What is Probate Law?
Probate law is the legal process of administering the estate of a deceased person, including distributing their assets to beneficiaries and resolving any debts or issues related to the estate. The probate process can be complex, so it’s important to have an experienced probate lawyer on your side.
If you are named as an executor in a will, or if you are the next of kin of someone who has died without a will, you may be responsible for handling the probate process. This can be a daunting task, especially if you are grieving the loss of a loved one.
Navigating the complex probate process can be difficult and time-consuming, from filing the necessary paperwork with the court to distributing assets to beneficiaries. If there are any disputes among beneficiaries or creditors, a probate lawyer can also help resolve those issues.
What Happens During Probate?
Probate is the administration of the estate of a person who has died. This process is completed through a special division of the courts, called the Probate Division. The administration process typically includes:
- Identifying and locating testamentary instruments, such as a will or trust.
- Gathering and inventorying the deceased person’s assets, including property, bank accounts, investments, and other financial accounts.
- Determining whether any debts or taxes are owed by the estate, and paying them accordingly.
- Distributing assets to beneficiaries in accordance with the terms of the will or state probate laws, if there is no will.
- Resolving disputes among beneficiaries or creditors as necessary.
Ways to Avoid Probate
Depending on the size and complexity of your estate, there are a few methods of avoiding probate.
To know how to avoid probate, you must first understand why probate is necessary in the first place. If you died today, what assets would still be in your name? Your car, your house, your bank account, or your retirement account? How does the bank, for example, know where those funds should go upon your passing? If you haven’t designated a beneficiary in advance, the bank needs some sort of legal confirmation to release those funds to whoever claims them. This is where probate comes in. Through probate, assets titled in the name of someone who has passed can legally change title, be sold, or otherwise distributed under the direction of the court. One goal of estate planners is to try and get as much as possible out of your name before you pass or upon the moment you pass and thus avoid the need for the court to direct that assets be taken out of your name in the first place.
The formation of a trust is one of the most common and effective avenues available to avoid probate. With a trust, you can designate a trustee to manage your assets and distribute them to your beneficiaries upon your death. Trusts can be revocable or irrevocable, and they can be used for asset protection as well. Trust formation is part of estate planning, but if not validly executed and then operated effectively and with the avoidance of probate in mind, a trust will fail to avoid probate. However, even the best trust can be challenged in probate court, so absolute probate avoidance is impossible.
Other Strategies to Avoid Probate:
Avoid probate by gifting assets during your lifetime. This can be done through a gift, deed, or other legal documents. However, it is important to consult with an experienced estate planning attorney before making any gifts, as there may be tax implications.
Owning property together with rights of survivorship with one or more individuals can also help avoid probate. For example, in Florida, you may own your home jointly with your spouse as tenants by the entirety, which means that if the deed is prepared correctly, your home will automatically pass to your spouse upon your death.
Designating beneficiaries on your bank, retirement, and investment accounts can help, too. However, should the beneficiary or beneficiaries you name predecease you, the transfer will lapse or fail, meaning the property will end up in probate anyway.
Failing to probate an estate when there are assets in the name of an individual who has died can have several consequences. First, if there is a mortgage on real property or liens on other assets with debt still outstanding, the estate will likely default on the debt and lose the assets. Let’s say you own a property in your personal name worth $100,000 and have a mortgage for $50,000. After you pass, no one makes your mortgage payments and no one probates your estate. The bank will initiate foreclosure, auction the property, and take its half. If you were alive, you would be at least entitled to the surplus ($50,000 less the costs of foreclosure); however, since you have died, your estate is entitled to the surplus. If no one initiates probate, no one can claim the surplus on behalf of the estate and the funds go unclaimed.
Another concern is that someone else other than a beneficiary, such as a major creditor, initiates probate instead. Creditors with an interest in the estate also have a right to petition the estate for probate. If assets in the name of the decedent (the person who died) have been taken from the estate without the blessing of the probate court, the creditor may be able to hold the taker liable for the value of those assets. While initiating probate as a beneficiary won’t eliminate claims of creditors, it will help the beneficiaries assess and determine their rightful share of the estate after claims of creditors on non-exempt property (and avoid accusations of theft).
Another good reason to initiate probate is the risk that another beneficiary petitions first. Let’s say your only family is your two adult children, Cain and Abel. You have specifically written out Cain for his relentless attacks on his brother Abel. After you pass, Abel holds your will, but fails to start probate. Cain, not knowing of the will, initiates probate believing he is entitled to 50% of your estate. Now Abel and Cain have an apparently adversarial conflict in the probate that Cain initiated, costing unnecessary time and money to sort out.
If you are named as an executor, or “personal representative” as it is called in Florida, in a will, or if you are the next of kin of someone who has died without a will, you may be responsible for handling probate. An experienced probate lawyer can help you navigate the probate process and ensure that the estate is administered properly.
Every state has its own probate laws, which dictate how probate must be conducted. These laws may require that certain steps be taken in order for probate to be valid. In Florida, there are many sources of probate law and procedures including the Florida Statutes, Florida Probate Code, case law, and even local rules at the court level.
Penalties to the Personal Representative
In Florida, the holder of a will is required to deposit it with the court within 10 days of the death of the decedent. While breaking this rule is not criminal, it is not without possible consequences. Delays in depositing the will can result in someone else erroneously believing there was no will and initiating probate as if there was no will and incurring expenses they may claim against the holder of the will as a result.
Claims and Insolvent Estates
In some cases, the estate may be insolvent, which means there are more debts than assets. By opening probate, a creditor must file a claim within a required timeframe or the claim may be rejected by the personal representative. If no probate is initiated, then creditors’ claims will only be barred after two years following the individual’s death.
Hiring a Probate Attorney
Probate can be a complex and time-consuming process, but it doesn’t have to be. There are ways to avoid probate if you plan ahead. An experienced probate lawyer can help you navigate the probate process and ensure that your assets are distributed according to your wishes.
For more information on our probate and estate planning services, contact us at 1-321-206-3603 or schedule an appointment.