For Probate Administration of Probate Assets, Contact Our Sarasota Attorneys
In Florida, the probate court oversees the distribution of a decedent’s assets and payment of his or her debts. If there is a will, the court makes certain the personal representative distributes assets according to the wishes of the decedent. If there is no will, the court will pass the assets to heirs according to Florida statutes.
Some assets are “probate assets” and require probate administration for their distribution. A probate asset is one that was either owned solely by the decedent, or owned by the decedent with other co-owners, but there was no provision for what would happen to the assets upon the decedent’s death. Examples of probate assets include:
- A bank account owned solely by the decedent or co-owned with another that has no provision for transfer to another upon death.
- A life insurance policy or retirement account with no specific beneficiary but payable to the estate upon death.
- Certain real estate, depending on how it is owned, may be a probate asset.
Probate Administration may be formal, summary or non-court supervised, depending on the nature of the probate assets. At our Wills, Trusts, Probate and Elder Law Firm, PLLC, in Sarasota, Florida, we identify probate assets and provide efficient probate administration in order to ensure compliance with requirements of the Florida Probate Code.
IMPORTANT FREQUENTLY ASKED QUESTIONS ON PROBATE ADMINISTRATION
Probate administrations are governed by Chapters 731 – 735 of the Florida Statutes. More commonly referred to as the “Florida Probate Code”. More specifically, Chapter 731, titled “General Provisions”; Chapter 732, titled “Intestate Succession and Wills”; Chapter 733, titled “Administration of Estates”; Chapter 734, titled “Foreign Personal Representatives & Ancillary Administration”; and Chapter 735, titled “Small Estates”.
WHAT IS PROBATE?
There are two types of probate administration under Florida law: formal administration and summary administration.
There is also a non-court supervised administration proceeding called “Disposition of Personal Property Without Administration.” This type of administration only applies in limited circumstances.
WHAT ARE PROBATE ASSETS?
- A bank account or investment account in the sole name of a decedent is a probate asset, but a bank account or investment account owned by the decedent and payable on death or transferable on death to another, or held jointly with rights of survivorship with another, is not a probate asset.
- A life insurance policy, annuity contract or individual retirement account that is payable to a specific beneficiary is not a probate asset, but a life insurance policy, annuity contract or individual retirement account payable to the decedent’s estate is a probate asset.
- Real estate titled in the sole name of the decedent, or in the name of the decedent and another person as tenants in common, is a probate asset (unless it is homestead property), but real estate titled in the name of the decedent and one or more other persons as joint tenants with rights of survivorship is not a probate asset.
- Property owned by husband and wife as tenants by the entirety is not a probate asset on the death of the first spouse to die, but goes automatically to the surviving spouse.
This list is not exclusive, but is intended to be illustrative.
WHY IS PROBATE NECESSARY?
Probate is also necessary to wind up the decedent’s financial affairs after his or her death. Administration of the decedent’s estate ensures that the decedent’s creditors are paid if certain procedures are correctly followed.
WHAT IS A WILL?
If the decedent’s will disposes of all of the decedent’s probate assets and designates a personal representative, the will controls over the default provisions of Florida law. If the decedent did not have a valid will, or if the will fails in some respect, the identities of the persons who will receive the decedent’s probate assets, and who will be selected as the personal representative of the decedent’s probate estate, will be as provided by Florida law.
WHAT HAPPENS IF THERE IS NO WILL?
If the decedent died intestate, the decedent’s probate assets will be distributed to the decedent’s heirs in the following order of priority:
- If the decedent was survived by his or her spouse but left no living descendants, the surviving spouse receives all of the decedent’s probate estate. A “descendant” is a person in any generational level down the descending line from the decedent and includes children, grandchildren, and more remote descendants.
- If the decedent was survived by his or her spouse and left one or more living descendants (all of whom are the descendants of both the decedent and his or her spouse), and the surviving spouse has no additional living descendants (who are not a descendant of the decedent), the surviving spouse receives all of the decedent’s probate estate.
- If the decedent was survived by his or her spouse and left one or more living descendants (all of whom are the descendants of both the decedent and his or her spouse), but the surviving spouse has additional living descendants (at least one of whom is not also a descendant of the decedent), the surviving spouse receives one-half of the probate estate, and the decedent’s descendants share the remaining half.
