What is Probate?
Probate is a court-supervised process for identifying and gathering the assets of a deceased individual, the “decedent”, paying the debts and taxes owed, and distributing the remainder of the assets to the decedent’s beneficiaries. Probate is filed in the Circuit Court of the county in which the decedent resided (the legal residence). There are two types of Probate: Formal Administration, where the gross estate assets are $75,000.00 or more (Homestead is usually exempted from this figure), and Summary Administration, where the assets are less than $75,000.00, or if the decedent has been dead for more than two years and there has been no prior administration. Non-court supervised Probate, called Disposition of Personal Property Without Administration, applies in limited circumstances. Attorney’s fees, set by Florida statute, are based on a percentage of the gross estate. Many attorneys choose instead to charge an hourly fee. Depending upon the number and nature of the assets, and where real property is located, probate can be very costly.
What are Probate Assets?
Pursuant to Florida law, you must file for Probate if any asset is in the name of the decedent alone. Probate assets may include bank accounts, stocks, investment accounts, life insurance, annuities, retirement accounts, and real estate titled solely in the name of the decedent or in his or her name as tenants in common with another person(s).
How Long Does Probate Take?
It depends on the nature of the estate assets. For example, the Personal Representative may need to sell assets such as real estate, or resolve a disputed creditor’s claim, or a challenge to the validity of the Will. Even a simple Probate may take five to six months. If the estate does not have to file a federal estate return, a Form 706, the final accounting and other documents necessary to close the estate are due within 12 months after the Court issues Letters of Administration to the Personal Representative. This period can be extended. If an estate is required to file a federal estate return, it is due nine months after the date of decedent’s death. The time may be extended for six months. The accounting and other documents are due within 12 months from the date the estate tax return is filed. This date can also be extended.
Can Probate be Avoided?
There are primarily two methods to avoid Probate proceedings. One is through the use of a properly executed and funded Trust agreement. The other is referred to as the “common property route”. This means titling assets in more than one name, and/or naming beneficiaries where possible, so that they receive the assets without delay upon the death of the decedent.
What is Trust Administration?
There are three phases to Trust Administration
- The proper execution and funding of the Trust agreement
- The lifetime administration of the Trust
- The post-mortem administration of the Trust
The Settler, also known as the Grantor, is usually the initial Trustee of the Trust agreement. During the lifetime of the Trust, that Trustee has no need to provide an accounting of the Trust assets and income to anyone. Other Trustees should provide a Settler with a written accounting.
One of the purposes of a Trust agreement is to allow a post-mortem disposition of the assets without the need for Probate proceedings, and with a minimum of attorney involvement. The Trustee must ascertain the nature, value and location of the Trust assets and any assets that may not have been put into the Trust. A reasonable effort must be made to ascertain the nature, extent and identity of creditors of the Settler’s estate or Trust. The Trustee signs an Acceptance of Trustee (the functional equivalent of Letters of Administration in Probate), and files a Notice of Trust within 10 days after receipt of notification of the testator’s death. This Notice contains the name of the Settler, date of death, name and date of the Trust, and the name and address of the Trustee. Unless a Probate proceeding has been instituted, he is required to notify creditors. To ensure a smooth administration, the Trustee should engage an attorney to handle correspondence with beneficiaries, joint owners of accounts, and the Personal Representative (if Probate has been filed). As soon as feasible after the payment of fees, taxes, expenses and creditor claims, the Trustee distributes the net Trust estate to the beneficiaries. Attorney’s fees are set by Florida statute and, unlike the Personal Representative of a Will, a Trustee is not required to be represented by an attorney. The statutory rates for attorney fees for Trust administration are not as high as those for Probate. Attorneys may choose to charge an hourly fee.
What if there is No Will or Trust?
If there is no Will or Trust, the decedent dies “intestate” and his or her assets will be distributed to the lineal heirs, pursuant to Florida statutes.