Florida Probate 101
After a person dies (called the Decedent), the probate court in the county where they were domiciled has jurisdiction over the Decedent's property. The Decedent's property that is subject to probate is called the "estate." Some things are not included in the probate estate. For example, if real estate was owned jointly with a right of survivorship or by a married couple (called tenancy by the entireties) then it passes to the surviving joint owner immediately without going through probate. Similarly, if a bank account has joint owners or has a pay-on-death (POD) or transfer-on-death (TOD) provision, it goes to the other owner immediately without having to go through probate. The other big things not included are life insurance and retirement accounts, which do not have to go through probate if there is a properly designated beneficiary.
“Probate is a court-supervised process for distributing a person's property after their death.”
Why is there probate?
Probate has two primary purposes. The first is to ensure that any creditors that the Decedent owed money to are paid correctly pursuant to Florida law. Probate also helps beneficiaries by setting a time limit for creditors to come forward and assert a claim. If they miss their time limit for filing a claim, then they are out of luck. The court ensures creditors are paid correctly and in the right order. The second primary purpose is to ensure that the personal representative of the estate (called an executor in other places) properly distributes the property in the estate to the beneficiaries under the will, if there is a will. If there is no will, then the property must be distributed pursuant to a Florida Law called the law of intestate succession, which direct who gets what. There is probate to ensure the proper people are paid and the will is honored.
What are the down-sides of probate?
Here are some ways we can achieve a better result in estate planning:
- Time. Probate can take a long time. There are two probate processes in Florida. Summary administration is the first. It is available for small estates with less than $75,000 in the probate estate. This process is fast and can be completed in 6-8 weeks. However, formal administration is the other process and that is required if the estate has over $75,000. A formal administration can take on average 10-14 months to complete, depending on the speed of the court and whether there are any complications.
- Expense. While summary administration can often be accomplished with the help of a lawyer for a flat fee ranging from $1,500 to $2,500, in a formal administration lawyers often charge a percentage of the estate. Florida Law allows lawyers to receive, by defaults, 3% of the value of the estate up to the first $1 million in value. Our firm typically charges less than that amount, but many do charge that amount. The legal fees are often the biggest expense, but there are other expenses like accounting fees, tax preparation fees, court filing costs, service costs, and newspaper publication costs. As you can see, probate can be expensive.
Despite these downsides, there are some advantages. Because the process is supervised by the court, there is less chance for wrongdoing on the part of the personal representative. Also, with proper notice, creditor claims can be dealt with and beneficiaries do not have to worry about a creditor coming after the inheritance received at a later time. Probate can be a challenging process and requires the help of a competent team for things to go smoothly. We are here to help ensure you have a good experience during a difficult time.