- If the decedent was not married at his or her death but was survived by one or more descendants, those descendants will receive all of the decedent’s probate estate. If there is more than one descendant, the decedent’s probate estate will be divided among them in the manner prescribed by Florida law. The division will occur at the generational level of the decedent’s children. So, for example, if one of the decedent’s children did not survive the decedent, and if the deceased child was survived by his or her own descendants, the share of the decedent’s estate which would have been distributed to the deceased child will instead be distributed among the descendants of the decedent’s deceased child.
- If the decedent was not married at his or her death and had no living descendants, the decedent’s probate estate will pass to the decedent’s surviving parents, if they are living, otherwise to the decedent’s brothers and sisters.
- Florida’s intestate laws will pass the decedent’s probate estate to other, more remote heirs if the decedent is not survived by any of the close relatives described above.
The distribution of the decedent’s probate estate under Florida’s intestate laws, as discussed above, is subject to certain exceptions for homestead property, exempt personal property, and a statutory allowance to the surviving spouse and any descendants or ascendants whom the decedent supported. Assets subject to these exceptions will pass in a manner different from that described in the intestate laws. For example, if the decedent’s homestead property was titled in the decedent’s name alone, and if the decedent was survived by a spouse and descendants, the surviving spouse will have the use of the homestead property for his or her lifetime only (or a life estate), with the decedent’s descendants to receive the decedents’ homestead property only after the surviving spouse dies. The surviving spouse also, however, has the right to make a special election within 6 months of the decedent’s death to receive an undivided one-half interest in the homestead property in lieu of the life estate provided certain procedures are timely followed. The spouse’s right to homestead property does not take into consideration whether the surviving spouse has one or more living descendants who are not also a descendant of the decedent.
WHO IS INVOLVED IN THE PROBATE PROCESS?
- Clerk of the circuit court in the county in which the decedent was domiciled at the time of the decedent’s death.
- Circuit court judge.
- Personal representative (or executor).
- Attorney providing legal advice to the personal representative throughout the probate process.
- Those filing claims in the probate proceeding relative to debts incurred by the decedent during his or her lifetime, such as credit card issuers and health care providers.
Internal Revenue Service (IRS), as to any federal income taxes that the decedent may owe, any income taxes that the decedent’s probate estate may owe, and, sometimes as to federal gift, estate or generation-skipping transfer tax matters.
WHERE ARE PROBATE PAPERS FILED?
In the interest of protecting the privacy of the decedent’s beneficiaries, any documents that contain financial information pertaining to the decedent’s probate estate are not available for public inspection.
WHO SUPERVISES THE PROBATE ADMINISTRATION?
The judge will rule on the validity of the decedent’s will, or if the decedent died intestate, the judge will consider evidence to confirm the identities of the decedent’s heirs as those who will receive the decedent’s probate estate.
If the decedent had a will that nominated a personal representative, the judge will also decide whether the person or institution nominated is qualified to serve in that position. If the nominated personal representative meets the statutory qualifications, the judge will issue “Letters of Administration,” also referred to simply as “letters.” These “letters” are important evidence of the personal representative’s authority to administer the decedent’s probate estate.
If any questions or disputes arise during the course of administering the decedent’s probate estate, the judge will hold a hearing as necessary to resolve the matter in question. The judge’s decision will be set forth in a written direction called an “order.”
WHAT IS A PERSONAL REPRESENTATIVE, AND WHAT DOES THE PERSONAL REPRESENTATIVE DO?
The personal representative has a legal duty to administer the probate estate pursuant to Florida law. The personal representative must:
- Identify, gather, value, and safeguard the decedent’s probate assets.
- Publish a “Notice to Creditors” in a local newspaper in order to give notice to potential claimants to file claims in the manner required by law.
- Serve a “Notice of Administration” to provide information about the probate estate administration and notice of the procedures required to be followed by those having any objection to the administration of the decedent’s probate estate.
- Conduct a diligent search to locate “known or reasonably ascertainable” creditors, and notify these creditors of the time by which their claims must be filed.
- Object to improper claims, and defend suits brought on such claims.
- Pay valid claims.
- File tax returns and pay any taxes properly due.
