Avoiding Probate

Probate is the division and distribution of a deceased person’s estate. This procedure is supervised by the courts and assures that the estate is properly divided and all expenses and debts are paid. Probate involves lot of legal paperwork, something that comes as a surprise for many who thought they would receive an inheritance in a timely manner. It can also be expensive, depending on the estate.

Probate applies to property or assets in an individual’s name only.  Smith Law often works with clients who are looking for ways to lessen the need for probate. Below, we discuss some of the most common methods used to avoid probate in Florida. However, consulting with an experienced attorney is paramount to ensure you have done things correctly, as there are tax and legal implications from some of the situations listed below.

Trusts

Revocable trusts avoid probate because the assets were transferred from the individual to the trust while the decedent was alive. In addition, there is already a designated authority to handle the distribution of the estate so it does not need to be handled by the state. The decedent started out as the trustee and beneficiary for all of the assets incorporated into the trust. The paperwork then provides for how the trust is handled upon that person’s death; it passes directly to a successor trustee without having to go through probate. All money and assets will be distributed to beneficiaries as described in the trust documents.

Trusts offer flexibility for those wanting to distribute their assets in specific ways. One downside is that trusts are quite costly and involve a lot of paperwork during setup. But, you can rest assured that your estate will be handled as you intended and that you saved your loved ones many hours of paperwork and perhaps some money.

Joint ownership

Joint ownership means that one or more person owns something together in equal shares. In Florida this is available via joint tenancy or tenancy in the entirety (for married couples). This can be used for real estate, cars, recreational vehicles, bank accounts, etc. When one person dies, their share is automatically divided equally among the other people on the account. This avoids probate since nothing was individually owned.

Accounts with designated beneficiaries

Many types of financial instruments, such as life insurance, retirement plans, bank accounts, etc., come with the ability to designate a beneficiary. If a beneficiary is named, the account will automatically transfer to the named beneficiary, thereby avoiding probate. Two examples of these arrangements are listed below.

POD accounts

Florida allows bank accounts to have a payable-on-death designation (POD). This means that upon the account-holder’s death, the money in the accounts automatically goes to the beneficiary. The beneficiary has no rights to the money until the owner’s death, however. No probate is necessary since this arrangement was created in advance.

TOD accounts

Florida allows for transfer-on-death accounts (TOD) for stocks and bonds. When provided this distinction, your money will automatically transfer to the designated beneficiary upon death. No probate is necessary since this transfer arrangement was created in advance.

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