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If you have lost a loved one, you may be asking yourself, what if anything, will have to go through a court process called probate. Probate is only required for certain types of assets to transfer to their beneficiaries/heirs..
Generally speaking, and regardless of whether the decedent had a will, how the property was owned by the decedent dictates whether probate will be required. If probate is required, the property will be distributed according to the will, called a Last Will & Testament, or pursuant to Florida’s Intestacy Laws, if the decedent, the person who died, did not have a will.
Typically, the assets that are subject to probate are the assets in which are owned solely by the decedent at the time of death. This includes property that was titled solely in the decedents name and assets that did not have a designated beneficiary elected. These assets together make what is called the Probate Estate, while all the assets combined make up the decedent’s Estate or gross assets. In common law, an ‘Estate’ is the entire net worth of an individual, whether alive or dead, while a ‘Probate Estate’ is all of the money and property owned by the person at the time of his or her death AND of which is the subject of probate administration.
The assets requiring probate are specifically defined in Florida Statutes §731.201(14) It is typically the responsibility of the Personal Representative named in the decedent’s Last Will & Testament to initiate the probate process with the court, however any interested party (“any person who may reasonably be expected to be affected by the outcome” Id. at 731.201(23)) is able to file a petition to probate. If no will exists, or the named individual does not wish to act as the personal representative, the court will appoint an eligible person to do so.
Examples of Probate Assets are:
A non-probate asset simply means an asset that will pass under an instrument other than a will such that the property automatically passes without any court supervision. As the property will pass automatically upon the death of the decedent, a non-probated assets may pass contrary to the person’s Last Will & Testament. Stated another way, a person’s Last Will & Testament will not control that asset’s distribution.
Examples of Non-Probate Assets are:
If you would like assistance, call the Boyer Law Firm, P.L. for a case evaluation and one of our experienced attorneys can review your case to help you work towards proper administration of your loved one’s estate.
The Florida probate process is designed to distribute the assets of the deceased to the beneficiaries of the estate. However, the debts of the deceased are also distributed to said heirs, especially if the deceased does not have a proper estate plan.
Part of the probate process requires that a document called the “Letter to Creditors” be issued so that any debts accumulated by the decedent may be discovered and counted against the assets of the estate.
Examples of probate debts could include unpaid credit cards, mortgages, promissory notes, outstanding invoices, and more.
Additionally, if the deceased is over the age of 55, then Medicare must be notified for outstanding debts of the decedent.
The only way to avoid these debts from being counted against the assets of the estate is with proper Estate Planning. This includes not only wills, trusts, and power of attorneys, but also other key factors that will prevent an asset from being seized by a creditor.
For example, if you have a car that is paid off, then you should consider adding an additional person as a co-owner of the vehicle, such as an adult child, sibling, or other trusted individual who you would want that asset to be distributed to anyway.
The same applies for houses, bank accounts, and any other important assets to which you can register ownership with your city, county, or the State of Florida, although there are also potential risks of doing so. Estate planning is highly personal and has to be tailored to your individual needs and wishes.
When a loved one dies and the estate is going through the probate process, there is a misconception among many that the bank accounts will be automatically be made available to the heirs of the Estate. This is not true.
Bank accounts are considered assets in the same way as the rest of the assets of the Estate. They must be added to the asset inventory and will not be available for disbursement to the beneficiaries of the Estate until the probate process is complete.
The bank may allow the personal representative to view the balance of the account, but it will not allow them to withdraw funds until the probate process is complete.
Additionally, it is important to know that even as a personal representative of an estate, banks are prohibited from disclosing the existence of accounts you do not know exist. if you as the personal representative of the Estate go to the bank to inquire about the decedent’s bank account, and the decedent has an additional bank account, unbeknownst to you, banks are legally prohibited from disclosing the second account to you. For this reason, it may be worth the additional time and effort to forego summary administration of the estate until you are sure you have discovered all of the assets the deceased held.
The same is true for safety deposit boxes, as is for bank accounts. If the deceased possessed a safety deposit box, banks will allow the personal representative to view the safety deposit box for the purpose of adding those items to the inventory of the Estate, but they will not allow the personal representative to take any of the items in the safety deposit box.
