Probate has been made to sound like a scary process that’s best avoided. However, without an understanding of what it is, how do you decide if it’s worth avoiding?
So what is probate, anyway?
Probate is a legal proceeding where the court will appoint someone to take control of the deceased person’s assets and distribute them according to a will (Testate) or state law (Intestate). While the court is involved, it is rarely necessary to actually go to court. Unless someone brings a challenge, the entire process can be completed by simply filing the paperwork with the court.
Florida has two kinds of probate. Summary administration — is available to families when the deceased person has died more than two years ago, or had less than $75,000 in assets, not including their homestead. In order to get a summary administration, the person applying must know all of the assets – this includes knowing where they are located and the account numbers. This is key – if you don’t know all of the decedent’s assets, you cannot get a summary administration. Through a summary administration, the court will order the distribution of the assets more quickly. This entire process can take as short as a month. However, it is not appropriate for everyone.
If there are creditors, including outstanding credit card debt, and, if you don’t know where all of the assets are, or if you need a personal representative, then you must undertake a formal probate. The formal probate process can take up to a year, but it is not always a complicated process.
To file probate in Florida, you need to have a death certificate and the will, if there is one. The will should say who the deceased person wanted to be her personal representative, but if there is no will, or the person named does not want the responsibility, then Florida law dictates who has priority. If there is no will, the law also says who inherits, and the court will enforce that law.
What do beneficiaries get to know?
Throughout the process, beneficiaries are kept informed – this includes receiving a copy of the estate inventory, a list of creditors and debts paid by the estate, and the final distribution plan. For that reason, it is important to know who all the beneficiaries are and to let them know that they’ll be receiving papers throughout the process. A good relationship with the beneficiaries is always helpful – they can sign waivers that will make things go quicker, but that is not always possible. Working through an attorney may be the best thing to do.
What happens with creditors?
After death, creditors get two years to file a claim for the money that they are owed. This includes credit card companies, doctors, and hospitals. However, in a formal probate, you can shorten that time to three months. By doing that, you can effectively limit creditors and maximize the estate’s value.
What about the house?
Florida’s homestead rules are some of the most well-known and most misunderstood rules. While homestead offers tax breaks while you are alive, it also allows you to transfer your house to your survivors after your death – regardless of whether there are creditors. There are some restrictions, but the most important thing to keep in mind is that most of the time, homestead petitions can only be filed after the probate has been initiated. Homestead petitions may be filed in either summary or formal administrations.
One way to avoid probate is the use of trusts. While this is not always the best strategy – remember, probate can be used to limit creditor claims – trusts are not subject to probate like wills are. However, if you are going to use a trust, you must make sure to fund the trust by transferring all of your assets into it before you die. Another way to avoid probate is to put beneficiary designations on all of your accounts, such as your bank accounts and insurance policies. This does not work with everything, because you can’t name a beneficiary for your car or television. Determining how to avoid probate, and whether avoiding probate is the right strategy for you, is a decision that you should make with an attorney.
Preparing for probate
On the other hand, if you decide that probate is the proper avenue for you, as it is for many people, you can help make everything easier on your personal representative and beneficiaries by taking a few simple steps:
- First, make sure you leave important phone numbers where people can find them – these may be your accountant, your insurance agent, and your attorney.
- Second, leave a list of bank accounts. That ensures that your personal representative doesn’t have to go searching for things.
- Finally, make sure that your wishes are communicated in a manner that is enforceable. A note is not legally binding, and the court will not accept it. You should make sure that your paperwork is reviewed or prepared by an attorney to ensure that you are doing things correctly.
Probate is not the terrible court proceeding that some make it out to be. It is a system that is intended to be fair to everyone, and with guidance, probate in Florida is manageable. While no one can promise a painless process, it can be made a lot simpler than you may be led to believe.