What Is Probate? And Why Do I Want To Avoid It & How?
Some would call Probate title court. And that’s not too far off. In essence, Probate is the Circuit Court process of transferring a decedent’s assets to such a decedent’s loved ones most often times through a Last Will & Testament (also called a “Will”).
The WillThe Circuit Court Judge makes sure the wishes in a decedent's Will actually come into fruition. In other words, Probate gives a decedent Judicial Overview in solidifying that his/her assets are lawfully "re-titled" into his/her loved one's names.
Probate can be considered time consuming. Depending on the nature and/or amount of the assets subject to Probate, a period of at least six months usually transpires before the Probate process is over. Roughly one year is the average time frame it takes to open and close a Probate, and many Probates drag on for longer than that. Secondly, for better or for worse, Probate can be good money for attorneys. The Florida Statutes presume that three percent of the Gross Probate Estate is a reasonable Probate attorney's fee. Most of my elderly clients would rather not highly pay an attorney when they die - they just want to pass their assets to their loved ones in a time and cost effective manner.
CreditorsFurthermore, an important thing to consider is that Probate subjects a decedent's assets to his/her creditors. For example: a single woman dies and her Will leaves her Homestead Residence and a 500k mutual fund to her three children equally. She also died with 250K of unpaid medical bills. In a Probate situation, the Homestead would be re-titled into her children's names escaping such medical debt. However, the medical bill creditors would be able to attach to the 500k mutual fund, thereby reducing her children's inheritance by 250k.
How to Avoid ProbateIn Florida, there are some simple things you can do to avoid Probate. You can make your financial accounts Transfer-On-Death ("TOD") or Pay-On-Death ("POD") to your loved ones. And upon death, such accounts immediately transfer to the beneficiaries you've named - whilst avoiding the time, cost, and potential creditor attachment that Probate would entail. Keep in mind, when using "TOD" or "POD" to avoid Probate, YOU MUST keep your beneficiary designation forms up to date in the event that a loved one predeceases you. Often times, when using "TOD" or "POD" to avoid Probate, a deceased loved one's share won't be re-directed according to your wishes.
A Revocable Living Trust ("Trust") is a great way to achieve Complete Probate Avoidance in that all of a decedent's assets (including the Homestead Residence & other Real Estate) that are properly titled in a Trust, not only avoid Probate, but can also be re-directed exactly according to a decedent's wishes in the event that a decedent's loved ones die before the decedent. Trusts have a whole host of other benefits - some of which include estate tax avoidance/minimization, creditor protection, providing for spendthrift loved ones, and providing for disabled loved ones whilst keeping them qualified for Public Benefits.