If the deceased was an entrepreneur who owned 100% of a corporation or limited liability company, then that corporate bank account is also subject to the probate process, unless there are additional persons who are listed as signatories of the account.
Although in most cases, beneficiaries will not be granted access to funds in the decedent’s bank accounts, there are a couple of exceptions. The exception lies in joint accounts and pay-on-death accounts, in which case a person named on the account will have access to said account.
Joint accounts and pay-on-death (“POD”) accounts are alike in that all title and/or ownership of the account transfers automatically, at the time of death, to the remaining joint account holder or named beneficiary of a POD account. As the asset transfers automatically, both a joint account and a POD account are not probate assets, however this is the only similarity between the two types of accounts.
A joint account is much like it sounds. An account owned jointly with another person such that each named individual has equal rights and access to the account. By law a joint tenancy can be created at any time, in practice, this is wholly dependent upon the institution, but regardless as soon as a joint tenancy is created, each named individual has access to the account as if the account where solely his or her own. A typical example of this is found among married couples owning a joint checking account together. Upon the passing of a spouse, the remaining spouse will continue to have full access to the account, as if the deceased spouse was never a holder as the remaining spouse already owned the account. In this situation, the institution will typically remove the deceased individuals’ name from the account upon providing a certificate of death. The same is true for any account you own as a joint account with another person.
A pay-on-death account is an account of which the owner named a beneficiary to assume the account upon their death. By designating such beneficiary for the account, upon the death of the owner, the account will pass directly to that named individual(s), i.e. the POD beneficiary. The named beneficiary would not have any access to the account during the lifetime of the owner. Typically, parents utilize a POD beneficiary designation for their child(ren), such that a Mother owns a checking account solely in her name, but adds Sally, her daughter, as the payable-on-death beneficiary. In this instance, Sally cannot use the money in her Mother’s account, while Mother is alive, however upon Mother’s death, Sally would automatically become the owner as if it was her account all along.
While not common, some joint accounts do not bypass probate. Based on the intention of the deceased owner, there are situations that bring about joint account disputes. The remaining joint account holder will still receive the account automatically, however a dissenting party can request the Court’s examination to try to get the money back from the surviving account owner.
In many situations, joint accounts are created to streamline financial affairs without the consideration of what occurs after death. In other situations, joint accounts are created for the sole purpose of avoiding probate of the account at the “original” owner’s death. Many married couples have joint accounts to assist with “joint” debts, however there are other situations were a joint owner is added for convenience to assist the original owner with their financial affairs such as paying their bills or helping purchase groceries. Sometimes, a second person is added for the purpose of providing immediate access to funds to pay for funeral or other common after death expenses.
Legally speaking, whoever was named as the second account holder automatically becomes the sole owner of the funds when the original account holder dies, unless there is irrefutable evidence of a different intention when the account was created. Clear and convincing evidence is very hard to prove, which often leaves the second owner as the sole account holder. Unless there was an agreement in writing, or some similar evidence, it is very difficult to prove whatever earlier understanding or agreement about how the money was intended to be utilized upon their death. This is true, even if this result seems arbitrary or contrary to the Will. As such, the second owner is free to spend it on whatever he or she chooses as it is their bank account and family members wishing to dispute such distribution are unlikely to be successful.
Often when a joint account is created out of convenience, there is no consideration for any surviving rights after their death. This is especially true when the original owner already has a will or a trust that expresses how his or her assets will pass after their death. Florida Statute 655.79, which deals with joint accounts, is clear that unless expressly stated otherwise in a contract or other agreement executed in connection with the joint account, an account that is titled with more than one name creates a presumption that all ownership rights pass to the surviving person. This presumption can only be overcome is there is proof of fraud, undue influence, or clear and convincing evidence of a contrary intent.
Thus, if you can prove that additional named individual was added as a result of fraud or undue influence or if you have concrete evidence, such as an executed contract, that the original owner did not intend for the ownership to vest entirely with them after their death, then you may be able to recover the account for the intended beneficiaries.
