Probate FAQ

Boca Raton Probate Attorney: Your Questions Answered

What is probate?

Probate is a court-supervised process of distributing property as directed in a will or in accordance with the law if no will exists. Since there is court supervision of the entire process, the heirs/beneficiaries can be assured of a full and fair valuation and distribution of the estate. Probate is necessary whenever a deceased person leaves titled assets in their name alone.

Why is probate necessary?

The main function of probate is transferring title of the decedent’s property to his of her heirs and/or beneficiaries. If there is no property to transfer, there is usually no need for probate. Another function of probate is to provide for a mechanism for payment of outstanding debts and taxes of the estate, for setting a deadline for creditors to file claims (thus foreclosing any old or unpaid creditors from haunting heirs or beneficiaries) and for the distribution of the remainder of the estate’s property to ones’ rightful heirs or beneficiaries.

Where does probate occur?

Your will is probated in the court of the county and state in which you lived at the time of your death. If you own any property in another state, another probate proceeding may be required in that state and county. A Boca Raton probate attorney at our firm will review your assets in other states and make the necessary adjustments to avoid ancillary probate proceeding in other states.

Who is responsible for handling the probate?

The personal representative (also known as the “executor” or “executrix”, or the “administrator” or “administratix” in other states) is appointed as part of the probate proceeding and has the responsibility for managing the estate through the proceeding, making a list of all the assets and debts of the estate and seeking to carry out the directives of the will. The probate court oversees the activities of the personal representative, and requires that she or he obtain prior permission of the court before certain actions may be taken, such as selling real estate or business interests owned by the estate

Who can be a personal representative?

A personal representative can be a spouse, parent, child, sibling, close relative, or an individual who is a Florida resident. Alternatively, a financial institution that is qualified to exercise fiduciary powers in Florida can serve as personal representative.

Does a personal representative get paid?

Yes. Personal representatives generally earn a fee of about 3% of the probate estate for their work. (This varies moderately from state to state and generally decreases as a percentage as the size of the estate increases.) All out-of-pocket expenses incurred due to managing and settling the estate are also reimbursed.

What happens if the personal representative does not fulfill his or her obligations to the estate?

A personal representative who does not fulfill his or her duty is personally liable for damages caused in the administration of the estate. Liability may arise from selling an asset without the authority to do so, or at an inappropriate price, improperly managing the assets of the estate, neglecting to file tax returns on time, failing to collect claims and moneys due the estate, distributing property to the wrong beneficiaries, etc. The consequences for these actions or in-actions could be that the personal representative might be responsible for paying for the loss out of his or her own pocket.

What assets are subject to probate administration?

All assets owned by the decedent in the decedents’ name alone, not in joint tenancy, in trust or with a beneficiary designation, are subject to probate administration upon decedent’s death. Real and personal property owned as a joint tenant pass to the surviving co-owners without going through probate. Other types of benefits, such as a life insurance policy or annuity payable directly to a named beneficiary bypass probate. Money from IRAs, Keoghs, and 401(k) accounts transfer automatically, outside probate, to the persons named as beneficiaries. Bank accounts that are set up as payable-on-death account (POD for short) or an “in trust for” account (a “Totten Trust”) with a named beneficiary also pass to that beneficiary without probate. If a living trust holds legal title to some of your property then the assets held by the living trust also passes to the beneficiaries without probate. (The trust is a legal entity which survives you after your death.)

What assets are not subject to probate administration?

Property passing by contract includes life insurance proceeds, IRAs, and employee benefit plan proceeds, such as the proceeds payable under a pension, profit-sharing, or employee retirement plan. These assets pass outside the will to the persons named by the decedent in the appropriate beneficiary designations. Thus, it is important to periodically review the beneficiary designations with respect to these types of assets and to update them as necessary. Property held by the decedent and another person as joint tenants with right of survivorship passes outside the will directly to the survivor. Survivorship assets typically include certain types of bank accounts, certificates of deposit, stocks and bonds, and certain savings bonds issued by the United States Government, such as Series EE savings bonds. All property held in a trust for the benefit of the decedent passes outside of probate. The trust may have been created by the decedent during his or her lifetime for property management purposes or by someone else, such as a parent of the decedent. Trust assets pass under the terms of the trust rather than under the terms of the decedent’s will. It is important to determine the extent of one’s non-probate assets when planning the disposition of one’s property at death. If a substantial portion of the assets are non-probate assets that do not pass under the will, even a well-drafted will may be insufficient to carry out the testator’s intent in disposing of his or her property.

What if the decedent owned real estate in more than one state?

