Florida Probate Attorney

Here’s a common scenario:  Dad dies. Stepchildren claim that stepmother is taking dad’s assets and not communicating with them. Stepmother claims that all of the marital assets passed to her as surviving spouse and the children are just bugging her.  There’s conflict and confusion.  Each side accuses the other of greed and ill will. Neither side understands its rights.

So how do we resolve the problem?  Who gets what?  Here’s a step by step process to help you sort it out.

Step One: Make a List How the Deceased Person’s Assets are Titled

It is important to start with a solid list of the decedent’s assets and how they are titled.  That will determine the need for probate and the rights of the various parties. If you don’t know what the assets are and how they are titled, you’re stuck.

Step Two: Remove All Non-Probate Assets From the List

Not all assets are probate assets. Many assets pass automatically to a survivor based on how the asset is titled. Common examples of “non-probate” assets include:

• Real estate that is owned jointly with rights of survivorship will pass to the surviving owner(s).
• Bank accounts that are jointly owned will pass to the surviving owners.
• Life insurance and financial accounts (bank accounts, brokerage accounts, CDs) that have valid beneficiary designations will pass to the surviving beneficiaries.
• Assets that are titled in a living trust will pass in accordance with the terms of the trust.

In most cases, if the stepmother is able to get to the assets, it’s because she has a right to them. That’s not a hard and fast rule (after all, there is still some good old fashioned theft going around). But keep in mind that third parties (like banks, realtors, and title companies) know when probate is required and when it isn’t. If they are giving the stepmother access to the decedent’s property, it is usually because she became the owner of the property at the decedent’s death.

In other words, if the stepmother is spending money from a bank account, it is usually because she is a joint owner or designated beneficiary on the account. Otherwise, the bank wouldn’t give her access to the account. Similarly, if she sells real estate, it is because the real estate was titled jointly with rights of survivorship. Otherwise, she wouldn’t have insurable title.  You get the picture. The ability to deal with the assets usually indicates ownership of the assets.

Step Three: Be Sure that You can Prove Ownership of Whatever is Left

Once you’ve made a list of assets, then subtracted out the non-probate assets, the assets that remain are assets of the estate.  These are the “probate assets” that are governed by the deceased person’s will (if he had one) or the intestacy laws (if he died without a will).

If the decedent had a bank account or parcel of real estate in his name alone, everything is straightforward. That property will pass under the will or through the intestacy laws to his heirs are beneficiaries.  The rights of the children and the stepmother in the property are easy to determine.  All that needs to be done is to choose the person to represent the estate, hire the probate attorney, and start the process.

But many times, all that is left after subtracting out the non-probate assets is miscellaneous personal property (household furnishings, etc.).  You then need to be able to prove who owns that property.  If dad and stepmother went to the local retail store and bought a big screen TV, who did it really belong to?  Can you prove in court that it was your father’s alone and not the stepmothers?  In most cases, the answer is “no.” This kind of factual difficulty makes it almost impossible to claim an interest in most personal property.

Step Four: Decide Whether it’s Worth It

If you’ve gone through the first four steps, you should have a list of assets and know about what they are worth.  You then need to compare the value of the assets with the cost of probate (or an alternative to probate) to determine whether it is worthwhile to deal with the estate in court.

For small estates, there may be an alternative to full estate administration that will make financial sense.  If a full administration is required, you will want to be sure that the net value of the assets (after subtracting out the debts) involved exceed the value of the decedent’s property.

The best way to compare cost to value is to talk to an attorney.  We offer a value pricing model that gives you an up-front fee quote.  With that information, you can make an informed decision about which type of probate proceeding is right for you.

