In my blog post last week, I discussed how some Floridians choose to create a living trust in order to avoid probate. For this week’s post, I will elaborate on why it may be a good idea to avoid probate completely if at all possible.
First, a quick recap: probate is the legal process of distributing a person’s assets after their death. The decedent will typically have left a will describing how they want their assets distributed, but the court will still have to take stock of all the decedent’s assets and ensure that any debts are paid before distributing the remaining assets. If the decedent did not leave a will, the process becomes even more complicated, as the court will have to determine the beneficiaries, and there is a great chance for surviving family members to dispute the court-determined distribution.
You can probably already guess some of the potential pitfalls of probate based on the above description, but let’s look a little more closely at some of the issues.
Problems You May Encounter with Probate in Florida
The probate process takes a long time. Even the most straightforward probate case, in which the decedent has left a clear-cut will and does not have any debts, will have to be open for at least a three-month creditor claim period. The Florida bar estimates that most simple probate estates will take five or six months to close, and complicated estates can take much longer. The process can be especially slow if someone is contesting the will, and some families end up waiting three or more years before the decedent’s estate is finally closed and all assets are distributed.
The cost of probate adds up. There are several different expenses associated with probate, and heirs can expect a percentage of the estate to go towards court fees, personal representative fees, and attorney fees. In Florida, attorney fees are based on what is reasonable for estates of a certain value, so the more valuable the assets, the higher the fee.
Probate becomes public. Because probate goes through the Florida court system, it is a matter of public record, and anyone can look at the will. Many people would prefer not to make their will public because they value their privacy, or because they’re worried that a public record of their asset distribution will make the heirs a target for burglars and scammers.
Problems You May Encounter When Avoiding Probate
Given the potential problems listed above, you may be wondering why everybody doesn’t just create a living trust to avoid probate. The simplest answer is that avoiding probate can sometimes come with its own problems. If you do decide to create a living trust or pursue another route to avoid probate, you should be aware of these potential issues so that you can head them off:
Assets may end up going through probate even with a living trust. What some people don’t realize is that only assets that have been legally moved to a living trust will avoid going through probate. For example, if a decedent puts his/her cars in a living trust but do not include a valuable painting collection, that painting collection (and any other assets left out of the living will) would still have to go through probate.
Paying expenses may be complicated. When an estate goes through probate, expenses for things such as the funeral and professional fees will typically be pulled from the decedent’s assets. However, if most of the estate does not go through probate, there may not be enough money set aside for these expenses, and heirs may dispute who should cover the costs.
Assets may not be distributed the way the decedent intended. The New York Times points to one case where an aging parent created a joint bank account with the child who was their primary caregiver. The parent did not realize that after death, that child would automatically inherit the rest of the money in the bank account and was under no obligation to share the inheritance with their siblings. If the child did decide to divide the money amongst their siblings, the money would be classified as a gift and would be subject to the limits on tax-free gifts.
Probate or No Probate, You Still Have to Prepare for Asset Distribution
Whether or not you’re going to try to avoid probate, it’s a good idea to sit down with a Florida estate planning attorney in order to ensure that the distribution of your assets will go as smoothly as possible. If you’re going to try to avoid probate by creating a living trust, your lawyer can help you account for all your assets and make sure they are properly titled to be placed in that trust. If you’re creating a last will and testament that will go through probate, your lawyer can help you provide clear instructions so that the probate process is as short and painless as possible.
About the Author:
Christopher Q. Wintter is the founder of Wintter & Associates, P.A. and a board-certified expert in Trust and Estate matters by the Florida Bar. With more than 24 years’ experience as a practicing attorney, he also serves as an instructor and faculty member for the National Institute of Trial Advocacy (NITA)—the nation’s leading provider of legal advocacy skills training to practicing attorneys—and has earned the AV® Preeminent™ rating with LexisNexis Martindale Hubbell. He was also selected for inclusion in Florida Super Lawyers for 2011 and 2012 in Estate and Trust Litigation.