Successors Data Questions & Answer Blog https://successorsdata.com/Q-A-Blog Just another WordPress site Thu, 11 Jun 2020 20:34:10 +0000 en-US hourly 1 https://wordpress.org/?v=5.2.7 How Probate Works in Washington https://successorsdata.com/Q-A-Blog/how-probate-works-in-washington/ Thu, 11 Jun 2020 01:39:31 +0000 http://successorsdata.com/Q-A-Blog/?p=1235 read more →]]> How Probate Works in Washington

by Liza Hanks

Probate is the official way that an estate gets settled under the supervision of the court. A person, usually a surviving spouse or an adult child, is appointed by the court if there is no Will, or nominated by the deceased person’s Will. Once appointed, this person, called an executor or Personal Representative, has the legal authority to gather and value the assets owned by the estate, to pay bills and taxes, and, ultimately, to distribute the assets to the heirs or beneficiaries.

The purpose of probate is to prevent fraud after someone’s death. Imagine everyone stealing the castle after the Lord dies. It’s a way to freeze the estate until a judge determines that the Will is valid, that all the relevant people have been notified, that all the property in the estate has been identified and appraised,  that the creditors have been paid and that all the taxes have been paid. Once all of that’s been done, the court issues an Order distributing the property and the estate is closed.

Not all estates must go through probate though. First, if an estate falls below a certain threshold, it is considered a “small estate” and doesn’t require court supervision to be settled. Click here to find out Washington’s small estate threshold and procedure.

Second, not all assets are subject to probate. Some kinds of assets transfer automatically at the death of an owner with no probate required.  The most common kinds of assets that pass without probate are:

  • Joint Tenancy assets-when one joint tenant dies, the surviving joint tenant becomes the owner of the entire asset, without the need for a court order. This is called “right of survivorship.”  For example, if a house is owned this way, “Jane Sage and John Sage, as joint tenants,” and Jane dies, John owns the entire house.
  • Tenancy by the Entirety or Community Property With Right of Survivorship-these are forms of property ownership that function like joint tenancy, in that the survivor owns the entire property at the death of the other tenant, but are only available to married couples.
  • Beneficiary Designations-retirement accounts and life insurance policies have named beneficiaries. Upon the death of the account or policy owner, these beneficiaries are entitled to the assets in the account or the proceeds of the policy.
  • Payable on Death Accounts/Transfer on Death Accounts-bank and brokerage accounts can have designated beneficiaries, too. The account owner can fill out forms to designate who should recieve the account assets after their death.

Third, if a dececent had created a Living Trust to hold his or her’s largest assets, than that estate, too, won’t go through probate, unless the assets left outside of the trust add up to more than Washington’s small estate limit. That, in fact, is why that Living Trust was created, to avoid probate after the death of the trust’s Grantor.

But for estates in Washington that exceed the small estate’s threshold, and for which there is either no Will, or a Will (but not a Living Trust), probate will be required before an estate can be tranferred to the decedent’s heirs or beneficiaries. 

The general procedure required to settle an estate via probate in Washington is the following:

  1. The Will must be filed with the Superior Court in the county where the decedent lived.
  2. A Petition for Probate must be filed with the probate court as well. This requests the appointment of an executor. If there is no Will, the Court will appoint someone to serve as the Personal Representative of the estate.
  1. The Court will issue “Letters Testamentary” to the executor/Personal Representative — this gives the executor legal authority to act on behalf of the estate. In certain circumstances (all the heirs agree and the estate is solvent), the Petition can request that the court grant the executor the power to administer the estate with non-internvention powers. This allows the executor to, essentially, administer and close the estate without court approval.
  2. There’s no requirement that the executor publish notice of the probate to notify all creditors of the proceeding, but there’s an advantage in doing so: that way creditors only have four months to make a claim. If the executor does not publish, this claim period extends for 2 years. 
  3. An inventory of the estate’s assets must be filed with the court listing the estate’s assets.
  4. Once all of the creditors and taxes have been paid, a Petition to close the probate must be filed with the court. 
  5. The Court will issue an Order, distributing the estate’s property to the beneficiaries.
  6. The executor is entitled to reasonbale fees for their services based on the size and complexity of the estate, but since such fees are subject to income tax (which inheritances aren’t, unless Washington has an inheritance tax), many executors forgo the fees. Click here to see if Washington imposes an inheritance tax.

Click here for a link to Washington’s probate courts.

Washington’s probate forms can be found here.

Click here for a helpful article on Washington’s probate process.

About Liza Hanks

Liza Hanks is a partner at GCA Law Partners LLP in Mountain View, California, where she practices estate planning, trust administration, and probate law. She’s the author of Every Californian’s Guide to Estate Planning: Wills, Trusts & Everything Else and The Trustee’s Legal Companion (with Attorney Carol Zolla) and she writes about estate planning and inheritance law here at Legal Consumer. Liza is a graduate of Stanford Law School, a former magazine editor, and the mother of two children (neither of whom show any desire to become attorneys).

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Basic Utah Estate Planning Information https://successorsdata.com/Q-A-Blog/basic-utah-estate-planning-information/ Wed, 27 May 2020 13:27:21 +0000 http://successorsdata.com/Q-A-Blog/?p=1254 read more →]]> The following descriptions of basic estate planning principles are for general information purposes only. They should not be relied upon in making estate planning decisions. They are intended only to give a general understanding of how these principles work so that the reader can have a more informed conversation with his or her estate planning attorney. The reader should consult with his or her estate planning attorney regarding his or her particular circumstances.

What does a basic estate plan look like?

A basic estate plan in Utah will usually consist of several documents:

(1) a revocable trust

(2) a pour-over will

(3) a general assignment of assets to the revocable trust

(4) a financial power of attorney

(5) a health care directive

Each of these documents is discussed below.

For simple estate plans, some attorneys prefer to use a traditional will rather than a revocable trust, a pour-over will and a general assignment. Using a traditional will requires that the estate go through probate. For more detail on the advantages of a revocable trust and the disadvantages of probate, see “Do I need a revocable trust?” and “What is probate?” below.

What if I die without an estate plan?

When a person dies without an estate plan, the first question to ask is whether any of her property was held in joint tenancy or had a valid beneficiary designation attached to it. At death, property held in joint tenancy automatically passes to the surviving joint tenant. Property that is subject to a valid beneficiary designation (such as a retirement plan, the proceeds under a life insurance policy or, in some cases, a bank or brokerage account) passes to the beneficiary designated.

When a person dies without an estate plan, she is said to have died “intestate,” and any property that is not disposed of under a joint tenancy arrangement or under a beneficiary designation is distributed under the rules of intestate succession. In Utah, the rules of intestate succession provide as follows:

If the deceased person was married when she died, and if she has no descendants (children, grandchildren, etc.), or if all of her descendants are also her surviving spouse’s descendants, then all of her property passes to her surviving spouse. If the person was married, and if she has descendants who are not the surviving spouse’s descendants, the surviving spouse receives $75,000 off the top, plus one-half of the balance of the deceased person’s property. The balance of the deceased person’s property passes to her descendants.

If the deceased person was not married when she died, the property passes to her descendants. If the deceased person has no descendants, it passes to her parents, and if her parents are not living, it passes to her brothers and sisters or to the children of deceased brothers and sisters.

Some people with very simple estates are content to rely upon joint tenancy arrangements, beneficiary designations and the rules governing intestate succession. However, one should consult with one’s attorney before deciding to go that route.

At the very least, a person with minor children should have a simple will that nominates guardians for the children in the event the person dies while the children are still minors.

Do I need a revocable trust?

It is generally advisable to have a revocable trust rather than a traditional will. Where a revocable trust is used, the dispositive terms of the estate plan (i.e. the “who gets what” provisions) are contained in the revocable trust.

A revocable trust accomplishes two important things. First, it avoids the need for probate of one’s estate after one dies, and probate is generally something to be avoided. Second, a revocable trust avoids the need for a court-supervised conservatorship in the event one becomes incapacitated.

In Utah, the probate process is not as inconvenient as it is in many other states, which means the need to avoid probate is not as pressing in Utah as it is in some other states. (See “What is probate?” below.) However, a court-supervised conservatorship is always a burdensome process, and avoidance of that alone may be a sufficient reason to have a revocable trust.

Note that a revocable trust avoids probate and a conservatorship only to the extent that a person’s assets are transferred into the trust. If the assets are not transferred into the trust, the revocable trust serves no purpose. (See “How do I fund my revocable trust?” below.)

As noted above, some Utah attorneys prefer to use a traditional will rather than a revocable trust for small, simple estates. Their reasoning is that (1) probate in Utah is relatively easy; (2) clients often do not transfer their assets to the revocable trust, in which case the assets must pass through probate anyway; and (3) the preparation of a revocable trust, a pour-over will, a general assignment and the deeds to transfer real estate to the trust will cost more than the preparation of a traditional will.

The primary arguments in favor of using a revocable trust are that (1) even with stream-lined probate procedures, it is still better to avoid probate; (2) a probated will is a matter of public record, while a revocable trust is private; (3) a revocable trust is helpful to avoid a court-supervised conservatorship; (4) if the client owns real property in another state, a revocable trust will avoid the need for (and cost of) an ancillary probate in the other state; (5) a revocable trust will avoid the need for probate if the client moves to a state that has very cumbersome probate procedures (like California); and (6) most clients can and will get their assets transferred to their revocable trusts if they are given the appropriate guidance.

Ultimately, a Utah client should discuss with his or her attorney whether a traditional will or a revocable trust best suits the client’s individual needs, and what the respective cost will be of each option.

What if my estate is very small?

In Utah, if a person dies owning less than $100,000, and if none of the property the person owns is real estate, no probate of the person’s estate will be needed. The deceased person’s property can be distributed to the people who are entitled to it by presenting a simple affidavit to banks and brokerage firms who hold the property. This is true if the person dies with or without an estate plan.

If a person’s estate qualifies for this affidavit procedure, she does not need a revocable trust in order to avoid probate. However, if there is a good possibility that her estate will grow over the years, it may be advisable to use a revocable trust anyway. Or if the person is elderly, a revocable trust might be advisable in order to avoid a court-supervised conservatorship in the event the person becomes incapacitated. (See “Do I need a revocable trust?” above for a discussion of reasons one might want a revocable trust.)

Does a revocable trust save taxes?

The simple answer is “No.” As explained above, the purpose of a revocable trust is to avoid probate and avoid court-supervised conservatorships.

A revocable trust does not reduce one’s income tax. From a tax standpoint, a person’s revocable trust is her alter ego. Indeed, the tax identification number for a revocable trust is the person’s own social security number. Income earned on assets held in a revocable trust is reported on the person’s own individual income tax return.

Similarly, a revocable trust does not, in itself, save estate taxes. While a revocable trust might contain provisions that help reduce estate taxes, those same provisions could be included in a traditional will. The mere fact that a person has a revocable trust does not mean that her estate plan is properly designed to minimize estate taxes.

How does a revocable trust avoid probate?

Property must pass through probate if it is held in the decedent’s name at the time of death, unless it was held in joint tenancy with another person or has a valid beneficiary designation. (See “Are there other ways to avoid probate?” below.)

Property that is held in a revocable trust is not titled in the name of the decedent. It is titled in the name of the trustee of the trust. It is therefore not subject to probate. Property held in a revocable trust avoids probate even if the decedent was the trustee of her own revocable trust. Indeed, in most cases, a person will serve as trustee of her own revocable trust. What matters is that title to the property was held by her in her fiduciary capacity, as trustee of the revocable trust, and not in her own name as an individual.

Merely having a revocable trust does not avoid probate. The decedent’s property must be held in the revocable trust. Only property that is held in the revocable trust will escape probate. Property that is not held in the revocable trust will have to pass through probate, unless it is held in joint tenancy or has a beneficiary designation. (See “How do I fund my revocable trust?” below.) Once the property passes through probate, it will be disposed of under the terms of the revocable trust, through the use of a pour-over will. (See “What is a pour-over will?” below.)

What is probate?

Probate is a court-supervised process by which a deceased person’s creditors are paid and the decedent’s property is distributed to the persons who are entitled to it. Historically, probate was a lengthy, inconvenient and expensive process. The probate process would generally take at least a year from start to finish, and it was not uncommon for it to last several years. Frequent court hearings would be required as court approval was needed before any significant action could be taken, and the many court filings resulted in large attorney, accountant and other professional fees. Such a cumbersome probate process still exists in some states.

Utah has very stream-lined probate procedures. If no dispute arises, it is possible for the estate to be probated without there ever being a hearing before a judge. All matters can be resolved through filings with the court clerk. Nonetheless, if a question or dispute arises that requires a judge’s ruling, it is still possible to get the matter resolved by a judge.

Note that a probated will is a matter of public record. If one does not want the terms of one’s will to be made public, one should consider using a revocable trust rather than a traditional will. See “Do I need a revocable trust?” above.

How do I fund my revocable trust?

Property that is held in a revocable trust will avoid probate. However, it is not sufficient to just have a revocable trust. The deceased person’s property must be held in it when she dies.

Once a person signs a revocable trust, she should immediately transfer her property to the trust. For real estate, this is accomplished by signing a deed transferring the property from her name, as an individual, to her name as trustee of the trust. For example, if Mary Jones creates the Mary Jones Revocable Trust, she would sign a deed transferring her home from “Mary Jones” to “Mary Jones, as trustee of the Mary Jones Revocable Trust.” Title to bank accounts and brokerage accounts should be transferred in the same manner.

If a person acquires real estate or opens new bank or brokerage accounts after the revocable trust is created, title to that newly-acquired property should also be taken by her in her capacity as the trustee of the trust, not in her individual capacity.

Some property, such as property that is held in joint tenancy and property that has a beneficiary designation need not, and should not, be held in a revocable trust. (See “Are there other ways to avoid probate?” below.)

