What is Probate?
Probate is a means of winding down a deceased person's financial affairs, fairly and legally. It seeks to gather all of the deceased's assets and then pay off all creditors who make a justifiable claim within a shortened time period of between 30 to 90 days. Then, when all creditors are paid off, probate seeks to determine who the rightful heirs are to the balance of the estate. Then it sees to it that the balance of the estate is properly distributed to those heirs. If a creditor does not file a proper claim within the 30 or 90 day time period, they are forever barred from ever making the claim in the future. People execute Last Wills and Testaments in order to uncomplicate the determination of who gets what and how much. But many people die without wills. It is a common myth that if a person dies without a will the state will inherit the deceased's property. With the exception of their being no heirs anywhere, this is never true in any state.
What happens to my property if I die without a will?
In Florida, dying without a will almost never means that the state becomes the heir to the estate. In fact, Florida statutes contain an age-old formula for distribution estates which dates back to before our colonial period and earlier. It seeks to distribute the property of the estate in the manner most people would have distributed it if they had died with a will. For example, if a man dies without a will leaving behind a wife and three adult children. The law will give the wife 30% of the estate and the balance would go equally to the three children. And if he dies owning the homestead solely in his name, then the wife is entitled to live in the house for the rest of her life with it going to the children only when she dies.
Who gets my property if I die without a will - part 2
If a person dies with neither a wife or child but has a mother still alive and three siblings. The law provides that all of his estate goes to his mother. But if she is dead and there are 3 brothers and sisters, then it is divided between the 3 siblings. If a person dies leaving only the son of a deceased sibling (a nephew), then everything goes to that nephew. This is where we get the story of the proverbial rich uncle who dies leaving a fortune to the nephew who hardly knew him.
What happens to the real estate of the deceased?
Probate is a legal procedure which, in many cases, is absolutely necessary when someone dies. If a person dies with or without a will while owning real estate in their own name the public records of the county continue to show the deceased person as the owner of that property. Only the owner of record can sign a deed selling the property but the owner is dead. There are heirs who have a right to inherit the property and they want to sell it. It isn't the worry of the prospective buyer to figure out who the heirs are and who has the right to sign a deed. That is why there has to be a probate action in court. The estate will be probated and the judge will sign orders which get recorded in the same public records where the deceased's deed is recorded.
What happens if the heirs don't probate the estate?
The judge will appoint a personal representative (executor) of the estate and will determine who the heirs to the property are. Before the probate case is closed the personal representative will execute a personal representative's deed transferring the property from the deceased person to the rightful heir or heirs. Now the heirs are the owners of record to the property and they can sign a deed selling the property to a third person. Often times we see older people who die owning a home and who have no will. They have many children but the children don't bother to probate the estate. They may get together and agree that one or more of them can live in the house. The years pass and it comes time to sell the house. But the house is still in the name of the deceased. No one can sign a deed. In the meantime, some of the deceased's children have died leaving children of their own.
What happens if the heirs don't probate the estate -- Part 2
Those grandchildren now own their deceased parent's interest in the house. The title to the property is a mess and can only be straightened out by a lawyer, a probate action and more money than it would have cost if the heirs had dealt with the matter when the relative died years earlier. The longer people wait the more complicated the clearing of the title to the property becomes. So, a formal probate is necessary whenever the deceased owns real estate in his or her own name. It is also required if the deceased owns no real estate but has at least $75,000 worth of personal property such as bank accounts, stocks, annuities, autos, boats, and other physical property. Estates of less than $75,000 personal property can be summarily probated in an abbreviated procedure which can be done with or without a lawyer, depending on the circumstances.
Usually the administration of an estate requires an attorney. But it normally does not require a lot of courtroom work because most of the procedure is perfunctory. Certain documents and affidavits are filed, the judge looks at them in chambers, and if the judge is satisfied that the papers are in order he/she will issue an appropriate order (which the lawyer provides) permitting the next stage of the process to continue. The order is mailed back to the lawyer. There is only a need for hearings and court appearances when heirs or creditors object, that is, when there is a controversy. In other words, in most counties in Florida, simple, uncontested probate cases, regardless of the amounts involved, can be handled by the lawyer through the mail. But there are no pre-printed forms that a layman can use. Each pleading, affidavit, notice, waiver, and receipt as well as the judge's orders have to be written by the lawyer.
How long does a probate take and how much does the lawyer charge?
Many people think that probate is too time consuming and too expensive. But that's relative. In Florida our rules are relatively steamline compared to other states. The courts expect a probate case be wrapped up and closed within a year. Many attorneys can close a probate in from 6 to 8 months - sometimes even sooner. While your attorney may be permitted to charge any amount you agree upon, if there is no agreement the statutes provide that the court may only award 3% of the gross estate on an estate worth between $100,000 and a million dollars. The percentage is less when the estate is worth more than a million dollars. Most estates are about $100,000, more or less. We charge the statutory 3% or $3,000 (plus costs) whichever is greater.
Ideas about probate by people who move here from up north.
We find that many older people in Florida are from somewhere else where they have had experience with the probate courts of another state. They make the mistake of thinking that probate in Florida is the same as in, say New York or New Jersey. This office has experience with the NJ probate courts and the NY surrogates court and we can definitively say that Florida handles its cases much more efficiently, a lot faster, and much less costly. But having said that, we also must add that as south Florida gets more populated the probate courts tend to get more overloaded.
Budget Cuts, Probate and Miami-Dade County.
Recently the Dade County (Miami) probate courts, claiming a 3% budget cut as the reason, have breached the traditionally swift model of Florida probate practice by making the process cumbersome and time consuming for both the litigants and their attorneys. They proclaim that the judge will not even look at documents sent to him/her for at least 8 weeks after receiving them. Consequently, this office will no longer handle probate cases in Dade County, Florida.
2010 is a good year to die! Taxwise that is.
Many people worry about having to pay an estate tax when they die. Most people don't have to and neither do their heirs. 2010 is a good year for rich people to die in! Why, because there is absolutely no Federal Estate Tax in 2010. However, next year, 2011, it will be reinstated at its old rates, which are: Everyone gets a million dollar exemption and then the estate must pay the federal government 55% of the balance over a million. But, as stated above, in 2010 there is no estate tax at all. Anyway, most people don't have million dollar estates and don't need to worry about estate taxes. Furthermore, when heirs receive their inheritances, they do not have to pay any income tax on it no matter how great the amount. It's tax free. So don't worry!
Estate and Gift Taxes
Some wealthy people try to get around the estate tax by giving their money to their heirs during their lifetime. This doesn't work. The million dollar exemption is a cumulative lifetime exemption. You can only give your children up to a million dollars while you are alive then you have used up your estate tax exemption. Then you have to pay a gift tax of 35% on the excess you give away over one million, plus you will have used up your estate tax exemption on the balance left when you die. Because you have used up your million dollar exemption, your estate will have to give 55% of the entire remaining estate to the government when you die.
And Florida is a good state to die in! Taxwise that is.
One final note on estate taxes and another reason why Florida is a good state to die in. While many states tack their own estate tax on a decedents property, Florida does not. Florida has no estate tax. (In New Jersey the state will impound the entire estate until it has been determined what its cut is and it has been paid. Only then will it release the balance to the heirs.) Other states have other estate tax levies that are added to the federal estate tax. Some states tax an estate even when the estate isn't big enough to rate a federal tax. Technically, Florida has an estate tax but only after the federal tax is applied and only tax money on the estate that would go to the federal government if the state of Florida didn't claim it.