Probate is usually required in each state where the real property is owned in the decedent’s name, in addition to the home state. After a personal representative is appointed in Florida, a certified copy of the will, if any, at initial probate pleadings as letters of administration appointing the personal representatives, must be submitted to probate in each other jurisdiction in which the deceased owned real property. That separate probate procedure is formally referred to as “ancillary probate.” Some states insist upon the appointment of a personal representative who is a local resident to administer the in-state property. Where the deceased did not have a will, each state will have its own law for distributing the deceased’s real property. The real estate in State A, all might go to the spouse; in State B, it might go 1/3rd to the spouse, 1/3rd to the son and 1/3rd to the daughter; and in State C, it might go 1/2 to the spouse and 1/4 each child. The laws of the state in which the deceased was a permanent resident or “domiciliary” govern who would receive all the deceased’s personal property, wherever it was located, and all the deceased’s real property located within the state. Thus, probate almost always is undertaken in the home state.

What if there is no will?

If a person dies without a will, he/she will be considered to have died intestate. In this case, the probate court will appoint a personal representative and the remaining property after any creditors have been paid will be distributed by state law.

What if the will is lost or there is only a photocopy?

Missing wills raise interesting legal issues which often turn on the specific facts and circumstances, and the law of the state in which the deceased resided. The will may be missing because the deceased intentionally revoked it, in which case, depending on state law, an earlier will or the state’s rules on interstate succession would determine who gets the deceased’s estate. On the contrary, the will may be missing because it can be proven the will was stored in a bank vault that was destroyed in a natural disaster. In that case the probate court may accept a photocopy of the will, together with evidence that the deceased duly signed the original, such as a signed oath from the witnesses of the will.

How is the will probated?

The person named as the decedent’s personal representative (a more formal term is “Executor” or “Executrix”) retains a probate attorney who then prepares a petition for the court and takes it, along with the will, and files it with the probate court. In addition, the lawyer for the person seeking to have the will admitted to probate must also notify all those who would have legally been entitled to receive property from the deceased if the deceased died without a will, plus all those named in the will, and give them an opportunity to file a formal objection to admitting the will to probate. A Boca Raton probate attorney at our firm will be happy to assist. The following is a simplified outline of the probate process after the personal representative (PR) hires an attorney as required by statute:

  1. The nominated personal representative or interested person files with the court petitions to open a probate administration for an estate, admits the will (if there is one) and appoints a personal representative, attaching the original will.
  2. File inventory
  3. A “Notice to Creditors” is published and sent to known creditors. For a period of three months from the date of publication, creditors of the estate can file claims against the estate. This would include any prior creditors or judgment holders, debts resulting from last illness, funeral expenses, taxing authorities, etc.
  4. The personal representative has to identify and collect assets of the estate during this time period. To do this, the personal representative finds all bank and security accounts, debts owed to the decedent, property owned by the decedent, etc. The personal representative also has to maintain the assets in good condition, and to collect income for the estate. This consists of maintaining insurance coverage, collecting rent, protecting assets from theft or damage, etc. The representative may also liquidate assets such as cars, real estate, etc. The proceeds may be deposited in an estate account.
  5. After the three-month creditor period has expired, and when all assets have been collected, real property sold, and assuming no problems have presented themselves such as the will being contested, the representative files a petition with the probate court to allow a distribution of all remaining assets to the beneficiaries/heirs and to close the estate.

If the court approves the petition, the representative then divides the assets as instructed in the will, or as required by statute if no will exists. It is important to have a good probate attorney because it reduces the chances of complications during the probate process.

What are valid reasons to contest a will?

Objections to a decedent’s will must be filed in probate court within a certain number of days after receiving notice of the death or petition to admit the will to probate. Some of the most common objections are that the decedent lacked mental capacity at the time the will was executed; there force or undue influence; the will was forged, or the will was not properly drawn, signed or witnessed, according to the state’s formal requirements.

Does an estate have to pay taxes?

For Federal and state tax purposes, death leads to two events. It ends the decedent’s last tax year for purposes of filing an income tax return, and it establishes a new tax entity, called the “estate.” For federal tax purposes, the personal representative may be required to complete and file one or more of the following, depending on the decedent’s income, the size of the estate, and the income of the estate:

  1. Final Form 1040 Federal Income Tax return, reporting income for the decedent’s final tax year.
  2. Form 1041 Federal Fiduciary Income Tax returns for the estate, reporting income for the estate.
  3. Form 709 Federal Gift Tax return(s), reporting certain gifts made by the decedent prior to death.
  4. Form 706 Federal Estate Tax return, reporting the gross estate and deductions, depending on the size of the gross estate.