Property that does not lend itself to formal title is transferred to a revocable trust by means of a General Assignment. (See “What is a General Assignment?” below.)

Are there other ways to avoid probate?

Property that is held in joint tenancy escapes probate. On the death of one joint tenant, it passes outside probate to the surviving joint tenant. One would not, therefore, hold joint tenancy property in a revocable trust.

Similarly, property that has a valid beneficiary designation escapes probate. On death, it passes, outside probate, to the beneficiary designated. One would not, therefore hold a life insurance policy, a retirement plan or a bank or brokerage account in a revocable trust if the policy, plan or account has a beneficiary designated. Indeed, one cannot transfer ownership of a retirement plan to a revocable trust because only the employee may be the owner of the plan during her lifetime.

How does a revocable trust operate?

While the creator of a revocable trust is alive and mentally competent, she has complete control over the revocable trust and the property held in the trust. She can amend or revoke the trust at any time; she can withdraw property from the trust at any time; and she has complete control over how the trust assets are invested.

If the creator of the revocable trust becomes incapacitated, the successor trustee identified in the trust will immediately step in and begin to manage the trust property. No court involvement will be needed.

Similarly, when the creator of the trust dies, the successor trustee assumes control of the trust property and begins the process of paying creditors, paying taxes and distributing the property to the persons who are entitled to it under the terms of the trust, without the need for court involvement.

Frequently, a husband and wife will create a revocable trust together. Most often, they will serve as co-trustees of the trust. They will have the power, acting together, to amend the trust at any time, and either spouse, acting alone, will be able to revoke the trust at any time. If one spouse becomes incapacitated, the other spouse will serve as sole trustee. Upon the death of one spouse, the trust may divide into several new trusts, as described under “Basic Estate Tax Planning” on this website.

What is a General Assignment?

In order for a revocable trust to successfully eliminate the need for a probate, it must hold all of the decedent’s property (other than joint tenancy property and property that has a beneficiary designation). (See “Are there other ways to avoid probate?” above.)

Assets that are susceptible to formal, registered title, such as real estate, bank accounts and brokerage accounts, are transferred to the revocable trust by registering them in the name of the trustee of the trust. (See “How do I fund my revocable trust?” above.)

However some assets, like jewelry and furniture, do not lend themselves to formal title. Such assets can be transferred to the revocable trust through a General Assignment. A General Assignment contains broad language transferring to the revocable trust all of the person’s tangible personal property and other assets that cannot be transferred in any other way, as well as all such property that is acquired in the future.

What is a pour-over will?

A pour-over will should always accompany a revocable trust.

Many people who create revocable trusts neglect to transfer all of their property to their revocable trust. And often, when they acquire new property, they neglect to take title in their names as trustees of their revocable trusts. The result is that they die owning property in their names, as individuals, rather than in their revocable trusts. Property that is held in the revocable trust will successfully avoid probate, but property that is not held in the revocable trust must pass through probate (unless it is held in joint tenancy or has a valid beneficiary designation). (See “Are there other ways to avoid probate?” above.)

At the end of the probate process, the executor of the estate must distribute the probated property somewhere. All of the provisions of the deceased person’s estate plan that explain who is supposed to get what property are contained in the revocable trust. So, what is needed is a simple will that directs any property that had to pass through probate into the revocable trust. That is what a pour-over will does. It pours over into the revocable trust any property that had to pass through probate because the person neglected to put the property in the revocable trust while she was alive. The pour-over will just puts the property into the revocable trust, where it should have been in the first place. But it does so only after an unnecessary probate.

What property can I give away?

In general , any property that a person owns can be disposed of in the person’s estate plan, and will be disposed of under the rules governing intestate succession if the person dies without an estate plan (unless the property is held in joint tenancy or is subject to a valid beneficiary designation, in which case the property passes to the surviving joint tenant or to the beneficiary designated).

In Utah, a person owns property that is titled in her name. This property will be distributed as part of the person’s estate. This is true whether the person is single or married.

If a married couple owns property, for example, as “William and Mary Jones,” one-half of the property will be part of William’s estate and one-half will be part of Mary’s estate. If they own the property as “William and Mary Jones, husband and wife,” the property will be treated as if it were held by William and Mary, as joint tenants, and the property will automatically pass to the surviving spouse outside probate.

Can I avoid a will contest?

If a person believes that he or she should have received more under an estate plan than the estate plan provides for, and if he or she believes that the deceased person lacked the mental capacity to make an estate plan, or believes that someone exercised undue influence over the deceased person, he or she can contest the estate plan.

The most common technique that is used for reducing the possibility of a contest is the inclusion of a no-contest clause in the will or revocable trust. However, in Utah, the enforceability of no-contest clauses is greatly restricted. No-contest clauses are enforceable in Utah only against frivolous contests. If the contesting beneficiary has probable cause for bringing the contest, the no-contest clause is not enforceable against him or her.

What about my retirement plan?

Most retirement plans permit the employee to designate a beneficiary. Where the employee has done so, the retirement plan assets will pass to the beneficiary upon the owner’s death, and will not be subject to probate. For this reason, there is no need to transfer a retirement plan to a revocable trust. Indeed, federal law prohibits ownership of a retirement plan from being transferred to a revocable trust. (For a discussion of the taxation of retirement plans, see “Retirement Plans” under “Basic Estate Tax Information” on this website.)

What about my life insurance?

Life insurance policies will generally have a beneficiary. If so, the death proceeds will pass to the beneficiary upon the insured person’s death, and will not be subject to probate (unless the estate itself is named as the beneficiary). For that reason, there is no need to transfer ownership of a life insurance policy to a revocable trust in order to avoid probate of the policy proceeds. However, it may nonetheless be advisable to hold a life insurance policy in a revocable trust in order to avoid the need for a court-supervised conservatorship in the event the insured becomes incapacitated. (For a discussion of tax issues associated with ownership of life insurance policies, see “Life Insurance Trusts” under “Advanced Estate Planning Information” on this website.)

What is a power of attorney?

If a person becomes incapacitated, someone will be needed to manage her financial affairs. If she has a revocable trust in place, the successor trustee of her revocable trust will immediately start to manage the assets in the trust. No court involvement will be needed.

However, what happens if not all of the incapacitated person’s assets have been transferred to the revocable trust? The successor trustee of the revocable trust will not have the authority to manage assets that are not held in the trust. In that case, if the person has a financial power of attorney in place, the person’s agent under the power of attorney will have the authority to manage the assets that are not held in the trust. In many cases, the agent will be given the authority to transfer those assets to the trust. But without a power of attorney, assets not held in the revocable trust would be subject to a court-supervised conservatorship, which is an expensive and burdensome process. Court supervised conservatorships are to be avoided, if possible.

What is a Health Care Directive?

In the event a person becomes unable to make medical decisions for himself or herself, a Health Care Directive serves two functions: First, it designates an agent who will be authorized to make medical decisions on behalf of the incapacitated person. Second, it provides guidance to the agent as to the incapacitated person’s preferences regarding his or her health care.

If you have any need for probate or estate planning in the State of Utah, please contact Attorney

http://www.utahestateplanning.org/public/Video-Do-I-Need-An-Estate-Plan.aspx

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Probate and Administration of Estates in Nevada https://successorsdata.com/Q-A-Blog/probate-and-administration-of-estates-in-nevada/ Thu, 21 May 2020 06:05:57 +0000 http://successorsdata.com/Q-A-Blog/?p=1245 read more →]]> What is Probate?

Probate is a court-monitored process of proving the validity of a will, transferring property, and settling the affairs of the deceased’s estate. If there is no will, a similar process known as Administration is used to settle the deceased’s affairs.

When should a Probate be opened?

As soon as practical following the person’s death. In Nevada, if the total amount of the deceased person’s assets exceeds $20,000, or if real estate is involved, probate (or administration) will be required and there is normally no reason to delay starting the process. Nevada law requires a person in possession of the deceased person’s will must “deliver it to the clerk of the district court” within 30 days of the death.

If a Probate or Administration of an estate is not required, how do I inherit a deceased person’s assets?

If there are no real estate holdings and the value of the estate does not exceed $20,000, certain surviving family member(s) or a person entitled to inherit the property from the estate may initiate proceedings 40 days after the death. Without any court proceeding, these parties may use a form called Affidavit of Entitlement permitting the release of the assets from any person or business holding those assets (such as a bank, stock brokerage company or pension plan administrator).

What if the estate is worth more than $20,000?

If the deceased person’s assets exceed $20,000 or if real estate is part of the estate, probate or administration must be used. However, if the value of the deceased person’s assets subject to probate does not exceed $100,000 exclusive of liens, a special petition to the court by the beneficiary or heirs may allow the estate to be “set aside” and distribution made without further court proceedings. The petitioner will receive a court order directing the distribution of the estate property.

What if the estate’s net value exceeds $100,000?

If the deceased person’s estate has a net value exceeding $100,000, but does not exceed $200,000, the estate must proceed through probate by “Summary Administration”, which provides for a somewhat simplified procedure. If the deceased person’s estate has a net value exceeding $200,000, the estate must proceed through probate by “General Administration,” where the procedure is somewhat more extensive. The Administrator or Executor will receive a document called “Letters Testamentary” or “Letters of Administration” which will be issued by the court, and outlines the Administrator’s or Executor’s authority and responsibility.

Can I become the Executor or Administrator of an estate if I do not live in Nevada?

Nevada does not impose restrictions on residency of an Executor named in a will, but does require a non-resident Administrator of an estate where there is no will to associate with a Nevada resident as co-administrator. How long does Probate or Administration normally take? In a routine probate proceeding, you can expect a minimum probate period of from 120 to 180 days. This allows for publication of creditor notices and gives creditors time to file claims. However, probate and estate administration often take much longer if complications arise.

Who can withdraw funds from a deceased person’s bank account?

Normally, if the account is held jointly, with rights of survivorship, the surviving owner is entitled to withdraw the money or delete the deceased person’s name from the account. The financial institution will probably require a certified copy of the death certificate and proof that the deceased is the same person who owned the account. If the bank account was owned individually by the deceased person, normally only the person appointed as Executor or Administrator of the estate may withdraw funds.

Will the Executor or Administrator need to obtain a separate Tax Identification Number for the estate?

Yes. A Tax Identification Number for an estate normally is required. You should not use the deceased person’s social security number in most cases. A Tax Identification Number for the estate can be obtained from the Internal Revenue Service.

Is the Executor or Administrator of an estate personally liable for the deceased person’s debts?

No, not normally. However, the Executor or Administrator is obligated to act in the best interests of the estate and its beneficiaries. It is advisable to consult with an attorney regarding the duties and obligations of an Executor or Administrator prior to accepting the responsibility.

How do I start Probate or Administration proceedings?

Usually a relative of the deceased submits to the District Court a “Petition for Issuance of Letters Testamentary” or a “Petition for Issuance of Letters of Administration.”

Do I need an attorney to open a Probate or Administration?

Although you can open a probate or administration yourself, it is strongly recommended that you seek the assistance of an attorney who has experience with estate matters. A qualified attorney can guide you through the probate or administration process (including proper notification of other potential beneficiaries of the estate) and can be helpful if a dispute arises with creditors or other potential heirs.

How much will it cost to hire an attorney to process a Probate or Administration?

The cost of probate or administration will vary depending upon the complexity of the estate. You will need to compare rates and experience of attorneys in your area. Some attorneys charge a small percentage of the estate value at the end of the case, some charge an hourly rate as the case proceeds and some charge a flat rate.

How do I find an attorney with experience in estate matters?

You can contact the State Bar of Nevada’s Lawyer Referral & Information Service at 702-382-0504 (toll-free in Nevada at 1-800-789-5747) or look in the yellow pages of your telephone directory. You can also ask friends and/or relatives if they can recommend a good lawyer. The State Bar’s main office (see numbers listed below) can tell you whether or not an attorney is licensed in Nevada and in good standing.

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Probate Process in the State of Oregan – Oregan State Bare https://successorsdata.com/Q-A-Blog/probate-process-in-the-state-of-oregan-oregan-state-bare/ Sat, 16 May 2020 01:25:27 +0000 http://successorsdata.com/Q-A-Blog/?p=1226 read more →]]> What is Probate?

It is important to realize that changes may occur in this area of law. This information is not intended to be legal advice regarding your particular problem, and it is not intended to replace the work of an attorney.

What is probate?

Probate is a legal process whereby a court oversees the distribution of assets left by a deceased person. Assets are anything a person owns with value, such as real and personal property and cash, for instance.

When is probate needed?

Probate is not always necessary. If the deceased person owned bank accounts or property with another person, the surviving co-owner often will then own that property automatically. If a person dies leaving very few assets, such as personal belongings or household goods, these items can be distributed among the rightful beneficiaries without the supervision of the court.

Sometimes probate is needed to:
Clear title to land, stocks and bonds, or large bank or savings and loan accounts that were held in the name of the deceased person only, and put the title to these assets in the names of the rightful beneficiaries.
Collect debts owed to the deceased person.
Settle a dispute between people who claim they are entitled to assets of the deceased person.
Resolve any disputes about the validity of the deceased person’s will.

What happens during the probate process?

If the deceased person had a will, the will is “proved” and delivered to the court. The deceased person’s will can be proved by an affidavit made under oath by the witnesses to the will. If such an affidavit is unavailable, the personal presence of the witnesses may be required in court to testify that at the time the will was signed, the deceased person was of sound mind and knew what he or she was doing.

A personal representative is selected. A personal representative is someone who handles the deceased person’s affairs. A will generally names a personal representative who, if willing to serve and otherwise qualified, will be approved by the court. If a person dies without a will, the court will select the personal representative, usually the spouse, an adult child or another close relative. If none of those people are available or willing to be the personal representative, the court may choose a bank, trust company or a lawyer.

