September 1, 2006, 8:43 pm : Probate and Probate Avoidance
Filed Under: Probate Real Estate, Real EstateDiscussion: C[0]mments
When an individual dies in Florida or while owning real property in Florida, probate is the procedure used to transfer his or her assets to the proper heirs. 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 a full administration, ancillary administration, summary administration and family administration. For this article, we will address the most common, full administration. This article is intended to explain generally what probate is, discuss its pros and cons, and identify and discuss ways it can be avoided.
PROBATE EXPLAINED
Probate administration occurs whether there is a will or not. If no will exists or is found, the estate is distributed according to statute. Once a person dies, an individual is appointed as the Personal Representative (”P.R.”), also known as executor, to administer the estate. The P.R. must administer the estate according to strict guidelines, and is responsible to the court, the heirs, and creditors of the estate. One of the responsibilities of the P.R. is to publish a notice of administration for the benefit of creditors and to notify known creditors directly. Creditors then have ninety days in which to file a claim against the estate. Each claim must be addressed, because if it is not objected to, it must be paid. The P.R. is also responsible to ensure that appropriate filings and tax payments are made to the I.R.S. and Florida Department of Revenue. Once all creditor claims are addressed and all taxes paid and acknowledged, the P.R. may distribute all remaining estate assets to the heirs. Only upon final distribution will the P.R. be discharged.
PROS AND CONS OF PROBATE
While the probate process provides an orderly method of transferring an individual’s assets after death, there are many negative aspects to it as well. Probate administration can be expensive. Estate administration is a complicated matter and will generally require an attorney. In addition to the ordinary administration of the estate, the P.R. must often get court approval for any extraordinary actions taken, this necessarily increases the attorney’s involvement thus increasing the fees to the estate. Also, the P.R. is entitled to a fee for their services. Additionally, probate administration can take a long time. Probate administration can take from a few months to several years. Courts will rarely allow final distribution of assets or discharge of the P.R. until all creditor claims have been addressed and all taxes paid and accepted. Lastly, probate administration is very public. With certain exceptions, the probate file is public knowledge, and many clerks’ offices make these filings available on their web site for anyone to see. There may be some situations were probate administration is more appropriate than other transfer devises, but generally there is a better method available.
PROBATE AVOIDANCE
Some assets pass outside of probate because of the type of asset it is or the way in which it is titled. Homestead property can pass outside of probate. (Note: this is not the same as homestead for ad valorem tax purposes, but homestead as provided for by the Florida Constitution.) Property owned jointly with rights of survivorship passes automatically to the joint owner. However, this is a risky method of holding property with anyone other than one’s spouse, as the asset could be tied up by the joint owner’s creditors. Also, property owned jointly by a husband and wife does not take advantage of the unified credit against estate tax.
Lastly, assets transferred during the individual’s lifetime will not be subject to probate administration. These transfers could be directly to an individual, in which case the donor looses control of the asset, or into a trust in which the donor retains control and enjoyment of the asset. This is known as an inter vivos, or living, trust. Properly funded, an inter vivos trust can ensure that either no probate is necessary, or a less expensive procedure such as summary administration can be used. Under many circumstances, inter vivos trusts are the most versatile and safest method for avoiding probate. Regardless of which method seems best for your situation, you should consult an attorney to help you fully understand the risks and benefits associated with each method. Often times, the immediate expense of consulting with an attorney will be rewarded many times over with savings from administration of a well planned estate and the correct distribution of your estate according to your wishes.
Probate and Probate Avoidance CONCLUSION
While probate administration serves a very necessary function in the transfer of assets at death, it is rarely the best method in performing this function. Through this article, we hope to help you learn what probate is, to determine if it is the best method for your situation, and to show what alternatives are available. Estate planning is a complicated matter. There are many opportunities to minimize the expenses necessary to the transfer of one’s estate, but there are also many hazards for those that do not understand the procedure. Therefore, if you are unsure as to the final effects of your estate plan or if you have no estate plan, you should consult an attorney qualified in estate planning.
August 31, 2006, 8:42 pm : What is Your Legacy
Filed Under: Probate Real Estate, Real EstateDiscussion: C[0]mments
How will you be remembered after you are gone? Perhaps you don’t care or perhaps you haven’t thought about it. Maybe, if you are like me, you have thought about it quite a bit. Two events in my life really got me thinking about this issue. The first was at my grandmother’s funeral. She lived in a small town in the south and I remember looking back on the funeral procession and seeing that it stretched as far as the eye could see. That small town must have been shut down that day. Then came my father’s funeral. I remember a stream of people coming up to me, many whom I didn’t know, telling me stories of how wonderful a person my father was. I wondered how many people would come to my funeral and what they would tell my children about me. What will your legacy be? Here are some questions to ask yourself.
How is your estate plan
Do you have a will? If not, you have chosen to leave your assets to your heirs in the most confusing and time consuming manner possible. If so, that’s a great first step but it may not be enough. A well thought out estate plan leaves your belongings to your heirs in the most efficient manner while taking into account their different needs and wants. Your will might cover large items but what about the small stuff lying around your house? If have heard horror stories about siblings who no longer talk because of fights over trivial items not included in the will. Have you left your home equally to your two children knowing full well that one will want to live in while the other will want to sell it? People do things like these all the time, yet it’s a recipe for disaster.
