Probate, Wills & Trust FAQ
(The reader should not consider this information as specific. Anyone viewing this website should obtain specific advise pertaining to his/her particular situation and all cases.)Wills:
- What is a Last Will & Testament?
- What is a Living Will?
- Do I Need a Will?
- What Can Be Accomplished by a Will?
- Can I Change My Will?
- What If a Person Dies Without a Will?
- May A Person Dispose of Their Property In Any Way They Wish?
- Is a Trust A Substitute for a Will?
- What is a Power of Attorney?
- Can I Include My Pet in My Will?
- Who Should Prepare a Will?
- What is a Revocable Trust?
- How Does a Revocable Trust Avoid Probate?
- How Do I Know if My Assets are Properly Titled?
- Can the Trust Hold Title to My Homestead?
- Do I Benefit By Avoiding Probate?
- How are Creditors Satisfied?
- Does The Trust Provide Protection from Creditor Claims?
- Who Pays Federal Income Tax on Trust Income?
- What Are the Trustee’s Responsibilities?
- What is Probate?
- What are Probate Assets?
- Is Probate Necessary?
- Who is Involved in the Probate Process?
- Where are Probate Papers Files?
- Who Supervises Probate Administration?
- What is a Personal Representative?
- How Long Does Probate Take?
A Last Will & Testament is a written document that provides distribution of your estate (property) upon your death. To create a will you must be at least 18 years old; be of sound mind at the time you sign your will; the will must be written, witnessed and notarized; must be proved in and allowed by the probate court to be effective; and only becomes effective after ones death.
A Living Will is a document where an individual by declaration can stipulate when, and to what parameters, life prolonging procedures should be used.
If you want to ensure that the people you want to receive your property actually receive it or if you want to ensure that an appropriate person is appointed to administer your estate, then yes, you do want a will.
- You decide who gets your property instead of the law making the choice for you.
- You may name the personal representative (executor) of your will as you choose, provided the one named can qualify under Florida law. A personal representative is one who manages an estate, and may be either an individual or a bank or trust company, subject to certain limitations.
- A trust may be created in a will whereby the estate or a portion of the estate will be kept intact with income distributed or accumulated for the benefit of members of the family or others. Minors can be cared for without the expense of proceedings for guardianship of property.
- Real estate and other assets may be sold without court proceedings, if your will adequately authorizes it.
- You may make gifts, effective at or after your death, to charity.
- You decide who bears any tax burden, rather than the law making that decision.
- A guardian may be named for minor children.
Yes. You can create a new will whenever you want. Most changes are due to changes in circumstance (marriage, divorce, birth of children, etc.) The creation of the new will revokes your prior will. You can amend a will by a ‘codicil’, which is simply an addition executed with the same formalities of the will. A will’s terms cannot be changed by physically amending the will after the will is executed. Writing on the will after its execution invalidates part or all of the will.
If person dies without a will, the court appoints a personal representative, known or unknown to you, to manage your estate. The cost of probating may be greater than if you had planned your estate with a will, and the administration of your estate may be subject to greater court supervision. If there is no will, Florida has an “interstate succession law” which states that certain persons receive the estate.
While any sort of property may be transferred by will, there are some particular interests in property which cannot be willed because the right of the owner terminates automatically upon his or her death, or others have been granted rights in the property by Florida law. Some examples of these types of property rights or interests are:
- Except in certain very specific circumstances a homestead (that is, the residence and adjoining lands owned by a person who is survived by a spouse or minor child up to one-half acre within limits of an incorporated city or town or up to 160 acres outside those limits);
- A life estate: property owned only for the life of the owner;
- Any property owned jointly with another person or persons with right of survivorship (a tenancy by the entireties, which is limited to joint ownership between a husband and wife, would be one of these).
A person may not disinherit his or her spouse without a properly executed marital agreement. The law gives a surviving spouse a choice to take either his or her share under the will or a portion of the decedent’s property determined under Florida’s “elective share” statute. This statute uses a formula to compute the size of the surviving spouse’s elective share, which includes amounts stemming from the decedent’s jointly held and trust property, life insurance, and other non-probate assets. Because this formula is very complicated, it is usually necessary to refer this matter to an attorney with extensive experience in this area of law. Also, if your will was made before the marriage and the will does not either provide for the spouse or show your intention not to provide for him or her, then your spouse would receive the same share of your estate as if you had died without a will (at least one-half of your estate) unless provision for the spouse was made or waived in a marital agreement.
