Almost every time I meet with a client, they tell me that they are interested in avoiding probate. Many times, the client is unsure of what a probate actually is. Probate is a Court proceeding which occurs when someone dies having property (real estate, bank accounts, etc.) titled solely in their name. It generally takes anywhere from 6 months to a year, and requires (in most cases) the hiring of an attorney to help administer an estate. It can be expensive and time consuming which are 2 of my top 5 reasons why you want to avoid probate.
- Time consuming – Probate generally takes 6 months to a year to complete. Sometimes it can be more time, rarely is it less time. During that time, assets may be tied up and unable to sell or liquidate.
- Costly and expensive – In Florida, an attorney is required to represent the Personal Representative and the estate, except where the Personal Representative is the sole interested person. Also, a Disposition of Personal Property without Administration does not require an attorney. Attorneys can, by statute, charge 3% of the value of the estate for ordinary services and additional reasonable compensation for extra ordinary services.
- Matter of public record – A probate matter is available for the public to view and is not a private matter. If you have ever been involved in a probate where real estate was involved, then you have probably received letters from real estate investors saying they can buy your loved one’s property and take it off your hands. How do you think they found out about the property or that you are the beneficiary? By looking through the probate records.
- Can be stressful for family – Nothing tears family apart like a divorce and death. That’s when you can really see the greed that comes out in others, as well. If you do not spell out exactly what you want to have happen with your assets (which is done via a Will), it may be that a family member who you did not want to inherit from your estate hits the jackpot! Although a Will does not avoid probate, it’s better than having no Will at all because you can control who inherits your assets and who is responsible for administering the estate (the Personal Representative/Executor).
- It is so easy to avoid – Many people do no planning at all because they think it is too complicated or too costly. However, here are some easy things you can do to avoid probate:
- Make your bank accounts payable on death to a beneficiary (or they can be joint –but that could cause issues unto itself which is another blog post)
- Make sure life insurance, retirement accounts, money market accounts all have beneficiary designations and keep them up to date
- With regards to your automobiles, the Florida Department of Motor Vehicles has relatively easy procedures to transfer title at death without the need for probate, if everyone is in agreement.
- And, when it comes to your homestead, you could consider recording an enhanced life estate deed which gives the owner a life estate in their home (retaining the right to sell/mortgage/rent, etc.), and at death, passing the remainder to one or more beneficiaries. This is not considered a “gift” for Medicaid purposes. However, you should be aware that many title and mortgage companies do not want to refinance or issue title insurance without the remainder beneficiary signing off.