Of the various types of Florida probate proceedings, formal administration is the most common.  Like any probate matter, Florida probate administration can vary depending on the size of the estate, the decedent’s asset profile, the number of creditors, and whether any disputes are involved.  Here’s ten steps that may be involved in formal administration:

1. Deposit of wills with court. By law, a custodian of a Florida last will and testament must deposit it with the clerk of the appropriate court within ten days of learning of the testator’s death.
2. Petition for administration. Any interested person may file a petition for formal administration of a testate or intestate estate.   An “interested person” is any person who may reasonably expect to be affected by the outcome of the proceedings.  Courts typically interpret this definition broadly.
3. Appointment of personal representative. The position of executor/executrix is known in Florida as a personal representative and is appointed by court order.  The judge gives the personal representative authority to act for a decedent by granting letters of administration.
4. Petition to Open Safe Deposit Box. If the decedent’s will cannot be found among the decedent’s personal effects, it may be necessary to file a petition to authorize access to the decedent’s safe deposit box.
5. Validity of the will. A will may be admitted to probate without further proof if it is self-proved and executed in accordance with Florida law.   A will that is not self-proved may be admitted to probate upon the oath of any attesting witness to it.  If the will cannot be proved by either of those means, it may be admitted to probate only upon the oath of the personal representative nominated by the will or upon the oath of any person having no interest in the will.  The person must swear that he believes the writing to be the true last will of the decedent.
6. Control of the decedent’s assets. The personal representative manages the assets before and during distribution.  This includes collecting and inventorying the assets and determining whether to transfer property to or leave property with the persons presumptively entitled to it under the will.
7. Interim accounting. Before filing the final accounting, the personal representative has the option of filing one or more interim accountings with the court, but is not required to do so unless the court decides to order it.
8. Final accounting. After completing administration, the personal representative must make an accounting of the actions undertaken in administering the estate.  This must include receipts for all transactions and a list of any disbursements, income, compensation paid, etc.  Once a final accounting has been filed the court then holds a formal hearing to approve the accounting, unless all interested parties consent to waive final accounting.   An interested person may file an objection to any part of the accounting within 30 days of being served with notice of the accounting.
9. Closing of the estate. When everything required has been done, the personal representative files a petition for discharge of the estate, along with a proposed plan of final distribution of assets of the estate.   When distribution of the estate’s assets is complete, the personal representative then files evidence of distribution and evidence that creditors’ claims have been disposed of.  The court will then enter an order discharging the personal representative.
10. Reopening of the estate. A court may revoke an order of discharge and reopen an estate if additional property is discovered or if the court determines that further administration necessary for any reason, including fraud.

So there’s the Florida formal probate administration process in a nutshell.  Of course, not every step applies to every probate.  Questions regarding the steps necessary in your case should be directed to a Florida probate attorney.

I was recently involved in a discussion of so-called “pocket deeds”—deeds that are signed during a person’s life but not recorded in the land records until after the person dies. This planning technique (if it can be called that) is intended to accomplish two goals:

• Retained Control – Unrecorded deeds allow the transferor to retain control of the property during his lifetime. Since the unrecorded deed isn’t a matter of public record, the transferor is still the record owner of the property.  If the deed stays in his possession, he can even destroy the deed if he changes his mind.
• Avoiding Probate – The recording of the deed after the transferor’s death is intended to avoid probate.  If it works (that’s a big assumption), the transfer will be treated as being effective when the deed was signed and the property won’t be included in the transferor’s probate estate.

In Florida, these two goals—retained control and probate avoidance—are easily accomplished with a Florida Lady Bird Deed (also called an enhanced life estate deed). But even in jurisdictions that do not recognize enhanced life estate deeds, using an unrecorded deed to avoid probate is still a bad idea. Here are a few reasons why.

Unrecorded Deeds Can Create a Cloud on Title

Under the laws of most jurisdictions, a deed is not effective until it has been properly signed and delivered.  The delivery requirement is important. Just signing the deed is not enough to complete the transfer.

In ordinary real estate transfers, the deed is delivered and recorded at the time of the conveyance.  But with pocket deeds, the deed is not recorded. There is no proof of delivery. This raises a number of questions: Was the deed delivered to the transferee at all? Can it be proved? Who is to say that the transferee didn’t find it after the transferor’s death?

Questions like these can create a cloud on title, meaning that title insurers will not write a policy on the property without some legal action to clear things up. The transferee would have every incentive to claim that the deed was delivered before the transferor died, and the transferor isn’t around to say otherwise. In these circumstances, title companies may be reluctant to simply accept the transferee’s word that the deed was properly delivered prior to the transferor’s death.