A notice to creditors is published in a local newspaper. This public notice to creditors tells the creditors that they have four months to bring any claim against the estate for debts the deceased person owes them. The personal representative also gives written notice to all known creditors.

The heirs and people named in the will are notified of the probate proceeding.

Assets are identified and an inventory is prepared and filed with the court. The personal representative works to identify and value the deceased person’s assets. Depending upon the type of assets and the kind of records left by the deceased person, this step can be quite straightforward — or more difficult and time consuming.

Debts are paid. The personal representative ensures that creditors are paid. Creditors must be repaid from the estate before the remaining estate assets can be distributed to the rightful beneficiaries.

The personal representative prepares state and/or federal tax returns and any inheritance, gift and estate tax returns and pays any taxes due.

The personal representative prepares and submits an account to the people named in the will, the heirs of the deceased person and the court. Or if the heirs and people named in the will choose to waive that accounting, a “verified statement” in lieu of that account can be filed with the court for approval.

The account shows all money paid out from the estate and all money collected by the estate. It also contains a narrative explaining the important actions taken in connection with the probate of the estate.

After court approval of the account and payment of all unpaid probate expenses, the deceased person’s assets are distributed to the people and entities (such as charities or trusts) named in the will or, if the person died without a will, to the heirs of the deceased person.

What is a “small estate” proceeding?

Oregon allows an abbreviated procedure for handling small estates that would otherwise require a full probate. If an estate fits in this category, the cost and time for distributing the estate assets may be greatly reduced. The procedure involves filing a document called an “affidavit of claiming successor.” This abbreviated procedure can be used if the estate’s personal property is valued at no more than $75,000 and real property is valued at no more than $200,000, for a total aggregate estate value of no more than $275,000. (These rates are accurate as of April 2018, but can be changed by the state legislature. Please see an attorney or advisor to ensure that they are still accurate.) Real property includes land and buildings or structures placed on land, such as houses, commercial buildings and agricultural buildings. Personal property includes all other property, such as cars, boats, clothing, stocks, bonds and personal items.

How long does probate take?

Probate can be started immediately after death and takes a minimum of four months. If the estate includes property that takes a while to sell, or if there are complicated tax or other matters, probate can last much longer. A small estate proceeding cannot be filed until 30 days after death and is complete upon filing.

What are the costs involved?

Under Oregon law, a personal representative is entitled to a fixed percentage of the value of the total estate. Extra costs may be approved by the court for the personal representative and a lawyer, if the estate is complicated. Other costs include court filing fees, legal notices published in the local newspaper and any other necessary expenses. Lawyers generally charge an hourly rate for their services.

Does probate mean more taxes?

No. Probate does not affect taxes that must be paid. These amounts are based on the total assets that you own at the time of your death.  There are federal estate taxes as well as taxes due to Oregon. These amounts change frequently as Congress and our state legislature determine the amounts. Check with your attorney or advisor for details.

Do I need a lawyer?

Probate in Oregon involves a good deal of paperwork that must be filed in a timely manner. To achieve the results you want, probate should be handled with an understanding of the legal principles involved. A probate lawyer can help you avoid the many possible tax traps and other problems that could arise. Also, a lawyer can help you prepare and file the legal documents and prepare you for hearings in court.

Legal Editor: Don Johnson

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A Primer on Georgia Probate Court https://successorsdata.com/Q-A-Blog/a-primer-on-georgia-probate-court/ Thu, 14 May 2020 06:21:10 +0000 http://successorsdata.com/Q-A-Blog/?p=1248 read more →]]> The Georgia Probate Court system is in place to take care of clerical matters regarding estate planning, inheritance, and issuing licenses for marriage and firearms. Its purpose is to ensure efficiency in non-criminal legal matters that mainly involve filing paperwork. All necessary Georgia probate court forms are available online so that residents can have everything filled out and ready to file when they arrive.

Georgia probate judges are there to ensure that estates are settled legally, especially in cases where there is no will. When someone dies, their estate is transferred to probate court and an executor oversees the distribution of assets. Executors are usually family members, but they can be anyone over the age of 18 who is determined to be trustworthy and objective.

The probate judge determines the validity of wills and ensures that all relevant parties have been duly notified of a death and are present for settling the estate. The executor oversees the fair distribution of assets and sees that creditors are paid.

Not all estates need to go through probate, and some assets, like homes with a joint tenancy, are automatically passed to the appropriate heir. An estate planning specialist, such as Paul Black from The Law Office of Paul Black L.L.C can help.

Georgia Probate Court Rules

There is a set of complex Georgia probate court rules, as there is in other court systems. These rules are outlined in the UNIFORM PROBATE COURT RULES provided by the Council of Probate Court Judges of Georgia.

One of the main Georgia probate court rules is that an executor or an attorney hired by the estate will work with the probate court. Georgia probate court may appoint an executor if there’s absolutely no executor or the executor can’t or will not function, according to the Official Code of Georgia section 53-6-20. The court may also appoint a guardian for the deceased’s children who were left without a parent. The deceased person may have named a guardian in his or her will, but if there is no guardian or the named guardian can’t or won’t take the children, the court will step in.

A second critical Georgia probate court rule is that one of two forms of probate must be chosen. Solemn form probate requires that the executor give notice to everybody who might have an interest in the will, and it becomes binding when the property is closed. Common form probate doesn’t need any notice sent following the naming of the executor, but it doesn’t become binding for up to four years. This provides parties a chance to contest the decision.

Other Georgia Probate Court Rules

Another rule relates to the deceased person’s safe deposit box. Any person may file a Petition to Enter Safe Deposit Box with the probate court when they believe that the deceased’s will may be in the individual’s safe deposit box. This must happen before probate starts.

If the request is granted, the safe deposit box may be opened by the bank. The bank must record any will and give it to the court, and they must give any insurance policies directly to the beneficiaries. Until the Georgia probate court appoints an executor, everything else stays in the safe deposit box.

There are quite specific guidelines for filling out Georgia probate forms, as well. Those are outlined here by the Council of Probate Court Judges of Georgia. To determine which forms are necessary depending on the specific circumstance, an attorney from The Law Office of Paul Black L.L.C. can help.

There are quite specific guidelines for filling out Georgia probate forms, as well. Those are outlined here by the Council of Probate Court Judges of Georgia. To determine which forms are necessary depending on the specific circumstance, an attorney from The Law Office of Paul Black L.L.C. can help.

When Is Georgia Probate Necessary?

Probating an estate in Georgia usually involves these three steps:

  1. Gathering all the assets of the deceased person’s estate, including money, investments, bank accounts, real estate, and other property.
  2. Paying off the debts and taxes owed by the estate.
  3. Distributing the remaining assets to the heirs.

The specific way these steps are accomplished can differ, depending on the size of the estate, whether or not the deceased person was married, and whether or not there is a will.

Georgia Probate When There is a Will

There are four possible types of probate when there is a will:

  1. Solemn Form Probate:
    When the heirs are known and present, this form is used for the immediate conclusion of the estate.
  2. Common Form Probate:
    This is filed by the executor when all heirs are unknown and are inconclusive for up to four years following public notice of a death.
  3. Probate of Will in Solemn Form/Letters of Administration with Will Annexed:
    This type of petition is filed when the executor named in the will is unable or unwilling to carry out the duty, and names a new administrator (usually by agreement of a majority of the heirs).
  4. Will Filed Not for Probate:
    If there is no property to distribute to heirs, the will is filed with the court to create a permanent record, but no probate is carried out. There is no fee for this filing.

Georgia Probate When There is No Will

When a person dies without a will (“intestate”), there are three possible proceedings:

  1. Permanent Administration:
    Notice to all heirs is required. The spouse or sole heir becomes the administrator unless they decline or are disqualified; otherwise, the administrator is chosen by a majority of the heirs.
  2. Temporary Administration:
    Notice to heirs is not required, but heirs may choose an administrator, who compiles the estate inventory. No expenditures or disbursements are made without a court order.
  3. No Administration Necessary:
    If all the estate’s debts are paid, no other administration is needed, and all heirs agree to the division of the estate, this is the form of probate used.

Other Georgia Probate Petitions

There are also petitions that may be filed whether there is a will or not:

  1. Year’s Support:
    Filed on behalf of surviving spouse or minor children to set aside a specified part of the estate for their support, before payment of unsecured debts or any distribution under a will.
  2. Petition to Enter Safe Deposit Box:
    Filed when it is believed that the deceased person’s will is in a safe deposit box. If there is a will, the bank is required to deliver it to the probate court and to deliver any insurance policies to the beneficiaries. Burial instructions and any deeds to burial plots may be removed; all other items remain in the box until an executor or administrator is in place.


The Georgia courts have worked hard to streamline the process to make it easier on grieving families, and it is legal to handle probate without an attorney.

If you choose to go through probate without an attorney, you’re responsible for obtaining information to help you make the right decisions. That mean knowing which forms you need, completing the forms, handling the filing fees, and understanding the possible outcomes of your decisions. Getting it wrong can cost time and money.

The Dekalb County probate office staff and the Dekalb County probate judges are limited by law in the assistance they can provide. They can answer questions about the types of forms, filing deadlines, and fees, but cannot give you any advice on how to proceed. They also cannot complete forms for you or make copies.

The Law Office of Paul Black can advise you during any part of the probate process in Dekalb County. While it is best to handle estate planning and draw up a will ahead of any need, we understand that life can take unexpected turns. Even if you do not have a will, we can assist you with filing the correct Dekalb probate forms.

Georgia Probate Law Defined

Georgia probate laws are designed to ensure fair distribution of property when someone dies.

If there is no will, the heirs will appoint an administrator to oversee the inventory, distribute assets, and perform other duties. The probate judge decides if the existing will is valid, makes sure that any debts are paid, and determines if all possible heirs have been notified under Georgia probate law. Any monetary assets of value left after the discharge of debts and taxes are divided among the heirs or released to the beneficiaries named in the will.

An estate attorney, such as Paul Black from The Law Office of Paul Black L.L.C. can help shed light on the process.

GA Probate Court and the Personal Representative

One hindrance to distributing an estate in probate is when there’s no administrator or executor named. In these cases, one must be appointed. If someone is named by the decedent as an executor, also known as a personal representative (PR), this person must take charge of settling the estate at probate.

If the PR is unwilling or unable to discharge their duties, family members must elect a trustworthy person over the age of 18 to handle the administration. The probate court judge can also appoint an administrator.

The duties of the executor or administrator include the following:

  • Posting a bond to protect the assets if the administrator proves incompetent
  • Collecting, safeguarding, and making an inventory of all assets
  • Having assets valued by a professional appraiser
  • Paying all legitimate debts and taxes on behalf of the estate
  • Distributing remaining assets according to the terms of the will or Georgia state law

The Law Office of Paul Black L.L.C. can help explain the duties of a personal representative and offer additional counsel.

Georgia Probate Laws and Succession

The portion of Georgia state law that governs probate and estate matters is Georgia Code Title 53. Wills, Trusts, and Administration of Estates § 53-2-1. This code outlines legal terminology used in Georgia probate matters and lines of succession for inheritance.

According to Georgia law, half-siblings who are children of the decedent are considered equal in matters of inheritance, as are children born after the decedent’s death but conceived prior.

Spouses are first in line to inherit and cannot be disinherited under Georgia law. All other assets outside of the first $200,00 of net estate value plus 3/4 of the remaining assets go to children, parents, siblings, and other relatives, in that order.

Georgia has no separate estate tax. For questions about a Georgia estate matter, talk to an attorney at the Law Office of Paul Black.

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How Probate Works in Utah https://successorsdata.com/Q-A-Blog/how-probate-works-in-utah/ Sun, 10 May 2020 13:25:25 +0000 http://successorsdata.com/Q-A-Blog/?p=1251 read more →]]> How Probate Works in Utah

by Liza Hanks

Probate is the official way that an estate gets settled under the supervision of the court. A person, usually a surviving spouse or an adult child, is appointed by the court if there is no Will, or nominated by the deceased person’s Will. Once appointed, this person, called an executor or Personal Representative, has the legal authority to gather and value the assets owned by the estate, to pay bills and taxes, and, ultimately, to distribute the assets to the heirs or beneficiaries.

The purpose of probate is to prevent fraud after someone’s death. Imagine everyone stealing the castle after the Lord dies. It’s a way to freeze the estate until a judge determines that the Will is valid, that all the relevant people have been notified, that all the property in the estate has been identified and appraised,  that the creditors have been paid and that all the taxes have been paid. Once all of that’s been done, the court issues an Order distributing the property and the estate is closed.

Not all estates must go through probate though. First, if an estate falls below a certain threshold, it is considered a “small estate” and doesn’t require court supervision to be settled. Click here to find out Utah’s small estate threshold and procedure.

Second, not all assets are subject to probate. Some kinds of assets transfer automatically at the death of an owner with no probate required.  The most common kinds of assets that pass without probate are:

  • Joint Tenancy assets-when one joint tenant dies, the surviving joint tenant becomes the owner of the entire asset, without the need for a court order. This is called “right of survivorship.”  For example, if a house is owned this way, “Jane Sage and John Sage, as joint tenants,” and Jane dies, John owns the entire house.
  • Tenancy by the Entirety or Community Property With Right of Survivorship-these are forms of property ownership that function like joint tenancy, in that the survivor owns the entire property at the death of the other tenant, but are only available to married couples.
  • Beneficiary Designations-retirement accounts and life insurance policies have named beneficiaries. Upon the death of the account or policy owner, these beneficiaries are entitled to the assets in the account or the proceeds of the policy.
  • Payable on Death Accounts/Transfer on Death Accounts-bank and brokerage accounts can have designated beneficiaries, too. The account owner can fill out forms to designate who should recieve the account assets after their death.

