avoiding probate

Avoiding Probate in Florida

Probate can be slow, involves court costs and attorney’s fees, and will involve a court.  For all these reasons, you might want to avoid probate.  This article will cover some practical steps you can take in order to avoid probate.  Of course there are some situations in which efforts to avoid probate can cause more problems.

What is probate? 

Probate is the process of transferring assets held in a decedent’s name alone to that decedent’s beneficiaries or heirs.  The probate court oversees the process.  A probate also makes sure that creditors and taxes are paid.  In Florida, the probate process is described in Florida Statutes Sections 731 to 735.

Avoiding probate is easy if you are broke: there is nothing to probate if you die without any assets. 

It can also be easy to avoid probate if you are married and want everything to go to your spouse on your death.  (Even in this situation you will need to comply with Florida homestead rules if you own and occupy a residence in Florida.)  If you are a widow or widower you might need to get more creative to avoid probate.

You can avoid probate by holding accounts jointly with another person. 

This works best within a marriage because both spouses have an interest in the financial solvency of the marital estate.  If you are widowed, you may consider adding an adult child’s name to your accounts to avoid probate.  You should be aware in this instance that avoiding probate has left you vulnerable to possible misuse of your funds.  If your adult child goes through a divorce or bankruptcy, the funds in your joint account are fair game for the claims of the divorce or bankruptcy court.  Another problem you encounter if you avoid probate by using joint accounts: it will forestall and delay a Medicaid application.  If you would need Medicaid to help pay the cost of a nursing home, adding anyone else’s name to your account would be an apparent gift which would need to be cured before you could apply.

Another way to avoid probate is to use trusts to hold and control financial assets. 

Trust assets will not need to go through probate.  We have found that many people who go this route forget to fully fund their trusts.  If you have a trust and hope to avoid probate, remember that the trust will only control those assets retitled into the trust.   If you have a “pour-over” will or power of appointment that moves assets to the trust after your death, you will not avoid probate.  In fact, a probate will be needed to move the probate assets into the trust.  Then the trust itself will need to be administered by the trustee you appointed.  While it will avoid probate, there is a similar process involved in trust administration which will need to be completed before the asset transfer to the ultimate beneficiaries is completed.

One reason that clients give for avoiding probate is the fear that the state will take your assets. 

That is not true.  The state of Florida does not have a process to take your home or your money.  The state will only be entitled to the court filing fees to open the probate.  Otherwise, naming your beneficiaries in a will is the best way to make sure that your property goes where you want it to go.  If you die without a valid will in the state of Florida, the intestacy law will apply.  The intestacy law distributes assets to the most likely intended recipients (for most decedents): spouse, children, parents, siblings, etc.

Some assets make it easy to avoid probate. 

Life insurance policies have a beneficiary designation.  Those proceeds will not be a probate asset.  You should review periodically with the life insurance company who they have listed as your beneficiary.  Similarly, most retirement accounts (IRAs, 401Ks) will have the option to name a beneficiary.  Even if you have a probate for other assets, you will have avoided probate for the retirement account if you have properly designated your beneficiaries. 

Avoiding probate may be difficult or easy in Florida depending on your particular situation. 

If you are due for a review of your end-of-life planning, feel free to call us to set up a consultation.  We can be reached at 239-434-8557.

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