Planning Techniques to Avoid Probate
What is Probate?
Probate is the legal process the Court takes to distribute your property and pay your debts upon your death. During the probate process, your property is identified, inventoried, and then distributed to your beneficiaries. The Court makes certain that any and all debts and taxes are paid before any final distribution of assets to the beneficiaries. If you have a Will, the Court will make sure your assets reach your named beneficiaries; if you do not have a Will, the Court will distribute the property according to the rules of “intestate succession” which is in the Florida statutes.
The probate process has very specific legal requirements and cause problems including:
Probate can take a lot of time, anywhere from 3-6 months to over a year. If you have creditor claims, unpaid taxes, or heirs who contest the Will, the process can take longer.
Higher Legal Fees:
The probate process can become expensive. According to Florida law, you must have an attorney is required in most probate proceedings. Attorney’s fees are based on a percentage of the value of the probate estate, but could be based on an hourly rate. The longer the probate takes, the more it will cost, leaving the heirs with less than intended. If there are any challenges to the probate, the cost can be very high.
When your Will becomes part of the probate file in the Court, it is a public document; how much you left behind, how much you owe to creditors, and who are your beneficiaries are no longer private family matters.
Ways to Avoid Probate
Build a Trust
One of the best ways to avoid probate is to create a living revocable trust. A living trust is very similar to a will and allows the role of a trustee to take control in the event of death. This makes your property no longer part of your probate estate and it avoids the probate process entirely. You can instruct your trustee, upon your death, how they should transfer the property to the proper beneficiaries.
Another way to avoid probate is to have your property held jointly. If your spouse or significant other passes, the jointly held property will go to the surviving member, completely avoiding the probate process. Of course, unless the surviving member then takes further steps to avoid probate, there will be a probate when he or she passes.
Beneficiary Designations and Payable on Death Accounts
If you have completed beneficiary designations on retirement accounts and life insurance policies those assets will pass to the named individual, completely avoiding the probate process. It is always a good idea to name a secondary or contingent beneficiary, in case your beneficiary predeceases you.
For bank and investment accounts, you can designate the account be “payable on death” or “transfer on death” to a named beneficiary. This, too, will completely avoid the probate process.
Lady Bird Deed
A “Lady Bird Deed” offers a simple, inexpensive way to transfer real estate upon your death, without probate. These deeds work to transfer the property upon your death, much like a transfer on death account. These deeds have some drawbacks, however, and it is advisable to discuss your situation with an estate planning attorney.
Contact the Law Office of Debra G. Simms for your free consultation to discuss how you can avoid Probate.