The probate system has a bad reputation, as something always to be avoided. Like most institutions, the probate system is sometimes wrongfully criticized by those who are misinformed. Probate is the process by…
The most common types of probate in Florida are formal administration and summary administration. Summary administration applies to probate assets less than $75,000 in total value, excluding the value of the homestead. The process takes approximately two weeks from beginning to end. Formal administration takes around five months, in large part because of the three-month period for claims to be filed against the estate. Attorney’s fees for formal administration are specifically set forth in the Florida Statutes.
There are many ways of avoiding probate of one’s assets. The major ones are a living trust, putting property in joint ownership with a survivorship interest, such as life estates on real property, or joint tenancy with right of survivorship for real property, bank accounts, stocks, and bonds. Again, beware of pitfalls. Even though one plans to avoid probate, it is still an excellent idea to have a current Florida will, to cover assets which inadvertently or unavoidably were not transferred into the name of the trustee, remainderman, or joint tenant. If even one titled asset is in the decedent’s name alone at death, probate would still be necessary to be transferred. Although out-of-state wills are generally valid in Florida, it is time consuming and therefore expensive to go out-of-state to find the witnesses to those wills. Life insurance proceeds also pass outside of the probate system unless your estate is a beneficiary of the policy.
One can avoid the probate of real property by signing and delivering a deed to the grantee, or to an escrow agent. You can keep the full homestead exemption by reserving a life estate, with the remainder to whomever you choose. Retaining an “enhanced life estate” enables you to sell the property without getting formal approval of the remainderman. You can place an automobile in joint names and do the same with bank accounts and stocks and bonds. You should use the magic phrase “joint tenancy with right of survivorship” in order to do so. Legal assistance is strongly advised; please don’t do it yourself.
The trust is an enormously flexible vehicle for all kinds of legal maneuvers. In the typical “revocable living trust,” the settlor (one who makes a trust) appoints himself as trustee until his death, disability, or resignation, and then appoints a successor trustee or trustees to manage trust property and dispose of it by giving the settlor the use of the property during his period of disability, and then distributing it to the settlor’s successor beneficiaries. Some non-tax benefits include:
Technically, probate means proof of the proper execution of a will. This is called the probate of the will. In common parlance probate has come to mean the entire process of succession to decedents’ estates, including intestate estates.
All personal representatives must have an attorney admitted to practice in Florida to represent them.
Florida now recognizes only a formal, written, and attested instrument as a will or codicil.
Holographic wills were recognized in some states, but not in Florida. A holographic will is one written entirely in the handwriting of and signed by the testator.
A will must be written. The testator must sign his name at the end or his name must be subscribed at the end of the will by some other person in his presence and by his direction. The testator must sign first or acknowledge that he has previously signed the will or that another person has subscribed the testator’s name to it at his direction in the presence of at least two attesting witnesses. The attesting witnesses must sign the will in the presence of the testator and in the presence of each other.
The statute excludes a person of unsound mind from those qualified to make a will. The standard for testamentary capacity is whether the testator has sufficient intelligence to understand his ordinary business and to know and understand what disposition he is making of his property at the time he makes a will.
A will does not take effect until the death of the testator. It can be revoked by the testator during his lifetime if he has testamentary capacity at the time of revocation. No witnesses to the revocation are necessary unless the revocation is by writing.
Descent and distribution in the past referred to intestate succession. Descent dealt with real property while distribution dealt with personal property. While descent is still an appropriate term for intestate succession of real property, distribution also occurs under a will. Descent does not include succession to ownership of an estate by operation of law. The right to take property by descent is statutory. The law in force at the time distribution is made in intestate succession governs who inherits property. The decedent’s death vests the right to intestate property in the heirs. Any property of a decedent that is not disposed of by his will passes to his heirs by intestate succession.
The surviving spouse of a decedent takes the entire intestate estate if the decedent has no lineal descendants who survive him. If there are lineal descendants surviving who are also the lineal descendants of the surviving spouse, the first $60,000.00 of the intestate estate plus one-half of the balance descends to the surviving spouse. The balance goes to the descendants. If there are lineal descendants who are not lineal descendants of the surviving spouse, the spouse receives one-half of the intestate estate and the descendants receive the balance.
The part of an intestate estate that does not descend to the surviving spouse and all of the intestate estate when there is no surviving spouse descends in the following order:
(1) to the lineal descendants of the decedent;
(2) to the decedent’s parents equally, or the survivor of them;
(3) to the decedent’s brothers and sisters and the descendants of deceased brothers and sisters.
