Below are answers to questions frequently asked of Florida Estate Planning and Probate Attorneys.
Estate Planning
Estate planning is the process of arranging for the distribution of your assets and the management of your affairs after your passing. It’s important in Florida to ensure your wishes are followed, minimize estate taxes, and avoid probate complications.
The primary reasons to have a will are to distribute your belongings differently from state law, to designate who will be in charge of your estate, or to name a guardian for your children.
A trust can perform many different functions. Reasons to consider a trust:
- minimize the expense of probate
- control distributions to your loved ones
- use life insurance in your estate plan
- own properties in multiple states
- protect your property from ex-spouses
- minimize taxes
- protect minor and young adult children
The law in Florida is if the document was valid in the state in which it was executed, it is valid here. There are some notable exceptions. Holographic wills (handwritten) wills are not valid in Florida. However, even if your documents are valid in Florida, you or your family may end up needing multiple attorneys. One to confirm validity of the documents in the state of execution and a Florida attorney to administer the documents in this state. Often it is a good idea to replace out of state documents to reduce the possibility of these complications.
Living trusts are useful estate planning tools, and they have an important place in many people’s estate plans. If you find any one of the following benefits appealing, then a living trust may be appropriate for you.
Benefit #1: No Probate. When a person dies, most properties pass either under a person’s Will or under a living trust. Some properties–such as life insurance, IRAs, and certain types of bank and brokerage accounts–pass directly to named beneficiaries. If property passes under a Will, then the Will must be probated at the courthouse. Probate entails hiring a lawyer, filing a number of papers with the court, attending one or more hearings, and providing a written inventory to the court valuing the properties which passed under the Will.
Some people don’t want this type of involvement with the court, so they opt for a living trust. By transferring all properties which would otherwise pass under your Will to a living trust, you can avoid the probate proceeding. For estates which owe no estate taxes, there is usually less work for the lawyers, and that translates into reduced estate administration costs.
Court involvement is not eliminated entirely however. Florida now requires the trustee of a living trust to file a notice of the trust with the appropriate court containing information about the person who created the trust and the trustee. Also, in certain circumstances, the trustee may be required to pay expenses of administering the decedent’s estate as well as the claims of creditors against the decedent’s estate.
Benefit #2: More Privacy. As mentioned above, when a person dies with a Will, an inventory must be filed with the court. You may not want your friends, neighbors, or the media to be able to read a listing of what you own and what it is worth. After all, an inventory is a public record. With a living trust, your properties and their values remain private.
Benefit #3: Plan For Future Incapacity. You may be worried that one day you won’t be able to manage your own finances, and you may want to name someone to handle these types of matters for you. You can address this potential problem with a power of attorney or with a living trust. A power of attorney will usually be accepted by banks, title companies and the like, but there is always the risk that an institution’s legal department will reject it. The same person who may be denied the ability to use a power of attorney will likely be allowed to do anything he or she wants when acting as trustee of a living trust.
Benefit #4: Harder to Challenge. If you are planning to disinherit one of your children or grandchildren, you may be better off with a living trust because there is nothing filed at the courthouse. Also, it is a little harder to contest a living trust than a Will. Many people are interested in doing as much as possible to prevent a successful challenge to their estate plan.
Benefit #5: Avoid Out-of-state Probate. If you own property in another state, you can avoid a costly probate proceeding in that state by transferring the property to a living trust.
Before you establish a living trust you need to understand the downsides, which include the following:
Disadvantage #1: Time-consuming to Set Up. Depending on how many different types of properties and accounts you own, it can take quite some time to switch everything over to the name of your living trust.
Disadvantage #2: Complicated. Wills are usually shorter and simpler to understand than living trusts. Also, with a Will, you can sign it and forget about it. But with a living trust, you need to put your property into the trust and run your life out of it for as long as you live. For many people, this downside outweighs all the potential benefits.