Third, if a dececent had created a Living Trust to hold his or her’s largest assets, than that estate, too, won’t go through probate, unless the assets left outside of the trust add up to more than Utah’s small estate limit. That, in fact, is why that Living Trust was created, to avoid probate after the death of the trust’s Grantor.

But for estates in Utah that exceed the small estate’s threshold, and for which there is either no Will, or a Will (but not a Living Trust), probate will be required before an estate can be tranferred to the decedent’s heirs or beneficiaries.

The general procedure required to settle an estate via probate in Utah is set out in a set of laws called the Uniform Probate Code, a set of probate procedures that has been adopted, with minor variations, in 15 states, including Utah.

In Utah, under the UPC there are three kind of probate proceedings: informal, unsupervised, and supervised formal.

Informal Probate

Most probate proceedings in Utah are informal. You can use it when the heirs and beneficiaries are getting along, there are no creditor problems to resolve and you don’t expect any trouble.

The process begins when you file an application with the probate court to serve as the “personal representative” of the estate. (This is what most people think of as the “executor”). Once your application is approved, you have legal authority to act for the estate. Usually you’ll get what’s called “Letters Testamentary” from the court.

Once you get the letters, you need to do these things:

  • Send out formal notice to heirs, beneficaries, and creditors that you know of
  • Publish a notice in a local newspaper to alert other creditors
  • Provide proof that you’ve mailed notices and published the notice
  • Prepare an inventory and appraisal of the estate’s assets
  • Keep all the property safe
  • Distribute the property (when the estate closes)

Once the property’s been distributed, you close an informal proceeding by filing a “final accounting” with the court and a “closing statement” that says you’ve paid all the debts and taxes, distributed the property, and filed the accounting.

Unsupervised Formal Probate

A formal probate, even an unsupervised one, is a court proceeding.  That means that a judge must approve certain actions taken by the Personal Representative, such as selling estate property, or distributing assets, or paying an attorney.  The purpose of involving a judge is to settle disputes between beneficiaries over the distribution of assets, the meaning of a Will, or the amounts due to certain creditors. The informal probate process won’t work if there are disputes, so that’s when the court gets involved.

Supervised Formal Probate

A supervised formal probate is one in which the court steps in to supervise the entire probate process. The court must approve the distribution of all property in such a proceeding.

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TEXAS PROBATE PROCESS AND LAW https://successorsdata.com/Q-A-Blog/texas-probate-process-and-law/ Sun, 10 May 2020 01:49:42 +0000 http://successorsdata.com/Q-A-Blog/?p=1239 read more →]]>
Texas Probate Process Law

Probate is the process of recognizing a person’s death and winding up their estate.

The process can be simple or complicated, depending on the size of the estate and its complexity.

However, many people who are not lawyers can quickly become overwhelmed by the process and need professional help. Below is a general summary of the Texas probate process.

Identify the Estate

A person’s estate is made up of everything they owned at the time they died. This can include:

  • Real estate
  • Cash
  • Personal property, such as vehicles, boats, art, jewelry, books, etc.
  • Retirement accounts
  • Life insurance policies
  • Investment securities like stocks and bonds

Texas probate law requires that all estate assets are gathered and that the deceased person’s remaining debts get paid out of those assets. Only after all debts have been paid can the estate’s assets be distributed according to a will or, if there is no will, according to Texas intestate succession laws.

Some estate assets do not pass through the probate process. For example, any life insurance policy or retirement account with a named beneficiary will pass to the beneficiary outside probate. The beneficiary should contact the company which issued the policy to discuss what paperwork they should fill out.

Also, any property held in joint tenancy with right of survivorship or community property with right of survivorship does not pass through probate, either. Instead, the deceased person’s interest in the property vanishes at death, leaving the other joint owner the sole owner.

If the deceased created a trust, then trust assets are not part of the estate, either. The trustee named in the trust will distribute assets to named beneficiaries.

DEALING WITH A PROBATE DISPUTE?

Our experienced will contest attorneys can help.

CONTACT US NOW

Starting the Probate Process—Dying with a Will in Texas

Probating a will in Texas starts with someone filing an application with the probate court. Texas probate law requires that the application contain basic information, including the date of death, the deceased’s address, and the identities of heirs. You also submit a copy of the will to the court. The county clerk will post a notice at the courthouse informing the public that someone has filed an application for probate. After a two week wait, you can have a hearing before the probate judge.

At the hearing, the judge will determine whether the person named executor in the will is qualified to serve. This person is responsible for gathering all estate assets, safeguarding property, paying debts, and finally distributing assets. If the deceased did not have a will, then the judge will need to appoint someone to serve as the executor. Most probate courts require that executors have an attorney representing them because an executor owes a duty to all beneficiaries and heirs. Even if this is not a court requirement, it is an excellent idea.

The probate judge must also determine the validity of the will. Texas probate law requires that wills meet certain formalities, and the judge will deny a will if it is deficient. If the judge admits the will into probate, then the executor will be issued Letters Testamentary, which the executor needs when winding up the deceased’s financial matters.

Collecting Property

The executor needs to identify all estate property, which can be time consuming. The executor will need to go through their papers and identify all financial accounts and identify whether someone owed the deceased money. The executor must also safeguard all property so that it does not become damaged or that no one steals it.

After the executor has gathered all property, he or she must file an inventory of all assets with the probate court. The executor has 90 days from the date of appointment to provide this inventory. Some assets might also need to be appraised, such as jewelry, property, etc. A good rule of thumb is that anything you would not sell in a garage sale should be professionally appraised.

Paying Creditors

Most people have some bills, no matter how small—utility bills, credit cards, cell phone charges, etc. These must be paid off with assets from the estate. However, sometimes, the deceased owes considerable sums to people. Because creditors are entitled to payment, you must notify them of the death. Your lawyer will file a Notice to Creditors, which will identify the executor and provide their lawyer’s address. It should also provide a deadline to creditors for filing a claim with the estate for payment. This notice is published in a local newspaper.

Not all creditors are treated equally. Instead, Texas probate law classifies them into different classes. For example, the legal fees for any attorney the executor retains will be paid first. This ensures that executors have competent legal representation during the probate process.

If the estate has sufficient cash, then paying creditors is generally easy. However, if the bills are large and there is not enough cash, then the executor will need to sell estate assets to generate the funds necessary to pay bills. Selling assets is tricky, because a beneficiary might be waiting to inherit the item you sell. A lawyer is definitely helpful at determining which assets to sell while treating all beneficiaries fairly.

Court Supervision

If the deceased had a will, then most executors will be appointed as an Independent Executor. This means that they do not need the court’s permission before taking certain steps, such as paying creditors or selling estate assets. They also do not need to post a surety bond. An independent administration should be easier and less expensive.

Conversely, when someone dies without a will then the Texas probate process is “dependent,” meaning supervised by the court. The executor will need permission before taking any step in the probate process. Helpfully, Texas probate law section 145 allows the court to create an independent administration if all heirs agree.

Probate Disputes

Disputes can crop up in the probate process. For example, there might be a dispute about who should serve as executor. Family members might think the person named is not fit to serve, or the deceased might not have left a will so several people fight over who can serve in this capacity.

Sometimes, disputes arise over whether a will is authentic or whether the will represents the deceased person’s wishes. Someone might challenge the will for a variety of reasons, such as the deceased lacked mental capacity to create the will or they were defrauded when drafting the will. A judge will need to hear testimony and review evidence. If a will is set aside, then a prior will might take effect, or the estate might need to be distributed according to the state’s intestate succession laws.

Distributing Assets

The final step in the probate process if for the executor to distribute the assets according to the will. The executor must coordinate with the beneficiaries to determine how they will take the assets.

In some situations, an executor will sell assets so that the beneficiaries receive money. The executor will need to coordinate these sales. Depending on the assets sold, the estate might owe state and federal taxes, which the executor must pay.

Speak with a Dallas Probate Attorney

This is only a general overview of the probate process. Probating a will can be a complicated process, and executors must discharge their duties with a high degree of accuracy and fairness. Most executors find they need help when probating a will in Texas. Please contact an experienced probate attorney at Lindquist Wood Edwards LLP today. To schedule your consultation, please call 214-760-6893.

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Understand the Benefits of Living Trusts V.S. Probate: https://successorsdata.com/Q-A-Blog/understand-the-benefits-of-living-trusts-v-s-probate/ Sun, 10 May 2020 00:22:25 +0000 http://successorsdata.com/Q-A-Blog/?p=1195 read more →]]> Understand the Benefits of Living Trusts V.S. Probate:

In this article, we are going to try to explain probate, living trusts and will?

Every Investor or real estate agent should know the following information.

What is Probate?

Probate is a legal process through which the court oversees that, when you die, your outstanding debts are paid and your assets (personal and real properties) are distributed according to your will.

If you don’t have a valid will, your assets are distributed account to the state that the assets are there.

What is bad about Probate?

It can be expensive.

Legal fees, executor fees, and other costs must be paid before your assets can be fully distributed to your heirs. If you own property in other states, your family could face multiple probates, each one according to the laws in that state. These costs can vary widely; it would be a good idea to find out what they are now.

It takes time.

Usually nine months to two years, but often longer. During part of this time, assets are usually frozen so an accurate inventory can be taken. Nothing can be distributed or sold without court and/or executor approval. If your family needs money to live on, they must request a living allowance, which may be denied.

Your family has no privacy.

Probate is a public process, so any “interested party” can see what you owned, whom you owed, who will receive your assets, and when they will receive them. The process “invites” disgruntled heirs to contest your will and can expose your family to unscrupulous solicitors.

Your Family has no control.

The court process determines how much it will cost, how long it will take, and what information is made public.

Doesn’t joint ownership avoid probate?

Not really. Using joint ownership usually just *postpones* probate. With most jointly owned assets, when one owner dies, full ownership does transfer to the surviving owner without probate. But if that owner dies without adding a new joint owner, or if both owners die at the same time, the asset must be probated before it can go to the heirs.
Watch out for problems. When you add a co-owner, you lose control. Your chances of being named in a lawsuit and of losing the asset to a creditor are increased. There could be a gift and/or income tax problems. And since a will does not control most jointly owned assets, you could disinherit your family.
With some assets, especially real estate, all owners must sign to sell or refinance. So if a co-owner becomes incapacitated, you could find yourself with a new “co-owner”–the court– even if the incapacitated owner is your spouse.

Why would the court get involved in incapacity?

If you can’t conduct business due to mental or physical incapacity (dementia, stroke, heart attack, etc.), only a court appointee can sign for you–even if you have a will. (Remember, a will only go into effect after you die.

Once the court gets involved, it usually stays involved until you recover or die and it, not your family, will control how your assets are used to care for you. This public, probate process can be expensive, embarrassing, time-consuming, and difficult to end. It does not replace probate at death, so your family may have to go through probate court *twice!*

Does a durable power of attorney prevent this?

A durable power of attorney lets you name someone to manage your financial affairs if you are unable to do so. However, many financial institutions will not honor one unless it is on their form. If accepted, it may work too well, giving someone a “blank check” to do whatever he/she wants with your assets. If can be very effective when used with a living trust, but risky when used alone.

What is a living trust?

A living trust is a legal document that, just like a will, contains your instructions for what you want to happen to your assets when you die. But, unlike a will, a living trust can avoid probate at death, control all of your assets and prevent the court from controlling your assets if you become incapacitated.

How does a living trust avoid probate and prevent court control of assets at incapacity?

When you set up a living trust, you transfer assets from *your* name to the name of *your trust*, which *you* control–such as from “Bob and Sue Smith, husband and wife” to “Bob and Sue Smith, trustees under trust dated (month/day/year).”

Legally you no longer own anything, everything now belongs to your trust. So there is nothing for the courts to control when you die or become incapacitated. The concept is simple, but this is what keeps you and your family out of the courts.

Do I lose control of the assets in my trust?

Absolutely not. You keep full control. As trustee of your trust, you can do anything you could do before– buy and sell assets, change or even cancel your trust. That’s why it’s called a revocable living trust. You even file the same tax returns. Nothing changes but the names on the titles.

Is it hard to transfer assets into my trust?

No, and your attorney, trust officer, financial adviser and insurance agent can help. Typically, you will change titles on real estate, stocks, CDs, bank accounts, investments, insurance and other assets with titles. Most living trusts also include jewelry, clothes, art, furniture, and other assets that do not have titles.

Some beneficiary designations (for example, insurance policies) should also be changed to your trust so the court can’t control them if a beneficiary is incapacitated or no longer living when you die. (IRA, 401k), etc. can be exceptions.

Doesn’t this take a lot of time?

It will take *some* time–but *you* can do it now, or you can pay the courts and attorneys to do it for you later. One of the benefits of a living trust is that all of your assets are brought together under one plan. Don’t delay “funding” your trust; it can only protect assets that have been transferred into it.

Should I consider a corporate trustee?

You may decide to be the trustee of your trust. However, some people select a corporate trustee (bank or trust company) to act as trustee or co-trustee now, especially if they don’t have the time, ability or desire to manage their trusts, or if one or both spouses are ill. Corporate trustees are experienced investment managers, they are objective and reliable, and their fees are usually very reasonable.

If something happens to me, who has control?

If you and your spouse are co-trustees, either can act and have instant control if one becomes incapacitated or dies. If something happens to both of you, or if you are the only trustee, the successor trustee you personally selected will step in. If a corporate trustee is already your trustee or co-trustee, they will continue to manage your trust for you.

What does a successors trustee do?

If you become incapacitated, your successor trustee looks after your care and manages your financial affairs for as long as needed, using your assets to pay your expenses. If you recover, you resume control. When you die, your successor trustee pays your debts, files your tax returns and distributes your assets. All can be done quickly and privately, according to instructions in your trust, *without* court interference.