No, in most situations. A trust may be used in addition to a will. This is because a trust can handle only the property that has been put into it. Any property of a person that is not placed in the trust either during life or at death in most instances escapes the control of the trust. It is the will that controls all property in a decedent’s name at the time of death if the will is drafted properly. Trusts can be helpful to speed administration and save taxes if they are drafted properly and funded during life with the property intended to be transferred by the trust. Often, however, improperly drafted or incorrectly funded or administered trusts can add to the cost of settling estates, not lower it. Furthermore, it is the probate of the will that can clear creditors’ claims, which is not possible with just a trust administration.
An individual identify as a Power of Attorney, must be documented, may aid in handling finances, property, and legal matters of an individual that has become incapacitated, and forgoes the necessity to open a court proceeding to appoint a guardian to handle the person’s obligations.
The Legislature in 2007 strengthened pet-trust laws, making it easier to enforce an owner’s instructions on how money is used for the animals. Usually, a trustee is named to handle the money and someone else is designated to care for the animal. The owner can identify enforcers to make sure the trustee and caretaker follow instructions, such as what kind of pet food to buy and how often to take a dog to the vet.
The drafting of a will involves making decisions that require professional judgment which can be obtained only by years of training, experience, and study. Only the practicing lawyer can avoid the innumerable pitfalls and advise the course best suited for each individual situation. In addition, an experienced attorney will be able to coordinate the use of other skilled professionals, such as an investment advisor, actuary, insurance specialist, and tax accountant to complete a proper estate plan.
A revocable trust is a document (the “trust agreement” ) created by you to manage your assets during your lifetime and distribute the remaining assets after your death. The person who creates a trust is called the “grantor” or “settlor.” The person responsible for the management of the trust assets is the “trustee.” You can serve as trustee, or you may appoint another person, bank or trust company to serve as your trustee. The trust is “revocable” since you may modify or terminate the trust during your lifetime, as long as you are not incapacitated.
During your lifetime the trustee invests and manages the trust property. Most trust agreements allow the grantor to withdraw money or assets from the trust at any time, and in any amount. If you become incapacitated, the trustee is authorized to continue to manage your trust assets, pay your bills, and make investment decisions. This may avoid the need for a court-appointed guardian of your property. This is one of the advantages of a revocable trust.
Upon your death, the trustee (or your successor if you were the initial trustee) is responsible for paying all claims and taxes, and then distributing the assets to your beneficiaries as described in the trust agreement. The trustee’s responsibilities at your death are discussed below.
Your assets, such as bank accounts, real estate and investments, must be formally transferred to the trust before your death to get the maximum benefit from the trust. This process is called “funding” the trust and requires changing the ownership of the assets to the trust. You should consult with your attorney, tax advisor and investment advisor to determine if your assets are appropriate for trust ownership.
A revocable trust avoids probate only when the assets are transferred to the trust and made during the trustees lifetime prior to their death. This avoids the need to use the probate process to make the transfer after your death. The trustee has immediate authority to manage the trust assets at your death; appointment by the court is not necessary.
The “funding” of a revocable trust is critical to successfully avoid probate. Those persons who do not fully fund their trusts often need both a probate administration for the non-trust assets as well as a trust administration to completely distribute the assets. Because the revocable trust may not completely avoid probate, a simple “pour over” will is needed to transfer any probate assets to the trust after death.
The account statement, stock certificate, title or deed will make some reference to the trust or to you as trustee. You might also elect to fund your trust by naming the trust as a beneficiary of life insurance or other similar arrangements. Your attorney and financial advisor may assist you with the transfer of assets to your trust. If your trust will own real estate then it is important to have the deed prepared by an attorney. The attorney will consider the impact of existing mortgages, title issues and homestead restrictions when the deed is prepared.
In some situations your homestead property can be transferred to your trust. Most Florida counties have special requirements to maintain the homestead tax exemption and special language may be required in the trust agreement and the deed. However, homestead property may lose its exemption from creditors when title is held in a revocable trust-the bankruptcy law on this point is unsettled. Your attorney can advise you on whether placing your homestead in your trust is appropriate, and if so, the requirements for a valid transfer.
Possibly with costs and time delays; however, many of the costs and time delays associated with probate, such as filing a federal estate tax return, will also be necessary with a revocable trust. The administration of a revocable trust after death is similar to a probate administration. The trustee must collect and value the trust assets, determine creditors and beneficiaries, pay taxes, pay expenses, and distribute the trust estate. A trustee is entitled to a fee for administration of the trust, as is the personal representative of an estate. To the extent professional services of attorneys, accountants and estate liquidators are used to complete the process, the savings may be marginal.
