The Probate Process

Probate is the court-supervised administration of a decedent's estate. It is a process created by state law to transfer assets from the person who has died (the decedent) to his or her beneficiaries. A personal representative is appointed to handle the estate administration. The probate process ensures that creditors, taxes and expenses are paid before distribution of the estate to the beneficiaries. The personal representative is accountable to the court as well as the estate beneficiaries for his or her actions during the administration.

Probate Avoidance

Only assets owned in your individual name at the time of your death require probate. One of the advantages of creating an estate plan with the McCall Moody Law Firm is taking steps to avoid or minimize probate in a way that is best for your situation. Probate costs time and money and is a matter of public record. For these reasons, it is wise to consider measures to avoid probate. Avoiding probate may reduce the cost of administering your estate and time delays associated with the probate process. 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.) Assets owned jointly as "tenants by the entirety" with a spouse or "with rights of survivorship" with a spouse or any other person will pass to the surviving owner without probate. This is also true for assets with designated beneficiaries, such as life insurance, retirement accounts, annuities, bank accounts and investments designated as "pay on death", "transfer on death" or "in trust for" a named beneficiary. Assets held in trust will also generally avoid probate.

Life insurance proceeds payable to a person other than the insured's estate need not be probated. This does not mean that the proceeds avoid estate taxation. It just means that the proceeds are paid directly by the insurance company to the beneficiary without going through probate. However, again with proper planning must or all tax consequences may be minimized or avoided. The owner of an individual retirement arrangement (IRA), 401(k), Keough, pension or profit sharing plan account may designate the beneficiary entitled to receive the account at his or her death by signing a written document. The proceeds of the IRA or retirement account would then be paid directly to the beneficiary without going through probate. They are usually still subject to estate tax and often income tax as well so taxes greatly dilute the value of these assets upon the owner's death. Proper estate planning has many benefits but the greatest is the opportunity to handle these matters while you - the person who knows your financial situation best - can make the decisions and not burden your loved ones or diminish the economic achievements of your life with costly and often unintended consequences.

Probate Procedure

When an estate does require probate papers are filed with the Clerk of the Circuit Court, usually for the county where the decedent lived. A filing fee must be paid to the clerk to begin the probate administration. The clerk assigns a file number and maintains a docket sheet which lists all papers filed with the clerk for that probate administration. Florida law provides for several alternate, abbreviated procedures other than Formal Administration such as Summary Administration and "Disposition Without Administration" The availability of these options depends upon the extent, nature and value of the estate and apply in situations of very limited financial circumstances.

A Circuit Court Judge presides over probate proceedings. The judge appoints the personal representative and issues "letters of administration" establishing the authority of the personal representative to act. Hearings are held when necessary to resolve issues related to the administration of the estate. The personal representative is the person, bank or trust company appointed by the court to be in charge of the administration of the estate. The term "personal representative" has replaced certain terms you may associate with probate such as "executor, executrix, administrator and administratrix."

The Will, the PR and the Attorney

If you have a valid will, the court will give preference to whomever you named personal representative. Without a will, the surviving spouse has preference, with second preference to the person selected by a majority in interest of the heirs. In nearly every instance, the personal representative must be represented by a Florida attorney. This is because in even the simplest estate, many legal issues can arise.

The attorney for the personal representative advises the personal representative on rights and duties under the law and represents the personal representative in estate proceedings. The attorney for the personal representative is not the attorney for the beneficiaries. The personal representative, the attorney and other professionals, such as appraisers and accountants whose services may be required in administering the estate, are entitled by law to reasonable compensation.

The personal representative is required to use diligent efforts to give actual notice of the probate proceeding to "known or reasonably ascertainable" creditors to give creditors an opportunity to file claims. The personal representative also has the responsibility to properly distribute the estate to your heirs. In Florida, the surviving spouse and certain surviving children are protected from total disinheritance regardless of what may be in a will. Absent a marital agreement to the contrary, a surviving spouse may have homestead rights, elective share rights, family allowance rights and exempt property rights. In addition, certain surviving children of the decedent may also have homestead rights, pretermitted child rights, family allowance rights and exempt property rights. Minor children who are not also the children of the surviving spouse may be entitled to a greater share of certain assets. We work with you in planning your estate so that these requirements do not inadvertently alter your plan.

The Taxes

For federal income tax purposes, a new tax entity is established-- the estate. The personal representative may be required to file certain tax returns, depending on income of the decedent, income of the estate and size of the estate. Additionally, the personal representative has the responsibility to deal with issues arising from tax years prior to your death including tax returns that you filed or should have filed. Whether there are estate taxes required can affect many aspects of an estate, beyond depleting assets. Estates that are not required to file a federal estate tax return and that do not involve litigation may often close in five or six months. The federal estate tax return is initially due nine months after death and may be extended for another six months, for a total of 15 months. If a federal estate tax return is required, the final accounting and papers to close the probate administration are due within 12 months from the date the tax return is due. This date is usually extended by the court because often the IRS' review and acceptance of the estate tax return are not completed within that period.

We can guide you through the process of determining how to avoid or minimize probate to guard against burdening your loved ones or diminishing the economic achievements of your life with costly and often unintended consequences.

Please contact The McCall Moody Law Firm today if you or a family member would like to set up an appointment to come and discuss your personal situation and wishes and what we can do to help you achieve your estate planning goals.

The McCall Moody Law Firm is located in the NE area of Tallahassee in the first office complex on the left just past People's Bank on Kerry Forest Parkway.