Who can be successor trustees?

Successor trustees can be individuals (adult children, other relatives, or trusted friends) and/or a corporate trustee. If you choose an individual, you should also name some additional successors in case your first choice is unable to act.

Does my trust end when I die?

Unlike a will, a trust doesn’t have to die with you. Assets can stay in your trust, managed by the trustee you selected, until your beneficiaries reach the age(s) you want them to inherit. Your trust can continue longer to provide for a loved one with special needs, or to protect the assets from beneficiaries’ creditors, spouses and future death taxes.

How can a living trust save estate taxes?

Your estate will have to pay federal estate taxes if its net value when you die is more than the “exempt” amount at that time. (Your state may also have its own death or inheritance tax.) If you are married, your living trust can include a provision that will let you and your spouse use both of your exemptions, saving a substantial amount of money for your loves ones.

Should I consider a corporate trustee?

You may decide to be the trustee of your trust. However, some people select a corporate trustee (bank or trust company) to act as trustee or co-trustee now, especially if they don’t have the time, ability or desire to manage their trusts, or if one or both spouses are ill. Corporate trustees are experienced investment managers, they are objective and reliable, and their fees are usually very reasonable.

Doesn’t a trust in a will do the same thing?

Not quite. A will can contain wording to create a testamentary trust to save estate taxes, care for minors, etc. But because it’s part of your will, this trust cannot go into effect until after you die and the will is probated. So it does not avoid probate and provides no protection at incapacity.

Is a living trust expensive?

Not when compare to all of the costs of court interference at incapacity and death. How much you pay will depend primarily on your goals and what you want to accomplish.

How long does it take to get a living trust?

It should only take a few weeks to prepare the legal documents after you make the basic decisions.

Should I have an attorney do my trust?

Yes, but you need the right attorney. A local attorney who has considerable experience in living trusts and estate planning will be able to give you valuable guidance and peace of mind that your trust is prepared and funded properly.

If I have a living trust, do I still need a will?

Yes, you need a “pour-over” will that acts as a safety net if you forget to transfer an asset to your trust. When you die, the will “catches” the forgotten asset and sends it into your trust. The asset may have to go through probate first, but it can then be distributed as part of your overall living trust plan. Generally, a guardian for minor children must also be named in a will.

Is a living will the same as a living trust?

No. A living trust is for financial affairs. A living will is for medical affairs–it lets others know how you feel about life support in terminal situations.

Are living trusts new?

No, they’ve been used successfully for hundreds of years.

Who should have a living trust?

Age, marital status and wealth don’t really matter. IF you own titled assets and want your loves ones (spouse, children or parents) to avoid court interference at your death or incapacity, you should probably have a living trust. You may also want to encourage other family member to have one so you won’t have to deal with the courts at their incapacity or death.

Benefits of a Living Trust

  1. Avoids probate at death, including multiple probates if you own property in the other states.
  2. Prevents court control of assets at incapacity.
  3.  Brings all of your assets together under one plan.
  4.  Provides maximum privacy.
  5. Quicker distribution of assets to beneficiaries.
  6.  Assets can remain in trust until you want beneficiaries to inherit.
  7.  Can reduce or eliminate estate taxes.
  8.  Inexpensive, easy to set up and maintain.
  9.  Can be changed or canceled at any time.
  10.  Difficulty to contest.
  11.  Prevents court control of minors’ inheritances.
  12.  Can protect dependents with special needs.
  13.  Prevents unintentional disinheriting and other problems of joint ownership.
  14. Professional management with corporate trustee.
  15.  Peace of mind.

What is a will?

A will is a detailed instruction created by an individual in the event of their death. Details of how to distribute their wealth and property, guardianship of their children and other final instructions are clearly stated.

At Incapacity

With no will

Court Control: Court appointee oversees your care, must keep detailed records, reports to court, and usually must post bond (even if appointee is your spouse). Court approves all expenses, oversees financial affairs.

With a will

Court Control: Court appointee oversees your care, must keep detailed records, reports to court, and usually must post bond (even if appointee is your spouse). Court approves all expenses, oversees financial affairs

With a Living Trust

No Court Control: Your successor trustee manages your financial affairs according to instructions in your trust for as long as necessary. (In some states, court intervention may be required for health care decisions

At Death

With no will

Probate: Court orders your debts paid and assets distributed according to state law.

With a will

Probate: Same as no will, but assets distributed per your will (if valid and any contest are unsuccessful.

With A Living Trust

No Probate: Debts paid and assets distributed by successor trustee according to instructions in your trust.

Court Costs, Legal & Executor Fees

With no will.

Death : Often estimated at 3-8% of estate’s value. *Incapacity:* Impossible to estimate. 

With a will

Same as no will. Costs can increase if the will is contested after your death. 

With A Living Trust

Minimal or no court costs. Reduced legal fees (minimal for small estates; larger/complex estates require more. 

Time

With no will

Death: Usually 9 months to 2 years of longer before heirs inherit.

Incapacity: Court involved until recovery or death.

With a will

Death: Usually 9 months to 2 years of longer before heirs inherit.

Incapacity: Court involved until recovery or death.

With A Living Trust

Death: Often just weeks. Larger/complex estates take longer for tax returns, asset division. Incapacity: No delays.

Flexibilty & Control

With no will

None : Court processes, not your family, have control at incapacity and death. When you die, assets are distributed according to state law. 

With a will

Limited: Same as no will except, when you die, assets are distributed according to your will (if valid and any contests are unsuccessful). You can change your will at any time. 

With A Living Trust

Maximum: You can change/discontinue your trust at any time. Assets stay under control of your trust, even at incapacity and after your death. More difficult than a will to contest. 

Privacy

With no will

None: Court proceedings are public record. Family can be exposed to disgruntled heirs, unscrupulous solicitors. 

With a will

None: Court proceedings are public record. Family can be exposed to disgruntled heirs, unscrupulous solicitors. 

With A Living Trust

Maximum : Living trusts are not public record. Your family can take care of your financial affairs privately.

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Probate Process for Florida https://successorsdata.com/Q-A-Blog/probate-process-for-florida/ Sat, 25 Apr 2020 00:28:29 +0000 http://successorsdata.com/Q-A-Blog/?p=1200 read more →]]> WHAT IS PROBATE?

Probate is a court-supervised process for identifying and gathering the assets of a deceased person (decedent), paying the decedent’s debts and distributing the decedent’s assets to his or her beneficiaries. In general, the decedent’s assets are used first to pay the cost of the probate proceeding, then are used to pay the decedent’s funeral expenses, then the decedent’s outstanding debts, and the remainder is distributed to the decedent’s beneficiaries. The Florida Probate Code is found in Chapters 731 through 735 of the Florida Statutes, and the rules governing Florida probate proceedings are found in the Florida Probate Rules, Part I and Part II (Rules 5.010-5.530).

WHAT IS PROBATE?

Probate is a court-supervised process for identifying and gathering the assets of a deceased person (decedent), paying the decedent’s debts and distributing the decedent’s assets to his or her beneficiaries. In general, the decedent’s assets are used first to pay the cost of the probate proceeding, then are used to pay the decedent’s funeral expenses, then the decedent’s outstanding debts, and the remainder is distributed to the decedent’s beneficiaries. The Florida Probate Code is found in Chapters 731 through 735 of the Florida Statutes, and the rules governing Florida probate proceedings are found in the Florida Probate Rules, Part I and Part II (Rules 5.010-5.530).

There are two types of probate administration under Florida law: formal administration and summary administration. This pamphlet will primarily discuss formal administration.

There is also a non-court-supervised administration proceeding called “Disposition of Personal Property Without Administration.” This type of administration applies only in limited circumstances.


WHAT ARE PROBATE ASSETS?

Probate administration applies only to probate assets. Probate assets are those assets that were owned in the decedent’s sole name at death, or that were owned by the decedent and one or more co-owners and lacked a provision for automatic succession of ownership at death.

For example:

  • 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 spouses 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 necessary to pass ownership of the decedent’s probate assets to the decedent’s beneficiaries. If the decedent left a valid will, unless the will is admitted to probate in the court, it will be ineffective to pass ownership of probate assets to the decedent’s beneficiaries. If the decedent had no will, probate is necessary to pass ownership of the decedent’s probate assets to those who are to receive them under Florida law.

Probate is also necessary to wind up the decedent’s financial affairs. Administration of the decedent’s estate ensures that the decedent’s creditors are paid if certain procedures are correctly followed.


WHAT IS A WILL?

A will is a writing, signed by the decedent and witnesses, that meets the requirements of Florida law. In a will, the decedent can name the beneficiaries whom the decedent wants to receive the decedent’s probate assets. The decedent also can designate a personal representative (Florida’s term for an executor) to administer the probate estate.

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 those who will receive the decedent’s probate assets, as well as 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?

Someone who dies without a valid will is “intestate.” Even if the decedent dies intestate, the probate assets are almost never turned over to the state of Florida. The state will take the decedent’s assets only if the decedent had no heirs. The decedent’s “heirs” are those who are related to the decedent and described in the Florida statute governing distribution of the probate assets of a decedent who died intestate.

If the decedent died intestate, the decedent’s probate assets will be distributed to the decedent’s heirs in the following order of priority (found in Part I, Chapter 732 of Florida Statutes):

  • If the decedent was survived by a 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, parents and more remote descendants.
  • If the decedent was survived by a spouse and left one or more living descendants (all of whom are the descendants of both the decedent and the 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 a spouse and left one or more living descendants (all of whom are the descendants of both the decedent and the 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 the time of 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 that child’s own descendants, the share of the decedent’s estate that 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 the time of 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 and 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 decedent’s homestead property only after the surviving spouse dies. The surviving spouse also, however, has the right to make a special election within six 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?

Depending upon the facts of the situation, any of the following may have a role to play in the probate administration of the decedent’s estate:

  • 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, 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, federal gift, estate or generation-skipping transfer tax matters.

WHERE ARE PROBATE PAPERS FILED?

The custodian of a will must deposit the original copy of the will with the clerk of the court having venue of the estate of the decedent within 10 days of receiving information that the testator is dead. (S. 732.901, Florida Statutes.) There is no fee to deposit the will with the clerk of court. However, a filing fee must be paid to the clerk upon opening a probate matter. The clerk then assigns a file number and maintains an ongoing record of all papers filed with the clerk for the administration of the decedent’s probate estate.

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?

A circuit court judge presides over probate proceedings.

The judge will rule on the validity of the decedent’s will, or if the decedent died intestate, and 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 while 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 is the person, bank or trust company appointed by the judge to be in charge of the administration of the decedent’s probate estate. In Florida, the term “personal representative” is used instead of such terms as “executor, executrix, administrator and administratrix.”

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 advisers.
  • 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?

The personal representative can be an individual, or a bank or trust company, subject to certain restrictions.

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.

Individuals are not qualified to act as a personal representative if they are either under the age of 18 years, or mentally or physically unable to perform the duties, or have been convicted of a felony.

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.


WHOM WILL THE COURT APPOINT TO SERVE AS PERSONAL REPRESENTATIVE?

If the decedent had a valid will, the judge will appoint the person or institution named by the decedent in that will to serve as personal representative, as long as the named person or bank or trust company is legally qualified to serve.

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 the time of 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?

A personal representative should always engage a qualified attorney to assist in the administration of the decedent’s probate estate. Many legal issues arise, even in the simplest probate estate administration, and most of these issues will be novel and unfamiliar to non-attorneys.

The attorney for the personal representative advises the personal representative on the 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?

One of the primary purposes of probate is to ensure that the decedent’s debts are paid in an orderly fashion. The personal representative must use diligent efforts to give actual notice of the probate proceeding to “known or reasonably ascertainable” creditors. This gives the creditors an opportunity to file claims in the decedent’s probate estate, if any. Creditors who receive notice of the probate administration generally have three months to file a claim with the clerk of the circuit court. The personal representative, or any other interested persons, may file an objection to the statement of claim. If an objection is filed, the creditor must file a separate independent lawsuit to pursue the claim. A claimant who files a claim in the probate proceeding must be treated fairly as a person interested in the probate estate until the claim has been paid, or until the claim is determined to be invalid.

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 distributions are made 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 decedent’s death has two significant tax consequences: It ends the decedent’s last tax year for purposes of filing the decedent’s federal income tax return, and it establishes a new tax entity, the “estate.”

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, U.S. Individual Income Tax Return, reporting the decedent’s income for the year of the decedent’s death.
  • One or more Forms 1041, U.S. Income Tax Return for Estates and Trusts, reporting the estate’s taxable income.
  • Form 709, U.S. Gift Tax Return(s), reporting gifts made by the decedent prior to death.
  • Form 706, U.S. Estate Tax Return, reporting the decedent’s gross estate, depending upon the value of the gross estate.

The personal representative also may 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 from the personal representative’s 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 before the repeal of the intangibles tax as of Jan. 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?

The decedent’s surviving spouse and children may be entitled to receive probate assets from the decedent’s probate estate, even if the decedent’s will gives them nothing. Florida law protects the decedent’s surviving spouse and certain surviving children from total disinheritance.

For example, a surviving spouse may have rights in the decedent’s homestead real property. A surviving spouse also may have the right to come forward to claim an “elective share” from the decedent’s probate estate. The elective share is, generally speaking, 30 percent of all of the decedent’s assets, including any assets that are non-probate assets. A surviving spouse and/or the decedent’s children also may have the right to a family allowance to provide them with funds before 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 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 require knowledge about the applicable laws and procedures and are best handled by an attorney.


WHAT RIGHTS DO OTHER POTENTIAL BENEFICIARIES HAVE IN THE DECEDENT’S PROBATE ESTATE?

Except as provided in the immediately preceding section, a Florida resident has the right to entirely disinherit anyone. It is not necessary to give the disinherited beneficiary a nominal gift of, for example, $1.00.


