If You Do Everything Right Your Heirs Can Avoid Probate (Sometimes)
Many people who consult with me about drafting a Will do so because they want to avoid probate. They are usually not sure exactly why they want to avoid probate. They have heard somewhere along the way that probate is bad and that avoiding probate is good. It might be that they received this advice from a family member, a close friend, or a neighbor.
It is possible to structure your affairs so that your family will not have to open a probate case with the court when you pass away. This generally involves putting in place some combination of the following tools: Beneficiary Designations, Payable On Death (POD) Designations, Joint Accounts, Deeds Designed To Pass Real Property On Death, and Trusts.
Sometimes You Can’t Avoid It Because…
1. Life is full of surprises! Even if you set up all of your cash accounts with beneficiary designations, you just never know what might happen to throw off your plan. For example, what if you win a few million dollars tonight playing the Florida lottery but you die of a heart attack from the shock. Or, what if your long-lost aunt Esther left you a small fortune in her Will but you haven’t collected your check yet? Or, more likely, what if you received some sort of refund check in the mail and you didn’t have a chance to deposit it in the bank before you passed away? Or, what if you overpaid your income taxes and are entitled to a refund that you haven’t received yet when you pass away?
In situations like this, you haven’t gained control of the funds before you die so it’s likely that a probate case will need to be filed in the county where you died to determine who is entitled to the money.
2. Florida Homestead. If you die owning a home in your name, the property will pass to your beneficiaries or next of kin. But, title companies will likely want to see an Order Determining Homestead recorded in the county records before your heirs can sell the property. This will generally require that some type of probate case be filed with the court.
3. The Family Doesn’t Get Along. Even if you do everything right, if your beneficiaries (or your jilted beneficiaries) do not like the way you arranged things, there is the possibility that they will open a probate case. Perhaps your estranged son who you hadn’t heard from in 20 years decides that you only left him off as a beneficiary on your bank account because you were exploited and manipulated by his sibling. The estranged son might choose to open a probate case and contest the designation. It’s unfortunate, but sometimes family disputes may mean that a probate case will have to be filed with the court.
The Fact That You Have A Will Does Not Automatically Avoid Probate
I am not sure how this rumor got started but, for some reason, a lot of people think that if they make a Will then they will avoid probate. This is not the case. It’s possible that you could have a Will and avoid probate. But, a Will is no guarantee that you will avoid the probate administration process.
A Will is intended to provide a set of specific instructions regarding how an individual’s estate and assets should be administered. The fact that a Will exists does not automatically mean that the Probate process can be avoided after death. If there are assets that are not properly designated to pass automatically on death then it is likely that a probate case will need to be filed with the court.
It’s Not Always As Bad As You Think
Yes, it is true that opening a probate case costs money. There are court filing fees, attorney’s fees, and other miscellaneous expenses. But, it’s also true that there would be no reason to open a probate unless there is something of value that your beneficiaries will receive at the end of the case. The real problem occurs when the probate expenses exceed the value of the assets. This does happen sometimes. For example, it can be frustrating when there is a small bank account with no Payable On Death beneficiary and the cost of the probate is greater than the funds in the bank.
Yes, in theory, probate might be avoided if you create a Revocable Trust before you pass away. However, the expense of creating and funding the trust may be comparable to the costs of probate. And, unfortunately, many times a person creates a trust but does not properly place the assets in the trust. If that occurs, it’s possible that a probate will have to be filed even if there is a trust. Potentially, the costs of the probate and of dealing with the assets that were properly placed in trust could be more expensive than a simple probate case.
If you require assistance or have a question about a probate matter, or estate planning tools, please contact me today at (239) 997-0078.
Email me at Alexis@SitkaLaw.com