The homestead section of the Florida Constitution covers two situations. First, it exempts the homestead from forced sale with some exceptions. Second, it limits the devise of homestead when the owner is survived by a spouse or minor child. Neither of the homestead doctrines should be confused with the homestead exemption from taxation.
The prohibition against devise of homestead can exist only if title to the property is in the decedent’s name alone. If the property is owned as an estate by the entirety, homestead does not exist insofar as the prohibition is concerned. The surviving spouse takes by operation of law.
No devise of homestead property may be made if the owner is survived by a spouse or minor child. If there is no minor child, the homestead may be devised to the spouse. The spouse may waive homestead rights by agreement. When there is no spouse or minor child or the spouse has waived homestead rights, the testator may devise the homestead to anyone. If homestead is not devised as permitted by the Constitution, it descends in the same manner as other intestate property unless the decedent is survived by a spouse and lineal descendants. In that event the surviving spouse takes a life estate in the homestead with a vested remainder to the lineal descendants per stirpes in being at the time of the decedent’s death.
For decedents dying on or after October 1, 1999, the surviving spouse of a decedent domiciled in Florida has the right to elect to take 30% of the fair market value of the augmented estate, which is the probate estate plus all items of other property brought into it under the law.
What are the duties of the PR when commencing administration of an estate?
Administration of a decedent’s estate begins with filing the petition for administration by an interested person.
The personal representative, commonly called “PR,” administers the decedent’s estate, pays creditors, collects assets, pays any taxes and distributes the remaining assets as required by the will or by law.
In testate estates the following order of appointment, called preference, governs:
(1) the person designated in the will of the decedent;
(2) the person selected by a majority in interest of the persons entitled to administer the estate;
(3) a devisee under the will.
In intestate estates the following preference governs:
(1) the surviving spouse;
(2) the person selected by a majority in interest of the heirs;
(3) the heir nearest in degree.
Letters of administration are then issued to the appointee and he is the duly appointed and qualified personal representative of the decedent’s estate.
After appointment the personal representative must promptly serve a copy of the notice of administration on the surviving spouse and the beneficiaries, among others.
Unless creditor claims are barred by the two-year statute of limitations, the personal representative must promptly publish a notice to creditors.
What are the basic duties of the personal representative in administering the estate?
The basic duties of a personal representative are to collect the assets of the decedent, pay valid claims against him, pay administration expenses, pay taxes, and distribute the estate to the person or persons entitled to it.
The first major duty of the personal representative is to marshal the assets and determine what property, wherever located, is in the decedent’s estate. An inventory must be filed within 60 days after issuance of letters.
The inventory must list the decedent’s property in reasonable detail and show the estimated fair market value at the date of the decedent’s death.
The duties in managing the estate depend on the amount and variety of assets and liabilities.
One of the personal representative’s duties is to pay the decedent’s valid debts.
The personal representative normally must pay all claims within one year from the date of first publication of the notice to creditors.
A personal representative is not personally liable for his acts and omissions in the performance of his duties, except:
(1) when otherwise provided by his contract executed in his fiduciary capacity;
(2) in contract when he fails to reveal his representative capacity and identify the estate;
(3) for obligations arising from ownership or control of the estate if he is personally at fault;
(4) for torts committed in estate administration if he is personally at fault; and
(5) on a contract for attorney fees.
The personal representative is personally liable for payment of the estate tax.
Revocation of probate is the usual form of a will contest. Revocation can be sought when a will or codicil has been admitted to probate and the will:
(1) is not executed with the formalities required by law;
(2) is executed by a testator who is not competent to do so;
(3) is executed as a result of undue influence, fraud, duress, or mistake; or
(4) has been revoked by the testator.
A personal representative has a duty to promptly settle an estate and to distribute the assets.
A personal representative may elect to file an interim accounting at any time, but no accounting is required until he has completed administration of the estate.
At the time the personal representative files his final accounting, he also files a petition for discharge.
When the personal representative has completed distribution, he files the heirs’ or devisees’ receipts or other evidence of distribution and evidence that creditors’ claims have been disposed of. The court then enters an order of discharge. The order of discharge releases the personal representative as such and individually, and his surety, if any, from all liability for the administration of the estate, but the bar is not absolute. The principle is that full disclosure activates the statutory bar. Concealment of any matter does not.