HOW LONG DOES PROBATE TAKE?

It depends on the facts of each situation. For example, the personal representative may need to sell real estate before settling the probate estate, or resolve a disputed claim filed by a creditor or a lawsuit filed to challenge the validity of the will. Any of these circumstances would tend to lengthen the process of administration. Even the simplest of probate estates must be open for at least the three-month creditor claim period; it is reasonable to expect that a simple probate estate will take about five or six months to properly handle.

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, the attorney and other professionals whose services may be required in administering the probate estate (such as appraisers and accountants) are entitled by law to reasonable compensation.

The personal representative’s compensation is usually determined in one of five ways:

  • As set forth in the will.
  • As set forth in a contract between the personal representative and the decedent.
  • As agreed among the personal representative and those who will bear the impact of the personal representative’s compensation.
  • The amount presumed to be reasonable as calculated under Florida law, if the amount is not objected to by any of the beneficiaries.
  • As determined by the judge.

The fee for the attorney for the personal representative is usually determined in one of three ways:

  • As agreed among the attorney, the personal representative and those who bear the impact of the fee.
  • The amount presumed to be reasonable calculated under Florida law, if the amount is not objected to by any of the beneficiaries.

● As determined by the judge.


WHAT ALTERNATIVES TO FORMAL ADMINISTRATION ARE AVAILABLE?

Florida law provides for several alternate abbreviated probate procedures other than the formal administration process.

“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) the amount of preferred 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?

If the decedent had established what is commonly referred to as a “Revocable Trust,” a “Living Trust” or a “Revocable Living Trust,” in certain circumstances, the trustee may be required to pay expenses of administration of the decedent’s probate estate, enforceable claims of the decedent’s creditors and any federal estate taxes payable from the trust assets.

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 that 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 making up 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 the gross estate for purposes of determining federal estate tax liability.

The material in this pamphlet represents general legal advice. Because the law is continually changing, some provisions in this pamphlet may be out of date. It is always best to consult an attorney about your legal rights and responsibilities in your particular case.

This pamphlet is produced as a public service for consumers by The Florida Bar.

[Updated August 2018]

ecedent’s assets to his or her beneficiaries. In general, the decedent’s assets are used first to pay the cost of the probate proceeding, then are used to pay the decedent’s funeral expenses, then the decedent’s outstanding debts, and the remainder is distributed to the decedent’s beneficiaries. The Florida Probate Code is found in Chapters 731 through 735 of the Florida Statutes, and the rules governing Florida probate proceedings are found in the Florida Probate Rules, Part I and Part II (Rules 5.010-5.530).

There are two types of probate administration under Florida law: formal administration and summary administration. This pamphlet will primarily discuss formal administration.

There is also a non-court-supervised administration proceeding called “Disposition of Personal Property Without Administration.” This type of administration applies only in limited circumstances.


WHAT ARE PROBATE ASSETS?

Probate administration applies only to probate assets. Probate assets are those assets that were owned in the decedent’s sole name at death, or that were owned by the decedent and one or more co-owners and lacked a provision for automatic succession of ownership at death.

For example:

  • 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 spouses 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 necessary to pass ownership of the decedent’s probate assets to the decedent’s beneficiaries. If the decedent left a valid will, unless the will is admitted to probate in the court, it will be ineffective to pass ownership of probate assets to the decedent’s beneficiaries. If the decedent had no will, probate is necessary to pass ownership of the decedent’s probate assets to those who are to receive them under Florida law.

Probate is also necessary to wind up the decedent’s financial affairs. Administration of the decedent’s estate ensures that the decedent’s creditors are paid if certain procedures are correctly followed.


WHAT IS A WILL?

A will is a writing, signed by the decedent and witnesses, that meets the requirements of Florida law. In a will, the decedent can name the beneficiaries whom the decedent wants to receive the decedent’s probate assets. The decedent also can designate a personal representative (Florida’s term for an executor) to administer the probate estate.

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 those who will receive the decedent’s probate assets, as well as 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?

Someone who dies without a valid will is “intestate.” Even if the decedent dies intestate, the probate assets are almost never turned over to the state of Florida. The state will take the decedent’s assets only if the decedent had no heirs. The decedent’s “heirs” are those who are related to the decedent and described in the Florida statute governing distribution of the probate assets of a decedent who died intestate.

If the decedent died intestate, the decedent’s probate assets will be distributed to the decedent’s heirs in the following order of priority (found in Part I, Chapter 732 of Florida Statutes):

  • If the decedent was survived by a 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, parents and more remote descendants.
  • If the decedent was survived by a spouse and left one or more living descendants (all of whom are the descendants of both the decedent and the 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 a spouse and left one or more living descendants (all of whom are the descendants of both the decedent and the 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 the time of 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 that child’s own descendants, the share of the decedent’s estate that 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 the time of 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 and 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 decedent’s homestead property only after the surviving spouse dies. The surviving spouse also, however, has the right to make a special election within six 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?

Depending upon the facts of the situation, any of the following may have a role to play in the probate administration of the decedent’s estate:

  • 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, 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, federal gift, estate or generation-skipping transfer tax matters.

WHERE ARE PROBATE PAPERS FILED?

The custodian of a will must deposit the original copy of the will with the clerk of the court having venue of the estate of the decedent within 10 days of receiving information that the testator is dead. (S. 732.901, Florida Statutes.) There is no fee to deposit the will with the clerk of court. However, a filing fee must be paid to the clerk upon opening a probate matter. The clerk then assigns a file number and maintains an ongoing record of all papers filed with the clerk for the administration of the decedent’s probate estate.

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?

A circuit court judge presides over probate proceedings.

The judge will rule on the validity of the decedent’s will, or if the decedent died intestate, and 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 while 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 is the person, bank or trust company appointed by the judge to be in charge of the administration of the decedent’s probate estate. In Florida, the term “personal representative” is used instead of such terms as “executor, executrix, administrator and administratrix.”

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 advisers.
  • 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?

The personal representative can be an individual, or a bank or trust company, subject to certain restrictions.

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.

Individuals are not qualified to act as a personal representative if they are either under the age of 18 years, or mentally or physically unable to perform the duties, or have been convicted of a felony.

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.


WHOM WILL THE COURT APPOINT TO SERVE AS PERSONAL REPRESENTATIVE?

If the decedent had a valid will, the judge will appoint the person or institution named by the decedent in that will to serve as personal representative, as long as the named person or bank or trust company is legally qualified to serve.

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 the time of 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?

A personal representative should always engage a qualified attorney to assist in the administration of the decedent’s probate estate. Many legal issues arise, even in the simplest probate estate administration, and most of these issues will be novel and unfamiliar to non-attorneys.

The attorney for the personal representative advises the personal representative on the 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?

One of the primary purposes of probate is to ensure that the decedent’s debts are paid in an orderly fashion. The personal representative must use diligent efforts to give actual notice of the probate proceeding to “known or reasonably ascertainable” creditors. This gives the creditors an opportunity to file claims in the decedent’s probate estate, if any. Creditors who receive notice of the probate administration generally have three months to file a claim with the clerk of the circuit court. The personal representative, or any other interested persons, may file an objection to the statement of claim. If an objection is filed, the creditor must file a separate independent lawsuit to pursue the claim. A claimant who files a claim in the probate proceeding must be treated fairly as a person interested in the probate estate until the claim has been paid, or until the claim is determined to be invalid.

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 distributions are made 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 decedent’s death has two significant tax consequences: It ends the decedent’s last tax year for purposes of filing the decedent’s federal income tax return, and it establishes a new tax entity, the “estate.”

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, U.S. Individual Income Tax Return, reporting the decedent’s income for the year of the decedent’s death.
  • One or more Forms 1041, U.S. Income Tax Return for Estates and Trusts, reporting the estate’s taxable income.
  • Form 709, U.S. Gift Tax Return(s), reporting gifts made by the decedent prior to death.
  • Form 706, U.S. Estate Tax Return, reporting the decedent’s gross estate, depending upon the value of the gross estate.

The personal representative also may 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 from the personal representative’s 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 before the repeal of the intangibles tax as of Jan. 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?

The decedent’s surviving spouse and children may be entitled to receive probate assets from the decedent’s probate estate, even if the decedent’s will gives them nothing. Florida law protects the decedent’s surviving spouse and certain surviving children from total disinheritance.

For example, a surviving spouse may have rights in the decedent’s homestead real property. A surviving spouse also may have the right to come forward to claim an “elective share” from the decedent’s probate estate. The elective share is, generally speaking, 30 percent of all of the decedent’s assets, including any assets that are non-probate assets. A surviving spouse and/or the decedent’s children also may have the right to a family allowance to provide them with funds before 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 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 require knowledge about the applicable laws and procedures and are best handled by an attorney.


WHAT RIGHTS DO OTHER POTENTIAL BENEFICIARIES HAVE IN THE DECEDENT’S PROBATE ESTATE?

Except as provided in the immediately preceding section, a Florida resident has the right to entirely disinherit anyone. It is not necessary to give the disinherited beneficiary a nominal gift of, for example, $1.00.


HOW LONG DOES PROBATE TAKE?

It depends on the facts of each situation. For example, the personal representative may need to sell real estate before settling the probate estate, or resolve a disputed claim filed by a creditor or a lawsuit filed to challenge the validity of the will. Any of these circumstances would tend to lengthen the process of administration. Even the simplest of probate estates must be open for at least the three-month creditor claim period; it is reasonable to expect that a simple probate estate will take about five or six months to properly handle.

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, the attorney and other professionals whose services may be required in administering the probate estate (such as appraisers and accountants) are entitled by law to reasonable compensation.

The personal representative’s compensation is usually determined in one of five ways:

  • As set forth in the will.
  • As set forth in a contract between the personal representative and the decedent.
  • As agreed among the personal representative and those who will bear the impact of the personal representative’s compensation.
  • The amount presumed to be reasonable as calculated under Florida law, if the amount is not objected to by any of the beneficiaries.
  • As determined by the judge.

The fee for the attorney for the personal representative is usually determined in one of three ways:

  • As agreed among the attorney, the personal representative and those who bear the impact of the fee.
  • The amount presumed to be reasonable calculated under Florida law, if the amount is not objected to by any of the beneficiaries.

● As determined by the judge.


WHAT ALTERNATIVES TO FORMAL ADMINISTRATION ARE AVAILABLE?

Florida law provides for several alternate abbreviated probate procedures other than the formal administration process.

“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) the amount of preferred 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?

If the decedent had established what is commonly referred to as a “Revocable Trust,” a “Living Trust” or a “Revocable Living Trust,” in certain circumstances, the trustee may be required to pay expenses of administration of the decedent’s probate estate, enforceable claims of the decedent’s creditors and any federal estate taxes payable from the trust assets.

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 that 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 making up 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 the gross estate for purposes of determining federal estate tax liability.

The material in this pamphlet represents general legal advice. Because the law is continually changing, some provisions in this pamphlet may be out of date. It is always best to consult an attorney about your legal rights and responsibilities in your particular case.

This pamphlet is produced as a public service for consumers by The Florida Bar.

[Updated August 2018]

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TRUST ME: PRACTICAL ADVICE FOR DRAFTING FLORIDA TRUSTS https://successorsdata.com/Q-A-Blog/trust-me-practical-advice-for-drafting-florida-trusts/ Fri, 17 Apr 2020 00:46:48 +0000 http://successorsdata.com/Q-A-Blog/?p=1210 read more →]]> Many Florida residents engage attorneys only rarely, perhaps to administer a family member’s probate estate or to draft the client’s own will or revocable living trust. Thousands of attorneys’ practices focus on matters relating to estate planning and administration, and thousands more attorneys perform this work as part of a more generalized practice. Regardless of whether an attorney is a wills, trusts, and estates specialist or drafts only a few estate planning documents each year, it is important to consider carefully the practical application of the provisions included in a client’s will or trust, as well as their legal validity.

In drafting a client’s testamentary or inter vivos trust, an attorney often creates and defines long-term business relationships among parties the attorney has never met or communicated with, and who sometimes have never met or communicated with each other, namely, the trustee (or successor trustee) and beneficiaries. The trustee and beneficiaries will be legally required to abide by the trust terms established by the grantor and drafting attorney, sometimes long after the grantor has died and the attorney has lost touch with the grantor’s family or has retired. In particular, the trustee must fulfill its fiduciary duty to the beneficiaries according to the terms of the trust instrument, as supplemented by applicable law, even if those terms are not well-suited to the grantor’s assets or family circumstances at the time of grantor’s death, or when the trust otherwise becomes irrevocable.1

Therefore, the drafting attorney should try to foresee issues that could arise with respect to the client’s intended trust provisions, especially in light of the assets available to fund the trust and the characteristics of the intended beneficiaries and trustee(s). The client relies on the attorney to be more than an “order-taker,” dutifully translating the client’s vision into the legalese of a trust instrument. Although the attorney should try to effectuate the client’s intentions, the attorney also should question those intentions in light of his or her professional experience. The attorney should consider whether the client’s wishes are realistic, point out issues that could arise in trust administration, assist the client in considering whether to alter his or her initial intentions, and devise alternate methods to resolve potential issues.

This article considers some pitfalls commonly encountered by attorneys in drafting trusts; how those pitfalls can impact the trust administration; and some ways to avoid or resolve common issues.2 These issues are organized as follows: 1) provisions regarding distribution of trust assets; 2) provisions regarding investment of trust assets; 3) provisions regarding choice of trustee; and 4) miscellaneous trust provisions.

