What is Probate and Why is it Important?
Probate is the legal process in court where a decedent’s assets are discovered, identified, and legally transferred to their rightful heirs. Probate is necessary since a loved one’s property does not always automatically transfer to his heirs upon death. Only those assets owned by the decedent jointly as “tenants by the entirety” with a spouse, or “with rights of survivorship” with a spouse or any other person automatically pass to the surviving owner without the need for probate while assets that are owned solely by the decedent at the time he passes are not automatically transferred and therefore need to be probated. This is the main aspect of probate but there are many other statutory requirements that must be performed in probating an estate. For example, probate makes it possible for the decedent’s creditors to be identified and paid. Also, if the decedent left a will, the will is required to be probated in the court, or it will be ineffective to pass ownership of probate assets to the decedent’s beneficiaries.What Assets are Included in the Probate?
Not all assets belonging to the decedent are required to be probated. Only those assets owed solely in the decedent’s name at the time of death are required to be probated. Additionally, all assets which were required to have a beneficiary named but the decedent failed to do so are required to be probated. If the decedent died with a trust, his trust assets are not required to be probated. Similarly, a decedent who has named beneficiaries for assets such as life insurance policies, retirement and pension accounts, annuities, and bank accounts and investments designated as “pay on death” or “in trust for” are not required to be probate.How Long on Average Does Probate Take?
Most uncontested probate estates take about a year to complete on average in Miami-Dade County but are typically completed in less than a year when filed in Broward and Palm Beach County. Currently, a probate estate may take in excess of a year to complete if it is required to file a Form 706 known as the federal estate tax return. This form is required to be filed within 9 months after the decedent’s passing if the gross estate, plus adjusted taxable gifts and any specific exemptions, is more than $5,490,000.What is a Will?
A will is a writing, signed by the decedent and witnesses, that meets the requirements of Florida law. The will can name the beneficiaries whom the decedent wants to receive his/her probate assets. The decedent an also choose a personal representative (Florida’s term for an executor) to administer the probate estate. If loved one passes without a will, then their property will be distributed by intestate succession to their heirs. Heirs are the persons who are related to the decedent as described by Florida statute.Summary Administration v. Formal Administration
Probate may be filed as either summary administration or formal administration. formal administration is most common because it can apply to any estate, testate or intestate, of any size. The decision whether to file probate as formal or summary is based on the value of estate and what the will says, fi there is one. If an estate has assets valued at more than $75,000, then formal administration is used. If there is no will proving otherwise, and the value of estate is less than $75000 minus any exempt assets (for example, homestead real property in many circumstances) then summary administration may be used. However, more than two years have gone by since your loved has passed and no probate has been opened yet, then then summary administration may be used regardless of the estate’s value. Formal administration is more involved. For example, in formal administration, potential claims for creditors must be published in a newspaper in order to give them notice that they must file claims within three months of the date of publication or else they will lose their claims forever. This requirement does not exist in summary administration although it may be appropriate in some circumstances. lieu of the probate estate and the nature of its assets. There is also a third type of administration known as disposition of personal property without administration. This is like a summary administration but there can be no real property included within the assets of the estate to use summary administration without administration and the assets of the estate cannot exceed what is needed to pay for funeral and reasonable medical expenses incurred within the last 60 days.The Role of the Personal Representative
A personal representative is appointed by the court to carry out the administration of the decedent’s probate estate. The personal representative is required to Identify, gather, value and safeguard the decedent’s probate assets, locate and give notice to creditors so that they have a chance to file claims for debts they are owed by the estate, pay lawful debts, including taxes, that the decedent owed, hire professionals to help where needed, pay statutory amounts to the decedent’s surviving spouse or family, a and Distribute probate assets to beneficiaries and to close the decedent’s estate when finished.How is the Personal Representative Chosen?
The personal representative can generally be a person a bank or a trust company. A person must be a Florida resident in order to serve as a personal representative, however, a spouse, sibling, parent, child or other close relative of the decedent can act a personal representative irrespective of residence. A person who is not a legal resident of Florida, and who is not closely related to the decedent, cannot serve as a personal representative.Revocable Trusts
If a loved passed away with what is commonly referred to as a “Revocable Trust,” a “Living Trust” or a “Revocable Living Trust,”, then the trustee of the trust may be required to pay expenses of administration of the decedent’s probate estate, enforceable claims of the decedent’s creditors and any federal estate taxes payable from the trust assets.
The trustee of such a trust is always required to file a ‘Notice of Trust’ with the clerk of the court in the county in which the decedent resided at the time of the decedent’s death. The notice of trust gives information concerning the identity of the decedent as the grantor or settlor of the trust, and the current trustee of the trust. The purpose of the notice of trust is to make the decedent’s creditors aware of the existence of the trust and of their rights to enforce their claims against the trust assets.
A trustee of a revocable trust is required to carry out the same responsibilities as a personal representative although the trustee generally will not need to file the same documents with the clerk of the court. Furthermore, if a probate proceeding is not commenced, the assets making up the decedent’s revocable trust are subject to a two-year creditor’s claim period, rather than the three-month non-claim period available to a personal representative in a probate proceeding.