HOW TO AVOID PROBATE IN FLORIDA
What is Probate and Why Does it Matter?
Probate courts in Florida serve to ensure that after someone passes away, the individual’s assets are handled properly. Sometimes this means paying creditors; at other times, it means reading a will and dividing assets among family members. This article will summarize the most common tools you can use to avoid the probate process.
First, in order to understand probate avoidance, it is important to explore the reasons why we might want to stay out of probate court.
The probate process is costly, time-consuming, and open to the public. While non-probate assets may pass directly to their next rightful owner, the transfer of probate assets takes place under a Judge’s watchful eye! This process often takes months and sometimes even even years to complete. Ms. Rignanese has personally seen estates last five (5) years! Beyond the long time horizon, Florida law sets specific attorney’s fees to be billed depending on the size of the probate estate. Finally, the probate court makes a great deal of information publicly available. The purpose of the public nature of the process is to give creditors and potential heirs an opportunity to make a claim against the estate.
Joint Ownership of Accounts
One way to avoid probate for a given asset is to hold it jointly with another person. For example, if Sally’s savings account is jointly owned with John, then ownership automatically passes to John if Sally passes first. This approach, while simple, has some limitations for meeting the goals of probate avoidance. First, if the other joint owner predeceases, then the safeguard against probate has been lost until other arrangements are made. In the event of joint owners’ simultaneous death, such as in a car crash, the assets will be subject to probate. Joint ownership also requires complete faith in the other owner. While we may trust a loved one, unforeseen events can leave the joint assets open to claims. Common examples include lawsuits against the joint owner, divorce, or other creditor claims.
Transfer on Death Beneficiaries
Transfer on death (or “TOD”) beneficiaries may be designated for a certain accounts, from checking and savings to investments and retirement accounts. When the owner of the account passes away, funds are released to the TOD beneficiary. This method differs from joint ownership in that the individual retains exclusive control over the assets during their lifetime and eliminates credit risks associated with other joint owners. One drawback to consider is that if a person becomes incapacitated without an estate plan, extra court proceedings will be needed in order to access funds for their benefit.
Revocable Living Trusts
A revocable living trust is a vessel for assets that allows future transfers to take place outside probate court. We often think of a trust as a separate entity that has the power to outlive the Grantor, the person who created the trust. Assets held in a trust pass through a process called Trust Administration, rather than passing through probate court. By contrast, Trust Administration is quick and painless; it preserves privacy; and it costs less.
These trusts are flexible enough to carry out a person’s specific wishes during their life and long after their passing. While the Grantor is living, their trust can hold funds to be used for health expenses, education, and financial support. Upon passing, the Grantor’s wishes detailed in the trust are carried out, and funds can be distributed immediately or over time. The option to make payments over time is useful in ensuring future generations are secured financially, and safeguarded against unwise spending.
Putting it all Together
While some aspects of probate avoidance are simple to carry out, it is important to seek the advice of a qualified attorney in order to assess your individual situation. The seasoned professionals at Rignanese & Associates stand ready to put a tailor-made estate plan in place to protect your assets and secure your legacy.
Please reach out to us at 141 5th Street NW, Suite 300, Winter Haven, Florida 33881 at 863.294.1114.
Established in 1991, Rignanese & Associates is available to work with clients on their legal needs.
This blog was co-authored by Cynthia Crofoot Rignanese, Esq. and Matt Pryor.