On the other hand, avoiding probate in multiple states is a definite benefit. Because of the nature of real estate, probate is usually required in every state in which you own real estate. This can usually be avoided by transferring ownership of the real estate to your trust during your lifetime.
Florida’s trust law does not have a specific procedure for identifying and paying creditors at death. The creditors have up to 2 years from the decedent’s death to file claims against the estate. The trustee may be reluctant to distribute the trust assets to the beneficiaries until he or she is satisfied that all claims have been paid, and 2 years is a long time to wait. As a result, some may opt to open a probate estate in addition to the trust administration to take advantage of the probate claim process. The probate law limits the time for creditors to file claims against the estate (generally 3 months from the date of notice), and also provides a process for objecting to claims.
In Florida, the trust assets are not protected from the claims of your creditors. During your lifetime the assets in a revocable trust are treated as owned by you, and subject to the claims of your creditor as if you owned them in your personal name. If the trust assets remain in trust after your death, the interests of the beneficiaries may be protected from their creditors by a “spendthrift” provision in the trust agreement. Florida law provides special protection for many types of assets, including assets owned by a husband and wife as “tenants by the entirety.” Your attorney can advise you on the types of assets that offer creditor protection and the effect of funding your trust with them.
In most instances, the revocable trust is ignored for federal income tax purposes during the grantor’s lifetime. The income and deductions are reported directly on your individual income tax return. The trust will use your social security number as its tax identification number.
A revocable trust becomes a separate entity for federal income tax purposes when it becomes irrevocable, or stops reporting income under your social security number for any other reason. An annual fiduciary income tax return must be filed by the Trustee. Trusts are also allowed a deduction for distributions to beneficiaries. In this way, the trust passes on income and deductions to the beneficiaries to be taxed on their personal income tax returns. Income that is not distributed to the beneficiaries is taxable to the trust.
Serving as trustee is no simple task. While very important, the prudent investment of trust assets is not a trustee’s only responsibility. Your trustee’s exact powers and duties will depend on the instructions in your trust agreement. But, in general, your trustee will:
- Hold trust property
- Invest the trust assets
- Distribute trust income and/or principal to the beneficiaries, as directed in the trust agreement
- Make tax decisions concerning the trust
- Keep records of all trust transactions
- Issue statements of account and tax reports to the trust beneficiaries
- Answer any questions you and the beneficiaries may have concerning the trust
Your trustee may have broad powers or very limited powers. In either case, your trustee is a fiduciary and must follow a strict standard of care when performing trust functions.
Probate is a court-supervised process for identifying and gathering the assets of a deceased person (decedent), paying the decedent’s debts, and distributing the decedent’s assets to his or her beneficiaries. In general, the decedent’s assets are used first to pay the cost of the probate proceeding, then are used to pay the decedent’s outstanding debts, and the remainder is distributed to the decedent’s beneficiaries. The Florida Probate Code is found in Chapters 731 through 735 of the Florida Statutes.
There are two types of probate administration under Florida law: formal administration and summary administration. This pamphlet will primarily discuss formal administration.
There is also a non-court supervised administration proceeding called “Disposition of Personal Property Without Administration.” This type of administration only applies in limited circumstances.
Probate administration only applies to probate assets. Probate assets are those assets that the decedent owned in his or her sole name at death, or that were owned by the decedent and one or more co-owners and lacked a provision for automatic succession of ownership at death.
- A bank account or investment account in the sole name of a decedent is a probate asset, but a bank account or investment account owned by the decedent and payable on death or transferable on death to another, or held jointly with rights of survivorship with another, is not a probate asset;
- A life insurance policy, annuity contract or individual retirement account that is payable to a specific beneficiary is not a probate asset, but a life insurance policy, annuity contract or individual retirement account payable to the decedent’s estate is a probate asset;
- Real estate titled in the sole name of the decedent, or in the name of the decedent and another person as tenants in common, is a probate asset (unless it is homestead property), but real estate titled in the name of the decedent and one or more other persons as joint tenants with rights of survivorship is not a probate asset;
- Property owned by husband and wife as tenants by the entirety is not a probate asset on the death of the first spouse to die, but goes automatically to the surviving spouse.
- This list is not exclusive, but is intended to be illustrative
Probate is necessary to pass ownership of the decedent’s probate assets to the decedent’s beneficiaries. If the decedent left a valid will, unless the will is admitted to probate in the Court, it will be ineffective to pass ownership of probate assets to the decedent’s beneficiaries. If the decedent had no will, probate is necessary to pass ownership of the decedent’s probate assets to those persons who are to receive them under Florida law.