Summary administration is designed for small estates in which the creditors’ claims are paid by the heirs or devisees or the claims are barred and there is no dispute about the disposition of the assets. It is a permissive procedure. It is available when:
(1) the value of the estate, subject to Florida administration and less the value of property exempt from creditors’ claims, is $75,000.00 or less; or
(2) when the decedent has been dead for more than two years.
Estate administration in the state of the decedent’s domicile is called domiciliary. Administration in another jurisdiction is called ancillary. Administration in Florida of a nonresident’s estate is ancillary administration.
The applicant must file authenticated copies of:
(1) any probated will and codicils;
(2) petition for probate or for administration;
(3) the order admitting any will to probate in the domiciliary administration;
(4) the letters of administration issued in the domiciliary administration; and
(5) a copy of the death certificate of the decedent unless excused by the court.
Foreign probate proceedings are not binding on Florida courts, at least insofar as real property is concerned.
A purchaser (or owner) of real property in Florida may take title to real property in a variety of ways, depending on which estate planning, asset protection, business planning, or other objectives he or she may wish to achieve.
A purchaser may take title by means of a life estate, by means of various tenancies (a tenancy in common, or joint tenants with rights of survivorship, or as a tenancy by the entirety), or with the use of various legal entities (e.g., trusts, corporations, limited liability companies).
The life estate provides a useful tool to the property owner in achieving a particular estate planning objective. By means of a life estate, a person can convey real property to another person “for life.” The grantor can also specify whether the duration of the estate is to be measured by grantee’s life, or by a completely separate third person’s life. This last type of life estate is called a life estate per autre vie. When the person whose life is being used to measure the duration of the life estate dies, the estate automatically reverts to the grantor or his heirs.
Life estates occur in a variety of circumstances. They can arise as legal life estates in voluntary conveyances, or under Florida’s homestead provisions, or as equitable life estates in the context of trusts.
Persons taking title to real property together with others must choose between a tenancy in common and a joint tenancy with the right of survivorship. And if they are married, they may include a tenancy by the entireties among their options.
Each of these forms of concurrent ownership is best suited to achieving a different objective. Thus, one must carefully consider the characteristics of each, and consult with one’s attorney, when deciding which form to use.
In a tenancy in common, each tenant owns an undivided interest that is not necessarily equal to the other tenants’ interests, there is no right to survivorship, and each tenant’s interest is freely alienable and attachable by creditors.
In a joint tenancy with the right of survivorship, all of the tenants as a unit own the whole, joint ownership, there is a right of survivorship, and each tenant’s interest is freely alienable and attachable by creditors.
In a tenancy by the entireties, husband and wife own the whole, joint ownership, there is a right of survivorship, but both husband and wife must join in alienating the tenancy, and it is not available to answer for the individual debts of either spouse.
Taking title by means of various legal entities provides differing asset protection and estate planning benefits depending on the type of legal entity chosen. The following list provides a general description of the benefit provided by the different legal entities:
Entity Type:
Revocable trusts
Irrevocable trusts
Land trusts
Corporations
Limited liability companies
General partnerships
Limited liability partnerships
Benefit:
estate planning
asset protection and tax savings
privacy
“inside-out” liability protection
“outside-in” and “inside-out” liability protection
not good choice
“outside-in” and “inside-out” liability protection
Remember, the above discussion is only general in nature and one should consult with an attorney before attempting to make any selection so that a sound and correct choice is made.
Summary administration is designed for small estates in which the creditors’ claims are paid by the heirs or devisees or the claims are barred and there is no dispute about the disposition of the assets. It is a permissive procedure. It is available when:
(1) the value of the estate, subject to Florida administration and less the value of property exempt from creditors’ claims, is $75,000.00 or less; or
(2) when the decedent has been dead for more than two years.
Estate administration in the state of the decedent’s domicile is called domiciliary. Administration in another jurisdiction is called ancillary. Administration in Florida of a nonresident’s estate is ancillary administration.
The applicant must file authenticated copies of:
(1) any probated will and codicils;
(2) petition for probate or for administration;
(3) the order admitting any will to probate in the domiciliary administration;
(4) the letters of administration issued in the domiciliary administration; and
(5) a copy of the death certificate of the decedent unless excused by the court.
Foreign probate proceedings are not binding on Florida courts, at least insofar as real property is concerned.