Provisions Regarding Distribution of Trust Assets
1) Give the trustee clear guidance regarding when and to what extent trust assets should be distributed to beneficiaries, but also allow flexibility in case of changed circumstances. Most trust instruments give the trustee fairly broad discretion regarding distribution of trust assets to or for the beneficiary, or direct that the trustee distribute trust income to the beneficiary and allow principal invasion at the trustee’s discretion.3 Florida courts respect this arrangement and review the trustee’s distribution decisions to determine whether the trustee abused the discretion granted in the instrument, not whether the court would have exercised that discretion as the trustee did.4 Granting discretion to the trustee is often wise because it allows the trustee the flexibility to accommodate unforeseen circumstances. However, the language used to define the scope of the trustee’s discretion can be problematic.

One common direction is for the trustee to distribute trust assets to or for the benefit of a beneficiary to the extent necessary “to allow the beneficiary to maintain the lifestyle to which he or she has become accustomed.” This language provides little assistance to a trustee who is unfamiliar with the beneficiary’s lifestyle, such as a corporate trustee. Moreover, even if the trustee is a family member or friend who is familiar with the beneficiary’s lifestyle, this language is ambiguous regarding whether the lifestyle at the time of signing the instrument is to be maintained, or that at the time the trust becomes irrevocable (usually, at grantor’s death), or even afterward, during the term of the trust. Lifestyles can change over time, especially if many years pass between the date of the trust instrument and termination of the trust. The ambiguity inherent in this trust direction can give rise to disputes between the trustee and beneficiaries that may have to be resolved through litigation.5

Another common trust direction is to distribute trust assets to provide for the “health, education, maintenance and support of the beneficiary.” This language also appears indefinite, but many trustees are more comfortable with this language because it is taken directly from both the Internal Revenue Code and the Uniform Trust Code.6 The Uniform Trust Code uses this language as an ascertainable standard requiring the trustee to distribute funds for the beneficiary’s reasonable expenses, and Treas. Reg. §25.2514-1(c )(2) notes that this standard is not limited to the beneficiary’s “bare necessities of life.” The reasonableness of expenses may be determined according to the beneficiary’s need, the purposes expressed in the trust, and the assets and liquidity available in the trust to meet those purposes; it is not measured solely from the personal lifestyle choices that constitute the beneficiary’s accustomed standard of living.

Additionally, the drafting attorney can thoughtfully supplement standard form distribution directions. A trust instrument can include precatory or explanatory language to guide the trustee regarding the grantor’s desires. For example, is the grantor’s primary intent to provide for a first-class education for the beneficiaries? Does the grantor desire the beneficiaries to contribute substantially to their own support after completion of their education, and that interim distributions from the trust not supplant the beneficiaries’ own personal industry? Or does the grantor desire that the beneficiaries be able to travel for educational purposes and to maintain personal contact with distant family members, to the extent that trust assets allow? Does the grantor desire that the trustee exercise discretion conservatively, in order to preserve trust assets for the beneficiaries’ retirement?

Guidance such as this not only assists the trustee in better implementing the grantor’s intent, it also can avoid disputes between the trustee and beneficiaries. However, it does not hamstring the trustee by prohibiting distributions outside certain closely defined circumstances.7 The trustee retains flexibility to make distributions in the event of a beneficiary’s legitimate, if unforeseen, need. Inclusion of additional guidance such as this does require more of the drafting attorney’s time than relying solely on standard form language, but it benefits all parties by providing clarity and flexibility, and by increasing the likelihood that the grantor’s intent will be more fully implemented.

Finally, when the trustee has discretion regarding distribution of assets for a beneficiary’s support, uncertainty can arise regarding whether the trustee should consider other assets and income available to the beneficiary, such as the beneficiary’s own resources, or those of a minor beneficiary’s parents. This uncertainty can be especially problematic for a trustee directed to provide for the support of a beneficiary, such as a surviving spouse, for his or her lifetime, and then to distribute the remaining trust assets to separate beneficiaries, such as step-children of the lifetime beneficiary. If the surviving spouse beneficiary has significant assets of his or her own, a dispute could arise among the beneficiaries as to whether the surviving spouse must resort to his or her own assets, even to the point of exhausting those separate assets, before seeking to invade trust principal for his or her support.8 If the trust is silent as to whether it is intended to be the primary support of the lifetime beneficiary, the trustee can be caught between the competing beneficiaries’ interests. Direction in the trust instrument, as to whether the trustee should consider the lifetime beneficiary’s separate resources in exercising discretion regarding principal invasion, could resolve the issue before it develops into a dispute.9

2) If the grantor intends that one beneficiary’s interests be favored over other beneficiaries’ interests, the trust instrument must clearly direct such partiality. Many trusts provide for the support of the grantor’s surviving spouse for his or her lifetime, then for distribution of the trust’s remaining assets to the grantor’s children and/or designated charities. Often the grantor’s primary concern is to support the surviving spouse, not to grow the trust principal for the remainder beneficiaries at the expense of the spouse’s welfare and comfort. However, if the trust instrument does not direct primary consideration for the surviving spouse, the trustee will be legally required to give due consideration to the interests of the remainder beneficiaries.l0 This means that trust assets must be invested so as to balance the objective of principal growth (for remainder beneficiaries) against the need to produce income for the surviving spouse (or other present beneficiary).11 Moreover, in determining whether to invade principal for the surviving spouse’s support, the trustee must consider the remainder beneficiaries’ interest in preserving principal for ultimate distribution to them, unless the trust instrument directs otherwise.12

Similarly, many trusts benefitting a grantor’s children establish a single common trust fund, from which the trustee distributes assets for the benefit of multiple beneficiary children. The trustee’s discretionary power to distribute assets among multiple beneficiaries is called a sprinkle or spray power. The trust instrument granting a sprinkle power should clarify whether the grantor intends that distributions for the various beneficiaries be equalized, and if unequal distributions are allowed, what should be the basis for making unequal distributions. Without clarification, a trustee with a sprinkle power may be caught between one beneficiary arguing that his or her lower income or greater expenses entitle him or her to larger distributions than other beneficiaries, and other beneficiaries arguing that the trustee’s duty of impartiality prohibits favoring a beneficiary whose difficult financial circumstances may be the result of less responsible employment or lifestyle choices than those made by other beneficiaries.13

3) Consider whether available assets are sufficient to fund a trust, and allow the trustee to terminate an uneconomical trust. Trusts established for younger beneficiaries often direct several interim distributions at specified ages, so that the beneficiaries gain experience in managing funds before they have received their entire inheritance. For example, in addition to discretionary distributions, a trust may direct that its assets be distributed to the beneficiary in 1/3 increments, when the beneficiary attains ages 25, 30, and 35. There are sound reasons for this kind of structure, but the drafting attorney should consider whether the trust corpus will be large enough so that the last 1/3 of the corpus, less anticipated interim distributions, will be sufficient to justify the cost of trust administration for the last five years of the trust term.

If assets remaining near the end of the trust term may be insufficient to justify the cost of administration, the drafting attorney can suggest that interim distributions be reduced, for example, to 1/4 of the then-existing corpus at ages 25 and 30, with final distribution at age 35. The drafting attorney also can suggest a provision allowing the trustee to terminate the trust early, in the event the trustee determines that the remaining corpus no longer justifies the cost of administration and the beneficiary is capable of managing the assets on his or her own. Even if the trust instrument is silent, F.S. §736.0414 allows early termination on this ground if the trust corpus falls below $50,000. However, trust administration can be uneconomical for trust assets greater than that amount, especially if a corporate trustee is in place.

Provisions Regarding Investment of Trust Assets
Be aware of the trustee’s statutory investment responsibilities and alter those responsibilities in the trust instrument if necessary to comply with grantor’s intent, but allow the trustee flexibility to dispose of assets in the event of changed circumstances. The prudent investor rule, as set forth in F.S. §518.11, requires the trustee to review a trust’s investments upon accepting the trust, and periodically during the trust term. The trustee must ensure that trust assets are invested to balance the objectives of reasonable income production and safety of capital, consistent with the purposes and duration of the trust, and the relative interests of the beneficiaries.14 Unless directed otherwise by the trust instrument or based on the other objective grounds, the trustee is statutorily required to diversify the trust’s investments to increase the likelihood of achieving these goals.

The prudent investor rule does not allow a trustee to retain an asset indefinitely merely because the grantor retained the asset while the grantor was trustee of the trust, or during the grantor’s lifetime. Indeed, the trustee can be held liable for breach of its fiduciary duties to invest the trust assets prudently if it fails to diversify the trust assets without a legally sufficient reason. For example, in Estate of Janes, 681 N.E. 2d 332 (N.Y. 1997), a corporate trustee was held liable to the trust’s beneficiary for damages, and forfeited its trustee commissions and attorneys’ fees, because it failed to diversify the trust’s portfolio by retaining a large block of stock in Eastman Kodak Company, as the value of the stock declined. In addition to loss of capital, the income produced by the stock was less than that produced by comparable investments, and was insufficient to meet the needs of the beneficiary. Although the beneficiary was aware of and did not object to retention of the stock as its value declined, that did not absolve the trustee of its fiduciary duties under the prudent investor rule.

F.S. §518.11 (2) allows a trust instrument to expand, restrict, eliminate, or otherwise alter a trustee’s investment responsibilities under the prudent investor rule. The statute relieves a trustee of liability for reasonably relying upon such express provision in the governing instrument. Therefore, if the grantor intends that a particular asset be retained in trust, such as an interest in a closely held business or certain real property, the trust instrument should expressly allow the trustee to retain that asset despite the general duty to diversify.

However, in the course of authorizing the trustee to retain an asset, the drafting attorney should take care not to require that the asset be retained for a significant duration. Recently we all have been made aware of how quickly and drastically economic circumstances can change; what seems like a safe and certain investment at one time may later appear woefully ill-advised. If the grantor has an emotional attachment to an asset, such as a vacation home, the trust instrument may express the grantor’s desire to retain the asset unless the trustee determines retention no longer to be in the best interests of the beneficiaries. But the trustee should be allowed to exercise discretion to dispose of the asset if necessary. Trustees are often selected and compensated based on their investment expertise; the trust instrument should not prevent the trustee from using its expertise for the benefit of the trust beneficiaries. Indeed, F.S. §§736.0806 and 518.11(1)(a) require a trustee possessing special skills or expertise to use them in administering trust assets, so that the trustee’s actions will be judged in light of its special skills or expertise.

Provisions Regarding Choice of Trustee
1) Be aware of potential deadlock and liability issues when designating co-trustees. Designation of multiple co-trustees can benefit a trust by providing more than one viewpoint on decisions regarding investments and discretionary distributions. Additionally, a trust grantor may desire to designate more than one of his or her children as co-trustees, so the co-trustee children can share the work of administering the trust. To avoid the inconvenience of requiring the signatures of all co-trustees for every trust action (e.g., for every check drawn on the trust bank account), the drafting attorney may include a provision allowing any co-trustee to act for the trust without the joinder of the other(s).15 In addition, F.S. §736.0703(3) allows one co-trustee to delegate to the other(s) the performance of one or more trustee functions. For example, if a trust instrument designates both a corporate and an individual trustee, the individual trustee may wish to delegate investment responsibilities to the corporate trustee.

However, in designating multiple co-trustees, the drafting attorney should be aware of issues that can arise when trustee responsibility and authority are shared. First, even if the co-trustees agree on a course of action, making a decision “by committee” is more time-consuming and cumbersome than action by a single trustee. Worse, if co-trustees cannot agree on a course of action, the deadlock may have to be resolved through litigation. If a trustee function, such as investment of trust assets, has been delegated to one co­-trustee pursuant to statute, the delegating co-trustees retain the legal responsibility to use reasonable care to ensure that the co-trustee exercising authority does so in accordance with its fiduciary duties.16 In contrast, if the trust instrument places investment authority and responsibility with a particular co-trustee, such as the corporate co-trustee, then the other co-trustees will not be liable for investment decisions beyond the scope of their authority.17

Finally, the drafting attorney should beware of a client designating multiple children as co-trustees for the sole purpose of avoiding hurting the feelings of children not designated. If a child is irresponsible with money or does not work well with his or her siblings, designating him or her as a co-trustee will not improve relations among the siblings, but will increase the potential for conflict among them.

2) Designating one child as the trustee of another child’s trust invites family discord. Sometimes parents are concerned that one child may manage his or her inheritance unwisely, or may lose it to his or her creditors or divorcing spouse, so they direct that the child’s share be held in trust rather than distributed outright to him or her. But the corpus of the child’s trust may be too small to designate a corporate trustee, and no member of the parents’ generation may be an appropriate trustee, so the parents may designate one or more of the child’s siblings to act as his or her trustee. Unless the beneficiary child is disabled or much younger than the trustee child, this arrangement is fraught with peril for all parties involved. The beneficiary child may resent the authority exercised by the trustee child, and the trustee child is placed in an awkward no-win position, especially considering his or her fiduciary duties to the remainder beneficiaries designated in the trust.

A drafting attorney whose client suggests this arrangement should strongly suggest that the client discuss this arrangement with both the intended beneficiary and trustee children before finalizing the trust instrument. Otherwise, after the client’s death, the attorney may have to explain the arrangement to the client’s surprised and resentful children, and either assist with a difficult trust administration or deal with the intended trustee’s refusal to serve.

3) Designating a corporate trustee does not remove the need to designate a successor trustee or a mechanism for selecting a successor trustee. A client who designates a corporate trustee for his or her trust may not consider a successor trustee designation, since the corporate trustee entity will not die or become incapacitated. However, the designated corporate trustee may resign or decline to serve for a variety of reasons, for example, because the trust assets are problematic or have too low a value, or because of concerns regarding unusual trust provisions or litigious beneficiaries. Therefore, the drafting attorney should ensure that the trust instrument includes a designation of successor trustee, or a mechanism for selecting one.18 For instance, the trust instrument could empower a majority of the adult qualified beneficiaries to select a successor trustee. Or a trust protector could be designated to select a successor trustee.19

A provision authorizing a resigning trustee to designate its own successor may not be helpful in the event of a vacancy, since an entity that declines to accept or continue a trusteeship also may decline to undertake responsibility for selecting a successor trustee. Moreover, if a trust instrument requires that the successor trustee be a bank or trust company, rather than an individual, the drafting attorney should confirm that the trust assets and provisions will be acceptable to a corporate trustee.20 Otherwise, if the designated corporate trustee declines to serve, others also may decline to serve, and the trustee vacancy may have to be resolved through judicial modification of the trustee provision or judicial designation of a successor trustee.