Are you properly insured?
Will you leave behind enough money for your family to maintain their lifestyle or a stack of bills? A simple rule of thumb measure to figure out if you have proper insurance is cut in half and drop the zero. For example, if you have $500,000 in life insurance you divide that number in half ($250,000) and drop the zero ($25,000). This is how much annual income your heirs could expect to receive from the life insurance proceeds. This example ignores a number of variables but it is a good starting point in figuring out if you have proper insurance.
Are you making smart choices with your money?
Are the choices you are making with your money today in line with the kind of legacy you want to leave? Are you teaching your children to be financially literate? If you want to be charitable what are you doing to achieve that goal? If you want to help with your grandchildren’s education how are you doing it? You can use your money to accumulate as many possessions as you want but after you are gone it is all meaningless. I will never forget going through my father’s effects after the funeral and seeing tie collection that he was so proud of. Unfortunately, they were too outrageous for me to wear and my brother doesn’t wear ties.
July 23, 2006, 10:55 pm : Unmarried older adults have loving relationship, But your children worry about the inheritance
Filed Under: Probate Real EstateDiscussion: C[0]mments
Your spouse has died for many years, now you have a new loving relationship and will have second marriage. All the people will warm you, except for your children and grand children. They concern the inheritance. The adult children get pretty selfish. They know their parent has large amount property. When parent die, the whole inheritance will belong them. If their parent have second marriage, the inheritance will be squandered.
Below, I list seven inheritance tips for Unmarried older adults. Please read it.
The Kids–Again
Just when you think your children are done fussing about the small details of life, they start again fussing–as adults, no less–about their inheritances if you become involved in an unmarried relationship. Assure them that the inheritance is intact and that you haven’t forgotten them or the grandchildren.
Separate Accounts
Older couples have a lifetime of assets–a house or two, multiple bank and brokerage accounts, insurance coverage and perhaps an annuity. There’s no need to combine assets late in life, unless you feel compelled to feed a starving attorney who will gobble your money to draft a detailed property agreement.
Separate Households
Many older couples choose to maintain separate households simply because fond memories go with the house and logistics make the task of moving in together overwhelming. Maintaining separate households also eliminates any legal wrinkles in the event of a death.
CareInsurance
If you haven’t already done so, think about getting long-termcare insurance. Many seniors don’t want to be a burden, emotionally or financially, on their children. Such coverage is a good start on both counts. Don’t count on Medicaid.
Estate Planning
At this stage of your life, it’s important to think about estate planning. Make a list of what you want done and then meet with an attorney. Setting up an estate isn’t cheap, so give this some thought.
Health Care Directive
Think about drafting a health care directive to be sure you’ll be treated in accordance with your wishes if you’re incapacitated. Discuss your plans with your family. Make your wishes known. Then put them in writing.
Finance of Romance
If you take care of the financial basics, chances are your children will be more supportive of your romantic relationship late in life. With a little planning, it’s possible to protect the interests of your children while following your heart.
July 22, 2006, 11:04 pm : Ten Must-Know Probate Real Estate
Filed Under: Probate Real EstateDiscussion: C[0]mments
Probate Real Estate Must-Know 1 - Beneficiary
A beneficiary is the person entitled to receive an estate, trust, retirement plan or life insurance policy after the person who established it dies.
Probate Real Estate Must-Know 2 - Estate
When computing federal estate-tax liability, the estate includes all of the deceased’s assets. The estate also includes all property subject to the jurisdiction of a probate court.
Probate Real Estate Must-Know 3 - Executor
The executor is the individual or financial institution appointed to handle the estate of a deceased person who died with a will.
Probate Real Estate Must-Know 4 - Testate, Intestate
A person who dies without a will is intestate. Those who die with a will are said to be testate. State law will govern the disposition of the estate of those who die without a will.
Probate Real Estate Must-Know 5 - Fiduciary
The word comes from Latin and means trust or confidence. Fiduciary refers to a person or entity such as a bank that represents the interests of an individual. A trustee, guardian, conservator or agent are fiduciaries and hold a position of trust with heirs and beneficiaries.
Probate Real Estate Must-Know 6 - Irrevocable Trust
A trust that can’t be amended or revoked is irrevocable. Typically, a revocable trust becomes irrevocable when the person who created it dies.
Probate Real Estate Must-Know 7 - Will
A will is a written statement that lists the disposition of a person’s property at death. It may also create a guardian and conservator to handle the affairs of minor children.
Probate Real Estate Must-Know 8 - Probate
The legal process to determine if the deceased person left a valid will that must be recognized by the law. Like most records at the county courthouse, probate files are public record and open to everyone.
Probate Real Estate Must-Know 9 - Escheat
If a person dies with no known beneficiaries and a valid will, or no known heirs and no will, the deceased’s property will escheat, or be assigned, to the state.
Probate Real Estate Must-Know 10 - Conservator
A conservator is an adult or a financial institution named by a court to handle a minor’s, mentally incompetent or incapacitated person’s property until the child becomes an adult or the incapacitated person regains mental alertness and can handle his affairs.