- Employ professionals to assist in the administration of the probate estate; for example, attorneys, certified public accountants, appraisers and investment advisors.
- Pay expenses of administering the probate estate.
- Pay statutory amounts to the decedent’s surviving spouse or family.
- Distribute probate assets to beneficiaries.
- Close the probate estate.
If the personal representative mismanages the decedent’s probate estate, the personal representative may be liable to the beneficiaries for any harm they may suffer.
WHO CAN BE A PERSONAL REPRESENTATIVE?
To qualify to serve as a personal representative, an individual must be either a Florida resident or, regardless of residence, a spouse, sibling, parent, child, or other close relative of the decedent. An individual who is not a legal resident of Florida, and who is not closely related to the decedent, cannot serve as a personal representative.
A trust company incorporated under the laws of Florida, or a bank or savings and loan authorized and qualified to exercise fiduciary powers in Florida, can serve as the personal representative.
WHO WILL THE COURT APPOINT TO SERVE AS PERSONAL REPRESENTATIVE?
If the decedent did not have a valid will, the surviving spouse has the first right to be appointed by the judge to serve as personal representative. If the decedent was not married at his or her death, or if the decedent’s surviving spouse declines to serve, the person or institution selected by a majority in interest of the decedent’s heirs will have the second right to be appointed as personal representative. If the heirs cannot agree among themselves, the judge will appoint a personal representative after a hearing is held for that purpose.
WHY DOES THE PERSONAL REPRESENTATIVE NEED AN ATTORNEY?
The attorney for the personal representative advises the personal representative on their rights and duties under the law, and represents the personal representative in probate estate proceedings. The attorney for the personal representative is not the attorney for any of the beneficiaries of the decedent’s probate estate.
A provision in a will mandating that a particular attorney or firm be employed as attorney for the personal representative is not binding. Instead, the personal representative may choose to engage any attorney.
WHAT ARE THE ESTATE’S OBLIGATIONS TO ESTATE CREDITORS?
The legitimate debts of the decedent, specifically including proper claims, taxes, and expenses of the administration of the decedent’s probate estate, must be paid before making distributions to the decedent’s beneficiaries. The court will require the personal representative to file a report to advise of any claims filed in the probate estate, and will not permit the probate estate to be closed unless those claims have been paid or otherwise disposed of.
HOW IS THE INTERNAL REVENUE SERVICE (IRS) INVOLVED?
The personal representative may be required to file one or more of the following returns, depending upon the circumstances:
- The decedent’s final Form 1040, Federal Income Tax Return, reporting the decedent’s income for the year of the decedent’s death.
- One or more Forms 1041, Federal Income Tax Returns for the Estate, reporting the estate’s taxable income.
- Form 709, Federal Gift Tax Return(s), reporting gifts made by the decedent prior to death.
- Form 706, Federal Estate Tax Return, reporting the decedent’s gross estate, depending upon the value of the gross estate.
- The personal representative may also be required to file other returns not specifically mentioned here.
The personal representative has the responsibility to pay amounts owed by the decedent or the estate to the IRS. Taxes are normally paid from probate assets in the decedent’s estate, and not by the personal representative from his or her own assets; however, under certain circumstances, the personal representative may be personally liable for those taxes if they are not properly paid.
The estate will not have any tax filing or payment obligations to the State of Florida; however, if the decedent owed Florida intangibles taxes for any year prior to the repeal of the intangibles tax as of January 1, 2007, the personal representative must pay those taxes to the Florida Department of Revenue.
WHAT ARE THE RIGHTS OF THE DECEDENT’S SURVIVING FAMILY?
For example, a surviving spouse may have rights in the decedent’s homestead real property. A surviving spouse may also have the right to come forward to claim an “elective share” from the decedent’s probate estate. The elective share is, generally speaking, 30% of all of the decedent’s assets, including any assets that are non-probate assets. A surviving spouse and/or the decedent’s children may also have the right to a family allowance to provide them with funds prior to final distribution of the estate assets, and rights in exempt property that will be paid to them instead of to creditors in satisfaction of claims against the probate estate. It is important to note that a spouse may waive his or her rights to an elective share, family allowance, and/or exempt property in a valid pre-marital or post-marital agreement.
