Many people have heard that avoiding probate is wise, but they don’t know what probate is.
So, what is Probate?
At the most basic level, probate administration is the process of paying a deceased person’s debts and then transferring assets to his or her beneficiaries. A probate court judge oversees the process.
How Does Probate Work? Below are some of the basic steps included in the Florida probate process.
Step 1: Probate Lawyer Files the Paperwork to Probate the Estate
In order to start the probate process, your family will need to find your original last will and testament, make a list of all of your assets, state how the assets are titled, and their approximate values. Then your family can hire an experienced probate lawyer to draft the appropriate paperwork and file it with the probate court. Florida probate courts now accept most documents on-line through e-filing which reduces the amount of time it takes to file paperwork. The original last will and testament and the original death certificate must still be filed physically with the court. The last will and testament should be filed within 10 days of the date of death.
Step 2: Probate Court Judge Appoints the Personal Representative
After the probate lawyer files the required paperwork, the probate court judge reviews everything to ensure it complies with Florida Probate Rules. The judge will decide whether the will is valid and should be admitted. The probate court judge will also appoint a personal representative (sometimes called an executor in other states) to be the person in charge of the estate.
Step 3: Inventory the Probate Estate
The personal representative must inventory the property that makes up the probate estate. The formal inventory must be filed with the court. The probate process only oversees the transfer of assets that are part of the decedent’s probate estate. Some assets pass outside of the probate process because they already have a beneficiary designation to control who receives the property when the decedent dies.
Examples of assets that would be part of the probate estate:
- Bank accounts that are titled in the decedent’s individual name, with no co-owner and no beneficiary designation;
- Real estate that is owned by the decedent individually;
- Real estate that is co-owned as tenants in common; and
- Proceeds from a life insurance policy that is payable to the decedent’s estate.
Examples of assets that would not be part of the probate process:
- Assets that are titled in the decedent’s revocable living trust;
- Real estate that is co-owned as joint tenants with rights of survivorship;
- Bank accounts with payable on death (POD) or transfer on death (TOD) beneficiary designations;
- Retirement accounts with beneficiary designations; and
- Proceeds from a life insurance policy that has a beneficiary designated.
Step 4: Notifying and Paying Creditors
One of the primary purposes of probate is to make sure that the decedent’s debts are paid. The personal representative is required to give the decedent’s creditors notice of the probate proceeding. After creditors receive this notice, they have three months to file a claim with the probate court. Even the simplest probate proceeding must be open for at least this three month period. Once the three month creditor’s claim period is over, the personal representative pays the claims that are valid and timely filed with the probate court.
Step 5: File Tax Returns and Pay Any Taxes Due
The personal representative may be required to file one or more of the following returns:
- The decedent’s final 1040 to report his or her income for the year of death;
- Ensure that the decedent’s 1040 for the year prior to his or her death was filed;
- Form 1041 reporting the probate estate’s taxable income; and
- Form 706 federal estate tax return depending on the value of the gross estate.
Step 6: Distribute Probate Assets to Beneficiaries
After costs, taxes, and creditors are paid, the balance of the probate estate is distributed to the beneficiaries listed in the last will and testament. If there is no will, the heirs are determined by Florida probate law.
How to Avoid Probate
Now that you know the basics about the Florida probate process, you may be interested in avoiding probate. Probate can be avoided by setting up a fully funded living trust. If your assets are titled in the name of your living trust instead of your individual name, your successor trustee can pay creditors and transfer the trust funds to your beneficiaries without the probate judge overseeing the settlement process.
This article is for general information only and is not intended to provide legal advice. If you need to probate a will, you can talk to a Florida probate attorney at our office. Also, if you would like to set up a living trust to avoid probate, you can talk to an estate planning attorney. Call us at 813-852-6500 to schedule a free 30-minute consultation.