AVOIDING PROBATE: Key steps to manage your estate
You've probably heard the term “probate” and heard the sighs that often go along with its mention. Probate is the court process of settling an estate, paying taxes and debt from the estate, and dispersing estate assets to the beneficiaries. This often entails retitling assets after death. Unfortunately, the process can be costly and time consuming, never mind the emotional toll that dragging it out can often create. Another disadvantage is the lack of privacy that probate entails; estates become a matter of public record that anyone can access.
Many of our Hollander Law clients come into the office wanting a Last Will and Testament mistakenly thinking that this document will help their family avoid the probate process. Ironically, the Last Will and Testament doesn’t help you avoid the probate process, but it is the document that starts it.
Now, please don’t get me wrong. The Last Will and Testament is a vital document in your estate plan. We always want to have a document that communicates to the court your wishes in the event an asset has to be probated. However, we do want to limit probate and try to avoid the process when possible.
WHAT COULD GO WRONG?
When a loved one passes, the last thing a family wants to deal with are legal issues. Families need time to grieve properly. Unfortunately, sometimes due to poor planning, I’ve had many families in my office arguing about their deceased loved one’s assets. It’s not that the heirs are greedy or bad people, it’s just that the decedent’s intentions weren’t clear enough. Families can be thrust into an adversarial situation. I’ve seen too many families fracture over disagreements about a loved one’s estate and spend years in litigation.
steps to avoid probate
The first step you can take to avoid the probate process is to name beneficiaries on your assets. For example, you probably already have beneficiaries named on assets such as IRAs and life insurance policies. Upon your passing, your beneficiaries simply go directly to the institution (bank or insurance company) that holds the asset and receives their portion. A beneficiary can usually handle this relatively simple step with some phone calls and paperwork. Plus, there are no taxes involved with this type of asset transfer.
The good news is that you can also put a beneficiary on other assets, such as bank accounts. All you need to do is go to the bank and ask to put a Payable On Death (POD) on your account. Once completed, your beneficiaries will be able receive this asset outside of the probate process.
Now there are a few assets that you can’t put a beneficiary on such as your vehicle. However, the State of Florida understands that the courts would be overwhelmed with probate proceedings if every single vehicle had to be probated in order to transfer title. Florida law allows for the representative on your Last Will and Testament to go into the DMV with your Death Certificate and the will to transfer the title of the vehicle to your beneficiaries. So, this step avoids the probate process.
There is one more asset that you can’t put a beneficiary on. This asset is usually the most valuable thing you own–your homestead property. However, Hollander Law can do a special deed that only a handful of states allow, called the Lady Bird Deed. This deed allows you to put a beneficiary or what we call a “remainderman” right in the deed itself, thus avoiding the probate process.
Another step to consider to avoid the probate process is using a revocable living trust. We use Trusts primarily when a client wants to control the beneficiaries distribution after their passing. This would be appropriate when the beneficiaries are minors or spendthrifts. This type of trust avoids probate and protects the privacy of the trust owner. It does require some planning and paperwork, so it’s not something to enter into lightly, but it can be a viable option for you if you want to avoid probate and control how the beneficiaries share is administered after your passing.
In summary, avoiding probate can help make the estate process much easier on your family. You can save them time, money, and the emotional roller coaster of dealing with the court system. Call Hollander Law (352) 406-2092 if you’d like to discuss your estate plans and find out which estate plan can protect you and your family.