust and includes “settler,” “trustor” or “trustmaker” and a testator who creates or adds to a trust.
Heirs or Heirs at Law:Those persons, including the surviving spouse, who are entitled to the property of a decedent under the statutes of intestate succession.
Intestate:Dying without a will.
Personal Representative:Fiduciary appointed by the court to administer the estate.
Probate of Will:All steps necessary to establish the validity of a will and to admit a will to probate.
Successor Trustee:The person who becomes the trustee when the trustmaker dies, or becomes disabled.
Testate:Dying with a will.
Testator:A person who creates a will.
Trustee:An original, additional, surviving or successor trustee, whether or not appointed or confirmed by court.