Probate is also necessary to wind up the decedent’s financial affairs after his or her death. Administration of the decedent’s estate ensures that the decedent’s creditors are paid if certain procedures are correctly followed.
Depending upon the facts of the situation, any of the following may have a role to play in the probate administration of the decedent’s estate:
- The Clerk of the Circuit Court in the county in which the decedent was domiciled at the time of the decedent’s death;
- The Circuit Court (acting through a Circuit Court Judge);
- The person or institution serving as the decedent’s personal representative (or executor);
- The attorney engaged by the personal representative to provide legal advice to the personal representative throughout the probate process;
* Those filing claims in the probate proceeding relative to debts incurred by the decedent during his or her lifetime, such as credit card issuers and health care providers; and
- The Internal Revenue Service (IRS), as to any federal income taxes that the decedent may owe, any income taxes that the decedent’s probate estate may owe, and any federal gift, estate or generation-skipping transfer tax matters.
The decedent’s will, if any, and certain other documents required in order to begin the probate proceeding are filed with the Clerk of the Circuit Court, usually for the county in which the decedent lived at the time of his or her death. A filing fee must be paid to the Clerk. The Clerk then assigns a file number, and maintains an ongoing record of all papers filed with the Clerk for the administration of the decedent’s probate estate.
In the interest of protecting the privacy of the decedent’s beneficiaries, any documents that contain financial information pertaining to the decedent’s probate estate are not available for public inspection.
A Circuit Court Judge presides over probate proceedings.
A Judge will rule on the validity of the decedent’s will, or if the decedent died without a will (also referred to as intestate), a Judge will consider evidence to confirm the identities of the decedent’s heirs as those who will receive the decedent’s probate estate.
If the decedent had a will that nominated a personal representative, the Judge will also decide whether the person or institution nominated is qualified to serve in that position. If the nominated personal representative meets the statutory qualifications, the Judge will issue “Letters of Administration,” also referred to simply as “letters.” These “letters” are important evidence of the personal representative’s authority to administer the decedent’s probate estate.
If any questions or disputes arise during the course of administering the decedent’s probate estate, the Judge will hold a hearing as necessary to resolve the matter in question. The Judge’s decision will be set forth in a written direction called an “Order.”
A personal representative is the person, bank, or trust company appointed by the Judge to be in charge of the administration of the decedent’s probate estate. In Florida, the term “personal representative” is used instead of such terms as “executor, executrix, administrator and administratrix.”
The personal representative has a legal duty to administer the probate estate pursuant to Florida law. The personal representative must:
- Identify, gather, value, and safeguard the decedent’s probate assets;
- Publish a “Notice to Creditors” in a local newspaper in order to give notice to potential claimants to file claims in the manner required by law;
- Serve a “Notice of Administration” to provide information about the probate estate administration and notice of the procedures required to be followed by those having any objection to the administration of the decedent’s probate estate;
- Conduct a diligent search to locate “known or reasonably ascertainable” creditors, and notify these creditors of the time by which their claims must be filed;
- Object to improper claims, and defend suits brought on such claims;
- Pay valid claims;
- File tax returns and pay any taxes properly due;
- Employ professionals to assist in the administration of the probate estate; for example, attorneys, certified public accountants, appraisers and investment advisors;
- Pay expenses of administering the probate estate;
- Pay statutory amounts to the decedent’s surviving spouse or family;
- Distribute probate assets to beneficiaries; and
- Close the probate estate.
If the personal representative mismanages the decedent’s probate estate, the personal representative may be liable to the beneficiaries for any harm they may suffer.
The time length for a probate can vary as each situation is unique. For example, the personal representative may need to sell real estate prior to settling the probate estate, or to resolve a disputed claim filed by a creditor or a lawsuit filed to challenge the validity of the will. Any of these circumstances, if present, would tend to lengthen the process of administration. Even the simplest of probate estates must be open for at least the three-month creditor claim period; it is reasonable to expect that a simple probate estate will take about five or six months to properly handle.
If the estate does not have to file a federal estate tax return, the final accounting and other documents necessary to close the probate estate are first due within 12 months after the Court issues Letters of Administration to the personal representative. This period can be extended if necessary.
If the estate is required to file a federal estate tax return it should be completed nine months after the death of the decedent; however, the time for filing the return can be extended for another six months. If a federal estate tax return is required, the final accounting and other documents to close the probate administration are due within 12 months from the date the estate tax return, as extended, is due. This date can also be extended if necessary.
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