Unlike the Florida Statute for joint accounts, Florida statute 655.82 governing POD accounts does not proscribe any means for rebutting ownership. The statute merely provides that upon the death of the owner, the sums on deposit belong to the beneficiary. Florida case law does, however, provide that a POD beneficiary can be refuted based on undue influence. Undue influence means that the individual did not willingly or intentionally designate the POD beneficiary, but rather such action was the result of another person’s wrongful influence.
As such, it does not matter if you have clear and convincing evidence that the original owner intended for the funds to be equally distributed upon his or her death, unless such evidence amounts to showing that their actions were the product of a wrongful influence of another person. To state it another way, it would make no difference if you had an executed document from the original account holder stating that the POD designation was made for funeral purposes only. Only evidence of undue influence can be utilized. Unfortunately, and as a result, unfair results can occur.
The appointed personal representative is permitted to distribute the personal property specifically devised (identified property and named beneficiary) pursuant to the decedent’s last will and testament. If property remains, or was not specifically devised, the personal representative may sell or distribute the personal belongings at their discretion pursuant to Florida Statute 733.805. As such, the personal representative may sell any property that was not specifically devised through an estate sale or by auction with a licensed auctioneer.
While property can be sold during probate, it is not as simple as distributing personal property. In Florida, if the only real property left by the Decedent was the house that they lived in at the time of their death, the property will be exempt homestead. Homestead property is exempt from forced sales to pay the debt of the decedent, creditors of the estate.
There is a special procedure for handling homestead property in Florida during probate as a result of the protections afforded. In order to keep these protections, the homestead property must pass to a person, or persons, who are declared the decedent’s heirs. In other words, regardless whether the person entitled to receive the property is by will or intestate, the property is only exempt from the claims of the creditors, if the home passes to a spouse or lineal descendant of the decedent. Thus, Florida law has restrictions on who may receive homestead upon the death of the decedent. There are, of course, exceptions to this rule such that the house may have been owned with a right of survivorship. In such instance, homestead rights would never attach as the property would pass to the surviving owner prior to any homestead right accruing.
There are also restrictions on who can receive a homestead property. If the decedent is survived by a spouse (one in which was not already a named owner) and minor children, the spouse must be given a life estate and the children will receive the remainder interest in the property. This can often produce an awkward result especially if the property is still subject to a mortgage. Florida statute 738.801, specifies that future interest holder, in this case the child(ren), has the responsibility to pay the principal of the mortgage, while the life estate, the spouse, has the responsibility to pay for the interest portion of the mortgage.
If on the other hand, the decedent was survived by the spouse but no minor children, then the spouse will be granted a life estate (or the full interest in the property), and the decedent is able to devise the remainder interest to anyone pursuant to their last will and testament. If the spouse only received a life estate, the same payment responsibilities as cited above would result.
As such, any property declared as a homestead property pursuant to an Order of Court, can only be listed for sale by the beneficiaries or heirs so named by the Order of Court to receive the property. All such persons must be listed and must sign the contract and deed.
If the subject property in the estate is not subject to homestead protection, then Florida Statute 733.613 governs the sale of real property during estate administration. It is important for the Personal representative to obtain authority to sell the property as soon as possible. Ideally, the personal representative will be able to obtain authorization pursuant to the last will and testament of the decedent through a “power of sale” clause. Such clause allows the personal representative to sell the property without an order of court.
If no such will was left or the last will did not include a sales clause, the personal representative must get an order of court before any sale of the property. Such process of course takes additional time and additional expense.
If the real estate property is not properly probated, the legal title or ownership will not transfer. This means that there is no right to possession, landlord/tenant ability, or power to sell. As eluded to above, unless there is confirmation of the court for a sale of the property, marketable title will not pass and the process cannot be distributed to the beneficiaries.
If you have questions about the probate of an estate or are a personal representative, it is important for you to consult an experienced estates attorney to ensure that all legal requirements are met as well as ensuring your loved ones wishes are executed, and your rights are protected in the process.
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