Estate planning is crucial for any individual who wants to ensure his/her property and assets will be put in the right hands upon their death.
One of the main aspects of an optimal estate plan is to avoid or mitigate as much as possible the effects of probate. In Florida, probate proceedings tend to be time-consuming and costly. In some cases, up to 5% of a decedent’s estate can go into probate costs.
Consequently, it is essential to adopt a strategic approach while dealing with probate to minimize the exposition of your property and assets to taxes and fees.
In this article, you will learn the differences between probate assets and non-probate assets.
What is Probate in Florida?
In layman’s terms, probate is the legal process designed to allow for the transfer of the estate of a deceased individual to their heirs or anyone else named in the will.
During probate, the court will verify the authenticity of the will, administer the decedent’s estate, and supervise the payment of any unsettled debts left by the decedent.
In Florida, there are distinct types of probate – summary administration, formal administration, and disposition of personal property without administration.
Probate Assets vs Non-Probate Assets in Florida
In the context of probate, an individual’s estate consists of all the assets he/she owned upon the time of death or disability.
Thus, all types of assets can constitute an estate, including real property (e.g., residential or commercial building), vehicles, and even miscellaneous such as jewelry and books.
In Florida, any assets that are owned solely by the decedent are considered as probate assets, including:
- Real property (titled solely in the decedent’s name or owned in a tenancy in common)
- Personal bank accounts (titled solely in the decedent’s name)
- Any interest in partnership, corporation, or LLC (e.g., profit shares)
- Any life insurance policy or brokerage account listing the decedent or its estate as beneficiaries
- Personal assets (e.g., jewelry, collectibles, furniture, and vehicles)
On the other hand, some assets do not go through probate when its owner dies in Florida, which includes:
- Real property owned in joint tenancy or tenancy by the entirety
- Any property transferred into a trust
- Retirement accounts
- Bank/brokerage accounts under joint tenancy
- Bank/brokerage accounts with payable-on-death and transfer-on-death beneficiaries
- Life insurance or brokerage-related accounts with beneficiaries that are not the decedent
Joint tenancy is a form of ownership in which two or more individuals own the same property, sharing equal ownership of it and enjoying rights of survivorship.
Tenancy by the entirety is a form of ownership allowed only for married couples. Accordingly, each spouse equally owns the property, assuming rights of survivorship upon the death of the other spouse.
Property not owned directly by the decedent does not go through probate. Hence, living trusts can be a useful tool to protect an individual’s estate against probate and creditors.
Setting up a trust in Florida not only facilitates estate management while the owner is still alive but also ensures a smoother transition upon his/her death.
In the context of avoiding probate, payable-on-death (POD) and transfer-on-death (TOD) accounts are extremely beneficial. While the estate’s owner is still alive, the funds within POD and TOD accounts cannot be claimed by its beneficiaries.
However, upon his/her death, the beneficiaries can claim the funds by presenting an I.D. with valid proof of the grantor’s death.
Last Will vs Probate – Is It Possible to Avoid Probate When There is a Will?
A last will cannot avoid probate proceedings in Florida.
The state legislation considers probate crucial to determine the validity of a will, so courts evaluate the validity of wills to avoid non-compliance with the law. Plus, the process of the probate is required to enforce the provisions contained in the will.
Regardless, it is much better to structure a last will than dying intestate. When someone dies without a will in Florida, the decedent’s estate will go through probate according to the state intestacy law.
Intestacy delays the distribution of the decedent’s assets, given that the state must decide how all the assets will be distributed.
Notice that you must take into account whether a property is probate property or non-probate property while drafting a last will. Also, be aware that the last will cannot control the distribution of non-probate property.
We Can Help to Protect Your Estate and Avoid Probate in Florida
At Jurado & Farshchian, P.L., we can help you structure an estate plan according to your circumstances.