All of a decedent’s assets together make up the decedent’s gross taxable estate. For estate tax reporting purposes the IRS defines estate as the total collection of a decedent’s assets whether or not they pass through probate. After an estate’s assets have been valued, if the decedent’s gross estate exceeds the federal estate tax credit exemption amount, (for 2007-$2,000,000.00), then a Form 706 (Estate Tax Return) must be filed with the IRS and a copy forwarded to the Florida Department of Revenue. For state purposes, an executor must file the appropriate state income tax return (assuming the decedent was required to do so while living) and any state income tax returns during the probate period, plus possible estate tax, inheritance tax and gift tax returns. In Florida there are no death taxes due for 2007, 2008, 2009, and 2010, if Form 706 is filed with the IRS. A copy must be filed with the Florida Department of Revenue. (In many states, gift, estate and inheritance taxes have been eliminated for most small and medium-sized estates.) The requirements for filing and payment vary widely from state-to-state.The personal representative should also be aware of the possibility of issues arising from tax years prior to the decedent’s death. Other taxes require the attention of the personal representative in the probate process, such as local real estate and personal property taxes, business taxes, and any special state taxes. However, all property left to a spouse is exempt from the estate tax, as long as the spouse is a U.S. citizen. Estate tax is also not assessed on any property you leave to a tax-exempt charity.

What happens if an estate has creditors?

As part of the probate process, creditors are notified through a weekly newspaper. In Florida, creditors must file a claim for the amounts due within three months with the court. If the claim is approved by the executor, the bill is paid out of the estate. If the claim is rejected, creditors must sue for payment. If there are insufficient funds to pay debts, states have statutes establishing who gets paid first. Personal representatives most likely will commence selling property to pay off approved creditor claims. If claims exceed assets, then some claim will only receive a pro-rated amount. In this case all assets are sold to pay administrative expenses. There will be no probate assets available to distribute to beneficiaries.

Do beneficiaries have to pay creditors if the estate does not have sufficient funds?

Generally the answer is “no.” Heirs and beneficiaries can’t be made responsible for your general debts, at least without their consent. Unless the deceased had gifted away his or her assets to someone shortly before dying, or otherwise acted in concert with them to defraud his or her creditors, beneficiaries should not have any liability to the deceased’s creditors just because they are beneficiaries. Of course, the estate may not have anything left for them, but the beneficiaries would not have to pay creditors out of their own pockets. Of course, if the children or beneficiaries took any property or benefits from the deceased or the estate, or had assumed liability for care given the deceased, or guaranteed payment, they could be held liable for some or all of the deceased’s debts separately, not because they are relatives or beneficiaries.

Is there any way to avoid probate?

In Florida if your total assets are less than $75,000 (excluding homestead property) than a summary administration can be utilized whereby a formal probate is avoided. Otherwise, you will need to prepare a trust in order for your assets to be distributed outside of probate court. It’s in your best interest to consult with an attorney to minimize the chance of legal complications in trying to avoid probate.

Should I avoid probate?

You will most likely want to avoid probate, if possible. Probate can tie up assets, expose assets to creditors, result in a loss of privacy to your family and cause your family considerable expense.

Is there ever a good reason to elect to open a probate administration?

When the deceased has completely funded his or her revocable living trust, the nominated personal representative who has little or no knowledge of the deceased’s financial affairs may elect to open either a formal probate administration or summary administration. As part of the administrative process, a Notice to Creditors can be published thereby reducing the period from two years to three months in which a creditor can make a claim against the trust estate.

How much does probate cost?

When all the costs are added up – and the costs may include appraisal costs, executor’s fees, court costs, costs for a type of insurance policy known as a “surety bond,” plus legal and accounting fees, probate can easily cost from 3 to 7 percent of the total estate value. If there is a “will contest” the cost will substantially increase. The cost of probate may be set by state law or by practice and custom in your community.

How long does probate take?

Estates that are not required to file a federal estate tax return and are not involved in litigation can usually be closed between six and nine months. For estates that are required to file a federal estate tax return, the estate must remain open for two years. However, some distributions may be made to the heirs and beneficiaries soon after the estate is opened. If no probate is required, what must be done to settle the estate? Estate settlement is the process by which a decedent’s total estate, which includes both probate and non-probate assets, is settled. Even if an estate does not require a probate administration, all estates must be settled. There are still documents to be filed, debts and taxes to be paid and assets to be distributed. Estate settlement involves the following steps:

  1. Collection of decedent’s assets;
  2. Payment of debts and claims against the estate;
  3. Payment of estate taxes, if any;
  4. Determination of heirs if the decedent died without a will;
  5. Filing certain documents required under state law, in some cases to clear title to real property owned by the deceased; and,
  6. Distribution of the remainder of the estate of those entitled to it.

The personal representative has to be approved by the court and those who receive property from the estate must be approved by the court. If the personal representative acts improperly, he or she may be held liable for any resulting damages and his or her appointment may be terminated by the court. Florida law requires that virtually all estates have a probate attorney or probate law firm assist with the estate administration. The Walser Law Firm is available to help with all probate and estate matters to settle an estate. Please feel free to contact a Boca Raton probate attorney at our firm to learn how we can help you.

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