Probate is a legal process that occurs after an individual’s death to verify the validity of their Will, distribute assets, and settle outstanding debts. Probate can be costly and time-consuming, especially here in Florida. A common question is whether a Will must always go through probate when someone dies. The answer can be complex and depends on various factors, including the type of assets, state laws, and the presence of a Will. This article will explore how probate works and when it is required.
Table of Contents
Understanding Probate
Probate is a court-supervised process that manages the estate of a deceased person. It serves several purposes, including:
- Confirming the validity of the Will
- Appointing an executor or personal representative
- Identifying and inventorying assets
- Settling debts and taxes
- Distributing the remaining assets to beneficiaries
When Probate is Necessary
Probate is necessary if the deceased person owns assets solely in their name. If the deceased person had all of their assets pass through a living trust, joint tenancy, or through beneficiary designation, then probate would not be necessary.
Example: George passed away in Florida with just a simple Will. He had three bank accounts, two investment accounts, and a CD. None of his accounts had beneficiaries on them.
Result: George’s assets must go through probate here in Florida because none of his assets had beneficiaries. After a lengthy and expensive probate court process, all of George’s assets will pass to his beneficiaries through his Will.
Factors Influencing the Probate Process
a) State laws: Probate laws vary from state to state. Some states have a simplified probate process for small estates, while others may require full probate, regardless of the estate’s size.
b) Estate size: Estate size can significantly affect whether probate is required. Smaller estates may qualify for a simplified probate process or even avoid probate altogether.
c) Types of assets: The types of assets in the estate can also impact the need for probate. Assets with designated beneficiaries, such as life insurance policies and retirement accounts, usually avoid probate. Assets held in a revocable trust, by joint tenancy, or with rights of survivorship bypass the probate process.
Florida has a simplified probate process for estates less than $75,000. However, most people hire an attorney, and the simplified probate process costs significant money. Anything over $75,000 and Florida requires a full probate called a formal administration, which can be extremely expensive and last upwards of a year or more.
Avoiding Probate
It is possible to avoid probate in certain situations, which can save time, money, and privacy for the deceased’s family. Some standard methods to bypass probate include:
- Creating a living trust: A living trust holds the deceased’s assets and allows them to be distributed without going through probate. Living trusts in Florida are commonly used to avoid the expensive and time-consuming probate process. The cost of setting up a living trust is often significantly lower than probate.
- Joint ownership: Owning property with another person, such as a spouse or child, can help avoid probate if the ownership includes rights of survivorship. We typically never recommend adding a beneficiary onto an asset as a joint owner.
- Payable-on-death accounts: Designating a beneficiary for bank, retirement, or investment accounts can help these assets bypass probate. These payable-on-death accounts are set up through the institution that holds the asset and must be done through that institution.
- Transfer-on-death deeds: Some states allow transfer-on-death deeds for real estate, which enables the property to be transferred to a beneficiary without going through probate. Florida allows a ladybird deed, which is an excellent way of transferring property upon death without the property going through probate.
Conclusion
Whether a will must go through probate when someone dies is not always straightforward. The need for probate depends on several factors, such as state laws, the estate size, and types of assets.
While probate may be necessary in many cases, there are strategies for avoiding the process to save time and money and protect the privacy of the deceased’s family. Consult with an experienced estate planning attorney to determine the best course of action for your specific circumstances.