Disadvantage #3: Time-consuming to Revoke. A year after you set up the living trust, you may decide you don’t want it any more. At this point, you will need to return to every bank and brokerage house, and undo everything you had done to establish the trust. You can expect more lawyers’ fees too.
Disadvantage #4: Post-Death Costs Not Eliminated. If you have a taxable estate (which is generally an estate over $5,430,000), there will be a lot of work to be done after death regardless of whether probate is required. Typically, there are tax returns to file, trusts to establish, assets to value, and more. Avoiding probate will only marginally reduce the cost of administering a taxable estate.
Disadvantage #5: May Still Need to Probate Will. If you leave just one bank account or one piece of real estate out of the trust, probate will still be necessary. And probate takes about as long when there is one asset as when there are twenty.
There are several ways to get the Will out of the box.
The easiest way is if another person is named as a joint holder of the box. That person can retrieve the Will with no problems or delays.
Another option is to go to court to request that a judge order an examination of the box. If a Will is found, it will be sent to the court. This should be the option of last resort because it takes longer, requires the filing of papers with the court, and usually involves a lawyer and the associated legal fees.
For some people, their estate planning documents are as private as their income tax returns, and nobody is ever given copies. For other people, estate planning documents are no different than a spare key to the house, and every family member and Personal Representative and/or trustee named in the documents is given a copy.
If you are the type of person who values your privacy, who does not especially trust your children, Personal Representative, or trustee, or if you have written a Will or trust which does not treat all the children equally, then it may not be a good idea to hand out copies. Also, you may have more money than your children expect, and depending on how your Will or trust is written, giving them a copy may be letting them know too much about your personal business.
On the other hand, if you have a fairly open relationship with all your children, you regularly discuss finances with them, and you are leaving your estate to them in equal shares, then go ahead and give everyone a copy. Of course, if you decide to change your Will or revocable trust, you should be sure to give all the same people copies of the new documents. If you don’t, then there may be some arguments following your death over which document controls the disposition of your estate.
Probate
Probate is the procedure used to transfer a person’s assets when they die. Some assets pass automatically or outside of probate based on their character or how they were titled. There are different types of probate administration, including full administration, summary administration and ancillary administration.
There are several versions of probate procedure depending on the estate.
- Formal Administration – This is a full administration and is appropriate in most circumstances.
- Summary Administration – An estate qualifies for this abbreviated procedure if the estate has assets of less than $75,000 or the decedent has been dead for over 2 years.
- Ancillary Administration – This is an administration for out of state residents that have real property in Florida.
If the decedent was a Florida resident, the proper location to probate the estate is in the county of residence. If the decedent was not a Florida resident, the estate can be administered in any county in which property was owned.
There are a number of different kinds of properties that may pass outside the provisions of your Will.
The list includes life insurance, retirement plans, individual retirement accounts, and annuities. When you purchased or set up these types of assets and accounts, you were probably asked to fill out a form listing the beneficiaries who will receive payments upon your death. These investments will pass to the named beneficiaries regardless of whether you have a Will. However, if you don’t have a beneficiary named, if the beneficiary named is your “estate,” or if all the beneficiaries are dead, then those investments will be paid to your estate and pass under your Will.
Certain bank and brokerage accounts will also pass outside your Will. For instance, payable-on-death accounts (sometimes called “POD” accounts) will be distributed to the named beneficiary. Additionally, accounts set up by one or more persons as joint tenants with rights of survivorship will pass to the surviving account holder or holders.
Some banks allow you to set up what they call trust accounts even though there is no written trust agreement. These types of accounts will pass to a named beneficiary without going through probate as well.
Not all joint accounts pass to the survivor. When joint accounts are set up as tenants in common, the portion of the account that was owned by the decedent passes under his or her Will.
Many people have decided to create revocable or irrevocable trusts as part of their estate plan. Virtually all such trusts are designed to pass directly to persons or other trusts named in the document rather than under a Will.
You may find that most of your estate consists of non-probate property. Therefore, it is extremely important to coordinate the beneficiaries of all these properties to make certain your assets will be distributed as you want when you pass away.