What Is Probate?
Probate is the court process that administers wills and appoints guardians. It is supervised by a judge of the probate court, who will oversee the process to ensure that your ultimate wishes are carried out. Like any other court proceeding there are expenses involved. There are filing fees, attorney’s fees and other costs involved to administer an estate in the probate court. These costs will be paid by the estate. An estate must go through probate whether the person has a will or not, however, there are other methods of passing property at your death to your beneficiaries which do not require court administered probate proceedings.
How Can You Dispose Of Property At Your Death?
There are a number of methods used to dispose of property at death, all of which have their advantages and disadvantages. Among the most common methods are:
1) Joint property. Property can be titled in the joint names of two or more people, with rights of survivorship. Upon death, the asset passes to the survivor, without court order. There are risks involved in the use of joint property as an estate plan. It is most satisfactory between a husband and wife in a nontaxable estate, where the spouses intend the survivor to be the beneficiary. Generally, it is not advisable to use joint property as the core of your estate plan to pass property to others after you are gone. One disadvantage is the creation of the joint account could be considered an asset of the donee, subject to debts, judgments or other claims. Other disadvantages include the possibility the donee could redeem the asset during the donor’s lifetime against their wishes or the chance that people may not die in the anticipated order, which could totally disrupt the anticipated passage of the property.
2) In trust for accounts. Banks often offer accounts which are titled “A in trust for B” or designate A pay on death of beneficiary. These are also known as ITF or POD accounts and are also sometimes referred to as ” Totten Plan Without Trusts.” Upon A’s death the account passes to B, but during A’s lifetime, B has no claim against the account. Creditors of B cannot attach the account and B cannot withdraw from the account during A’s lifetime. This avoids some of the disadvantages of joint accounts; however, these types of accounts still have the potential of people dying in the wrong order resulting in a disruption of the estate plan. Totten Trusts or ITF accounts are better used for relatively small amounts and not as a plan to dispose of the bulk of one’s estate.
3) Life insurance and annuities. Life insurance and annuities are usually payable to a named beneficiary. This avoids probate and is commonly acceptable. In addition, some policies may allow alternate beneficiary designations to be made. The designation of a beneficiary for these types of assets offers much more flexibility in the ability to provide for contingencies than a joint or “in trust for” account, but are still not as flexible as what can be done in a will or trust. In some instances it may be preferable to make the life insurance policy payable to your estate or to a living trust as part of your overall estate plan, for example if liquid funds are needed to pay taxes or other liabilities.
4) Last will and testament. A will has no effect until death. There is no transfer during your lifetime and generally wills are fully amendable and revocable during your life. Wills can go into great detail in disposing of your assets and the cost of preparing a will is relatively modest. A disadvantage is that upon death, assets which pass under the will are subject to a probate administration, which is overseen by the probate court. There are costs for filing fees, bonds, attorney fees and personal representative fees. However, all these costs are incurred after your death and the highly structured supervision of the court offers you a high assurance that the assets will be properly administered and distributed in accordance with your last wishes.
5) Living trust. A living trust comes into existence during your lifetime. Assets are held in the name of the trustee of the trust, which can be the same as the person creating the trust. Like a will it is normally amendable, revocable, and can go into great detail in disposing of assets. Upon death, the named successor trustee takes over and is responsible for the administration and distribution, generally without court supervision. As a result the costs and fees are usually less than those involved in a probate estate administration. The disadvantage is the lack of formal supervision of the successor trustee, however, there is a growing tendency for the legislature to enact laws which regulate trustees. The costs, incurred during your lifetime, of creating a trust is usually higher than preparing a will. Contrary to popular belief, a revocable trust is generally not more advantageous than a will, as far as income taxes or asset protection is concerned, but various forms of trusts can be used to minimize estate or death taxes. Trusts are beneficial for those wishing to minimize or avoid the costs of probate, for larger estates to minimize or avoid estate death taxes, and for retired, elderly, ill, or terminal persons because of the ability of the successor trustee to manage assets in the event of incapacity.
Learn more: Planning Your Estate
For More Probate Resources
The law firm of Fisher & Wilsey, P.A., has been assisting clients with Florida probate proceedings for over 40 years. We would be happy to meet you for a consultation to review your probate needs.
We handle probate proceedings in the Tampa-St. Petersburg area for clients in Florida as well as clients from around the world who own property in Florida. Call 888-312-1474 or 727-369-8572 or complete our contact form to schedule an initial consultation with one of our experienced lawyer.