In some situations, a title company will simply presume that there was valid delivery. But conservative title companies may require a declaratory action to quiet title before it will issue a policy on the property.  An action to quiet title will convert the transferee’s statements regarding delivery to legal testimony in a declaratory action, after publication and notice to anyone who may claim otherwise. Only then can the title company be sure that there aren’t any competing claims to the property.

If a title company will not write a policy on the property without a declaratory action, the transferee’s title to the property is unmarketable. The transferee will be unable to sell, mortgage, or otherwise deal with the property until the title issue is resolved.  The legal fees for bringing an action to quiet title are usually more expensive and time consuming than proper planning on the front end.

Unrecorded Deeds Can Give Creditors a Lien on the Property

An unrecorded deed does not put third party creditors on notice that the property has been transferred. This means that the transferor’s creditors (including creditors of his or her estate) may put a lien on the property. This leaves the transferee open to a claim by the transferor’s creditors. If that happens, the transferee would need a legal action to deal with the lien.

Unrecorded Deeds Can Create Tax Issues

Assuming that the transferor does not have an estate that is taxable for Federal transfer tax purposes (i.e., assuming the transferor’s estate is worth less than $5.25 million under current law), it is usually better from a tax perspective for the transferor to hold onto the property until death. This will give the transferee a full stepped-up basis in the real estate, effectively erasing any appreciation that accrued while the transferor owned the property. This can result in a significant income tax savings. This tax planning opportunity forfeited when a pocket deed is signed during the transferor’s lifetime.

In addition, the transferor is required to file a federal gift tax return (Form 709) for any transfer of property that exceeds the annual exclusion amount (currently $14,000). Since most real estate is worth more than $14,000, the transferor is usually required to file this return when the pocket deed is actually signed. The hassle and expense of filing the Form 709 can be avoided by holding the property until death.

Unrecorded Deeds Don’t Always Avoid Probate

Unrecorded deeds don’t always avoid probate. Say, for example, that the recording laws change after the transferor signs the deed. This can make the deed unrecordable at a later date. Similar issues arise if the deed is misplaced, destroyed, or hidden by an interested party. Probate may be required to straighten out the botched conveyance, often at a much greater cost than a simple probate proceeding. These risks are simply not worth the perceived savings.

There’s a Better Way

If unrecorded deeds were the only way to allow the grantor to retain control over the property and still avoid probate, they may be worth the risk in very limited circumstances. But they aren’t the only way. Enhanced life estate deeds or revocable trusts can accomplish these same goals with less risk. There’s no reason to ever use a pocket deed as an estate planning tool.

For Florida voters, November 6 is about more than the presidential election.  The ballot includes 11 proposed changes to Florida’s constitution.

These changes, which would require 60 percent of the vote to pass, deal with some heavy issues, such as abortion rights and funding and religious freedom. But property taxes appear to be top-of-mind – 4 of the 11 proposed amendments deal with changes to the Florida homestead laws. Here’s a quick rundown of the proposed changes to Florida homestead protection:

Amendment 2: Veterans Disabled Due to Combat Injury; Homestead Property Tax Discount

Florida law currently provides increased homestead benefits for Florida resident that are disabled in military combat. Disabled veterans are given a reduction in property taxes that is based on the veteran’s disability, as determined by the U.S. Department of Veterans Affairs.  Amendment 2 would extend the protection to individuals who were not Florida residents when they entered the military.

Amendment 4: Property Tax Limitations; Property Value Decline; Reduction for Nonhomestead Assessment Increases, Delay of Scheduled Repeal

Among the many benefits of qualification for Florida homestead is a 3 percent limitation on property tax increases under the “Save Our Homes” legislation.  No matter how much a homestead may increase in value, the tax-assessed value cannot increase more than 3 percent over the prior year’s value.

The Save Our Homes cap only applies to homestead property.  Non-homestead property, such as rental or commercial real estate, is not covered by the cap. Amendment Four would extend protection to these non-homestead properties by capping the annual increase at 5 percent.

Amendment Four also provides additional benefits to new home buyers. Under the Amendment, new home buyers would receive a 50 percent exemption on the value of their homestead property for the first year of ownership.