In addition, if the decedent married, or had children, after the date of the decedent’s last will, and if the decedent neglected to provide for the new spouse or children, an omitted family member may nevertheless be entitled to a share of the decedent’s probate estate.
The existence and enforcement of these statutory rights requires knowledge about the applicable laws and procedures and is best handled by an attorney.
WHAT RIGHTS DO OTHER POTENTIAL BENEFICIARIES HAVE IN THE DECEDENT’S PROBATE ESTATE?
HOW LONG DOES PROBATE TAKE?
If the estate does not have to file a federal estate tax return, the final accounting and other documents necessary to close the probate estate are first due within 12 months after the court issues Letters of Administration to the personal representative. This period can be extended if necessary.
If the estate is required to file a federal estate tax return, the return is initially due nine months after the date of the decedent’s death; however, the time for filing the return can be extended for another six months. If a federal estate tax return is required, the final accounting and other documents to close the probate administration are due within 12 months from the date the estate tax return, as extended, is due. This date can also be extended if necessary.
HOW ARE THE PERSONAL REPRESENTATIVE’S COMPENSATION AND PROFESSIONAL FEES DETERMINED?
The personal representative’s compensation is usually determined in one of five ways: (1) as set forth in the will; (2) as set forth in a contract between the personal representative and the decedent; (3) as agreed among the personal representative and the persons who will bear the impact of the personal representative’s compensation; (4) the amount presumed to be reasonable as calculated under Florida law, if the amount is not objected to by any of the beneficiaries; or (5) as determined by the judge.
The fee for the attorney for the personal representative is usually determined in one of three ways: (1) as agreed among the attorney, the personal representative, and the persons who bear the impact of the fee; (2) the amount presumed to be reasonable calculated under Florida law, if the amount is not objected to by any of the beneficiaries; or (3) as determined by the judge.
WHAT ALTERNATIVES TO FORMAL ADMINISTRATION ARE AVAILABLE?
“Summary Administration” is generally available only if the value of the estate subject to probate in Florida (less property which is exempt from the claims of creditors; for example, homestead real property in many circumstances) is not more than $75,000, and if the decedent’s debts are paid, or the creditors do not object. Those who receive the estate assets in a summary administration generally remain liable for claims against the decedent for two years after the date of death. Summary administration is also available if the decedent has been dead for more than two years and there has been no prior administration.
Another alternative to the formal administration process is “Disposition Without Administration.” This is available only if probate estate assets consist solely of property classified as exempt from the claims of the decedent’s creditors by applicable law and non-exempt personal property, the value of which does not exceed the total of (1) up to $6,000 in funeral expenses; and (2) the amount of all reasonable and necessary medical and hospital expenses incurred in the last 60 days of the decedent’s final illness, if any.
WHAT IF THERE IS A REVOCABLE TRUST?
The trustee of such a trust is always required to file a “Notice of Trust” with the clerk of the court in the county in which the decedent resided at the time of the decedent’s death. The notice of trust gives information concerning the identity of the decedent as the grantor or settlor of the trust, and the current trustee of the trust. The purpose of the notice of trust is to make the decedent’s creditors aware of the existence of the trust and of their rights to enforce their claims against the trust assets.
All of the tasks which must be performed by a personal representative in connection with the administration of a probate estate must also be performed by the trustee of a revocable trust, though the trustee generally will not need to file the same documents with the clerk of the court. Furthermore, if a probate proceeding is not commenced, the assets comprising the decedent’s revocable trust are subject to a two-year creditor’s claim period, rather than the three-month non-claim period available to a personal representative.
The assets in the decedent’s revocable trust are a part of his or her gross estate for purposes of determining federal estate tax liability.
EXAMPLE OF WHY YOU WANT TO HAVE AN ATTORNEY DO YOUR PROBATE/TRUST ADMINISTRATION
The material above represents general legal advice. Since the law is continually changing, some provisions may, or may not apply to you. Some provisions may have exceptions you need to be aware of. It is always best to consult an attorney about your legal rights and responsibilities regarding your particular case.
Please contact us to discuss any specific situation or needs you may have to see how we may be able to assist in reaching a resolution. We offer a free thirty (30) minute consultation to see if we can help.