In any event, if a corporate trustee is designated, the drafting attorney should consider whether to allow the beneficiaries to remove the corporate trustee and designate a successor corporate trustee. Such a provision ensures administration by a corporate trustee (in the absence of the problems discussed above), but grants the beneficiaries the flexibility to engage a different trustee in the event that investment results are less than expected, fees are greater than expected, or there is a personality conflict with personnel of the designated corporate trustee.21 Of course, there may be reasons in a particular case not to allow the beneficiaries to replace the corporate trustee, or to limit the frequency of such action, but consideration of the issue is recommended.

Miscellaneous Trust Provisions
1) When drafting joint trusts established by more than one grantor, clarify whether revocation or amendment requires the signature of one or both grantors. Often spouses who do not have taxable estates establish a joint revocable living trust and contribute their assets to the single “family” trust. If the drafting attorney uses a standard form document intended for a trust established by a single grantor, the attorney must revise the boilerplate language regarding revocation and amendment. Provisions allowing “the grantor” to revoke or amend the trust will not be helpful in these situations. The trust instrument should make very clear whether revocation and amendment of the trust terms require the signature of both grantors while they are both alive and have capacity, and clarify authority to revoke or amend after either grantor dies or becomes incapacitated.22

2) Consider whether to address the issue of trustee fees in the trust instrument. The issue of trustee compensation will arise in almost every trust administration, either through determining reasonable compensation, or through the trustee waiving compensation. The Florida Trust Code does not set forth a “presumed reasonable” trustee fee, as the Florida Probate Code sets forth for personal representatives. Instead, if the trust instrument does not specify the trustee’s compensation, F.S. §736.0708 provides for “compensation that is reasonable under the circumstances.” Even if the trust instrument does specify the trustee’s compensation, the court may allow more or less compensation, if the amount specified is unreasonably high or low, or the trustee’s duties are substantially different than contemplated at the time the trust was established.

Because much of the litigation between trustees and beneficiaries involves the reasonableness of the trustee’s fee,23 the drafting attorney should consider whether to address the issue in the trust instrument or in a separate memorandum. For a corporate trustee, reference to its published fee schedule may be sufficient. For an individual trustee such as an attorney or CPA, reference to an hourly or percentage-based fee may be appropriate, either in the trust instrument itself or a separate memorandum. For a family member trustee, even a general statement that the grantor intends the trustee to be compensated can be helpful to avoid disputes with beneficiaries who may not understand the extent of a trustee’s work and responsibility and may expect the family member trustee to serve without compensation. In any event, it is wise to discuss the issue of trustee compensation with the trust grantor, so the drafting attorney can address the issue as most appropriate to the grantor’s economic and family situation.

3) Consider who will be entitled to receive trust information and accountings and, if desired, designate a representative to receive such information. F.S. §736.0813 requires the trustee to deliver trust information and accountings to each qualified beneficiary of a trust, or to someone representing the beneficiary’s interest. For example, the trustee of a trust benefitting the grantor’s surviving spouse for his or her lifetime, then the grantor’s children, will be required to deliver trust information to both the surviving spouse and the remainder beneficiary children. Similarly, the trustee of a generation-skipping trust benefitting a grantor’s child for life, then that child’s own children, will be required to deliver trust information to both the child and grandchildren beneficiaries from the date the trust becomes irrevocable.

Grantors establishing trust arrangements like these often desire primarily to benefit the lifetime beneficiary, and intend the remainder beneficiaries to take only those assets not needed by the lifetime beneficiary. In these cases, the grantor may not want the remainder beneficiaries to be privy to trust information before they receive the remainder assets of the trust. Very often, the lifetime beneficiary shares this sentiment.

The trust instrument cannot negate the trustee’s duty to deliver trust information to or for qualified beneficiaries.24 However, F.S. §736.0306 allows the trust instrument to authorize the designation of a representative, other than the trustee itself, to receive any trust information on behalf of a beneficiary. If the designated representative is also a beneficiary of the trust, then that representative must either be named by the trust grantor, or be a relative of the represented beneficiary. Although the designated representative’s responsibilities have not yet been defined through case law, F.S. §736.0306(4) protects the designated representative from liability to the represented beneficiary for actions or omissions made in good faith.

The issue of delivering trust information and accountings to beneficiaries will arise in almost every trust administration. Therefore, the drafting attorney should discuss the issue with the trust grantor to determine the grantor’s desires. Sometimes, family dynamics among grantor’s spouse, children, and other beneficiaries affect the advisability of disclosing trust information directly to all qualified beneficiaries; if the drafting attorney is aware of these issues, he or she can draft the trust instrument accordingly.

4) Ask the trust grantor for contact information for trust beneficiaries and successor trustee(s). If a beneficiary of a revocable living trust is not known to the successor trustee, it can be extremely time-consuming to search for the beneficiary after the death of the trust grantor. This is especially true if the grantor gave the drafting attorney an incorrect spelling of the beneficiary’s name; the beneficiary has a common name; or the trust instrument does not refer to the beneficiary by name. For example, the remainder beneficiaries of a trust may be “grantor’s nieces and nephews surviving grantor.” If the drafting attorney has not obtained the names and contact information of the intended beneficiaries, the trust may incur unnecessary expense in identifying, locating, and contacting the beneficiaries after the grantor’s death. It is easiest to obtain this information while the trust is being drafted, and keep it in the attorney’s file if inclusion in the actual trust agreement is not preferred.

Clearly, the above is not intended to be an exclusive list of the issues that a Florida attorney may encounter in drafting a trust, and not all of the above recommendations will apply in all situations. This article is intended to assist attorneys in drafting clear documents that anticipate and resolve many issues that commonly arise in trust administrations.

1 The Florida Trust Code allows parties interested in a trust to seek judicial or nonjudicial modification of the trust instrument on grounds enumerated in Fla. Stat. §§736.04113 and 736.04115. However, these procedures can be burdensome and expensive, especially if not all interested parties are in agreement. Moreover, the IRS is not legally bound to recognize such later modifications for tax purposes if IRS is not made party to the action.

2 The problems and suggested resolutions discussed in this article are the opinion of the author, based on discussions with experienced individual trustees, members of corporate trustee trust departments, and other estate planning attorneys, as well as personal experience and review of case law involving disputes among trustees and beneficiaries. Because this article discusses the “art” of trust drafting rather than requirements for legal validity, the opinions of other practitioners may differ.

3 An alternative to traditional principal/income trusts is the total return unitrust, which directs that the trustee distribute to the beneficiary(ies) a stated percentage of the trust assets each year, often three to five percent per year. See Fla. Stat. §738.1041. Under a total return unitrust, characterization of investment returns as principal or income does not affect distribution amounts. Total return trust terms can be combined with discretionary principal invasion, i.e., allowing the trustee to distribute more than the unitrust amount in the event of an emergency or other criteria stated in the trust instrument.

4 Seee.g.NCNB Nat’l Bank of Florida v. Shanaberger, 616 So. 2d 96 (Fla. 2d D.C.A. 1993); Sarasota Bank & Trust Co. v. Rietz, 297 So. 2d 91 (Fla. 2d D.C.A. 1974).

5 See, e.g., Barnett Banks Trust Co. v. Herr, 546 So. 2d 755 (Fla. 3d D.C.A. 1989).

6 I.R.C. §§2041 and 2514 endorse “health, education, maintenance and support” as an ascertainable standard in the context of powers of appointment sufficient to limit the grantor’s discretion so that grantor is not deemed to have a general power of appointment. Uniform Trust Code §103, as adopted in Fla. Stat. §736.0103(3), defines the term “ascertainable standard” as “a standard relating to an individual’s health, education, support or maintenance.”

7 But see Nesbitt v. Eisenberg, 139 So. 2d 724 (Fla. 3d D.C.A. 1962), in which the court prohibited the trustee of a trust benefitting the grantor’s minor child from paying the child’s tuition and expenses at boarding school because the trustee could not provide “legal proof” that the child’s surviving parent was unable to pay such expenses, as required by the trust language.

8 This kind of dispute can become especially sharp in second marriages, when the surviving spouse is not the parent of the trust grantor’s children, and has children of his or her own. The surviving spouse’s own estate plan may benefit his or her own children from a prior marriage, and not the deceased spouse’s children, who are often the remainder beneficiaries of the deceased spouse’s trust. In this situation, the determination of how much to require the beneficiary surviving spouse to resort to his or her own assets shifts the ultimate benefit between the surviving spouse’s children and the children of the decedent spouse.

9 In the absence of contrary direction in the trust instrument, many corporate trustees require a beneficiary to disclose his or her most recent income tax return before making a substantial discretionary distribution for the beneficiary’s support. See NCNB Nat’l Bank of Florida v. Shanaberger, 616 So. 2d 96 (Fla. 2d D.C.A. 1993), approving this practice. Thus, as a practical matter, the beneficiary’s own separate resources are often considered in making discretionary distributions. However, many beneficiaries chafe at this requirement, and the tax return may not disclose some relevant information regarding expenses and net worth. General guidance in the trust instrument can help to avoid disputes between the trustee and beneficiaries regarding the types of information that may be considered regarding discretionary distributions for a beneficiary’s support.

10 Fla. Stat. §736.0803.

11 Fla. Stat. §518.11(l)(e).

12 Mesler v. Holly, 318 So. 2d 530 (Fla. 2d D.C.A. 1975). The trustee and income beneficiary may request that remainder beneficiaries waive their interests in trust investment decisions and principal invasions, but some remainder beneficiaries may refuse to waive. Further, the trustee may refuse to rely on such a waiver if the class of remainder beneficiaries could expand, e.g., if the share of a remainder beneficiary child descends to his or her own children if the child predeceases final distribution of trust assets.

13 There can be good reasons for establishing a sprinkle trust, especially when beneficiaries are young and their relative needs are uncertain, or when the total trust assets are too small to justify separate administration of individual trusts for each beneficiary. But without clear drafting, sprinkle trusts have the potential to pit beneficiaries against each other, and to catch the trustee between them. After all, “fair” may or may not be equal, depending on the point of view, and the trustee will have to contend with as many points of view as there are beneficiaries.

14 Fla. Stat. §518.11(1).

15 In the absence of such a provision, Fla. Stat. §736.0703 requires joint action by two co­-trustees, or action by a majority of three or more co-trustees.

16 Fla. Stat. §736.0703(7).

17 Note that Fla. Stat. §§736.0807 and 518.112 allow trustees to delegate investment functions to an agent who is not a co-trustee by following the procedures set forth therein, but these statutes also allow the delegating trustee to be held liable for actions of the agent if the delegating trustee did not properly select the agent, monitor the agent’s performance or results, or give proper written notice of the delegation to the trust beneficiaries, as set forth in §518.12.

18 If the trust instrument fails to designate a successor trustee, Fla. Stat. §736.0704 allows the trust’s qualified beneficiaries to select a successor trustee by unanimous agreement. However, without unanimity, the successor trustee would have to be appointed by the court.

19 The trust instrument could designate a trust protector to appoint a successor trustee, to modify or terminate the trust, or to perform other functions defined in the trust instrument, such as to approve or disapprove principal invasion. Fla. Stat. §736.0808. This may allow a family member to be involved in those decisions without having daily administrative responsibility as trustee. However, the drafting attorney should clearly delineate the authority and responsibility of the trust protector.

20 Although not legally required, it is good practice when designating a bank or trust company as the successor trustee of a client’s revocable living trust, and with the client’s permission, to allow personnel at the designated successor trustee to review the draft trust agreement and raise any concerns before the client signs the document.

21 Fla. Stat. §736.0706(2)(d) allows a court to remove a trustee upon the request of all qualified beneficiaries if the court finds that removal will best serve the interests of all beneficiaries, that removal is not inconsistent with a material purpose of the trust, and a suitable successor trustee is available. However, this mechanism requires judicial action and unanimity among qualified beneficiaries; a provision in the trust instrument can allow removal of the trustee without these requirements.

22 Unless the trust instrument directs otherwise, Fla. Stat. §736.0602(2) allows either grantor of a joint trust to revoke or amend the joint trust with respect to noncommunity property attributable to that grantor’s contribution to the trust. However, most assets contributed to a joint trust will have been owned jointly by the spouses before contribution to the trust, and years after funding a trust, it may be difficult to ascertain how the assets were owned before contribution to the trust. Rather than relying on the default statutory rule, the drafting attorney should discuss the issue with the grantors and include a governing provision in the trust instrument.

23 See, e.g., West Coast Hospital Ass’n v. Fla. Nat’l Bank of Jacksonville, 100 So. 2d 807 (Fla. 1958); Osius v. Miami Beach First Nat’l Bank, 74 So. 2d 779 (Fla. 1954); Parker v. Shullman, 906 So. 2d 1236 (Fla. 4th D.C.A. 2005).

24 Fla. Stat. §§736.0105(r), (s), and (t).

Nancy S. Freeman is a shareholder with Winderweedle, Haines, Ward & Woodman, P.A., practicing in the firm’s Winter Park office. She received her J.D. degree from the University of Florida. She is certified by The Florida Bar as a specialist in the area of wills, trusts, and estates. She is a member of The Florida Bar Probate Rules Committee and the Probate Law & Procedure Committee of the Real Property, Probate and Trust Law Section.

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