Amendment 9: Homestead Property Tax Exemption for Surviving Spouse of Military Veteran or First Responder

Amendment 9 would provide tax relief to spouses of military members or first responders that died in the line of duty by allowing the Florida legislature to totally or partially exempt the surviving spouse’s homestead property from taxation.

Amendment 11: Additional Homestead Exemption; Low-Income Seniors Who Maintain Long-Term Residency on Property; Equal to Assessed Value

Amendment 11 provides additional homestead benefits for senior citizens that have lived in their home for at least 25 years.  The additional homestead exemption would equal the assessed value of the property. To qualify:

• The property must be worth less than $250,000.00;
• The homeowner must have legal or equitable title to the property;
• The homeowner must have used the property as permanent legal residence for 25 years;
• The homeowner must be age 65 or older; and
• The homeowner’s income must be less than $27,030.00.

If these conditions are satisfied, the county or municipality that provides the exemption must pass a local government ordinance to implement the law.  The exemption only applies to counties and cities that already offer an exemption for low-income seniors.

Some people pass away leaving only real estate and/or some personal belongings, and not much else. Illiquid estates (estates where there is no cash) must be distributed just the same as any other estate.

Sometimes the heirs or beneficiaries of the estate would prefer cash to a partial interest in the estate assets.  One way to ensure a fair administration is to sell the property and distribute the proceeds to the beneficiaries.

Under Florida probate law, the personal representative’s discretion to sell assets of the estate depends on whether the property at issue is real property or personal property. Real property usually consists of land and buildings on the land (and some immovable fixtures attached to those buildings). For the sake of simplicity, personal property is anything that isn’t real property.

When it comes to personal property, a probate court will usually defer to the personal representative’s decision. The Florida Probate Code authorizes a personal representative, “acting reasonably for the benefit of the interested persons,” to “sell, mortgage, or lease any personal property of the estate or any interest in it for cash, credit, or for part cash and part credit, and with or without security for the unpaid balance.”

Real estate is trickier. Ideally, the decedent would have left a Last Will and Testament that includes a “power of sale clause.” Even a vaguely worded power of sale clause is sufficient to allow the personal representative to sell or lease real property without seeking an order from the probate court.

If the decedent died without a will (intestate) or with a will that lacked a power of sale clause, the personal representative can still sell real property, but he or she must first obtain court approval in order for title to be transferable.

Any authorized sale of real estate – including court-sanctioned transactions and those occurring under a power of sale clause – transfers title to the buyer free of claims of creditors and beneficiaries of the estate, with the exception of existing mortgages and liens against the real property.

When it comes to sales of estate assets, it is important to remember that all of the personal representative’s actions must be for the benefit of the other parties involved (such as beneficiaries of the estate and creditors).  The role of personal representative is a fiduciary role, meaning that the personal representative owes duties of loyalty to these other parties. Even if the personal representative is also a beneficiary, he or she should ensure that any sale of estate assets is in the best interest of the other beneficiaries.

If there is any question regarding the reasonableness of selling the assets of an estate, it is good practice to get court permission before doing so.  This protects the personal representative from a claim by other beneficiaries or creditors that the sale of the asset was unnecessary or for less than market value.

Taken together, this means that a Florida personal representative should seek a court order before selling real estate in three situations:

1. When the decedent did not leave a valid will;
2. When the decedent left a will that doesn’t have a “power of sale” clause authorizing the personal representative to sell estate assets;
3. Any other circumstances where the personal representatives actions are likely to be challenged by an heir or beneficiary.

The personal representative must also be aware of the restrictions on sale of Florida homestead.  A deed conveying a Florida homestead would not be effective unless the will directs that the homestead be sold. (Note: It isn’t usually a good idea to leave a will directing that the homestead be sold.  Doing so will forfeit the protection of Florida homestead exemption.)

If court approval is required, the court will oversee the terms and conditions of the sale.  Creditors and other beneficiaries must be given advance notice of the sale, and some Florida probate judges require the real estate to be appraised before it can be sold.

If you have questions regarding Florida probate, take advantage of our free Florida probate consultation.