1. WHAT IS PROBATE?
Probate is a court-supervised process for identifying and gathering the decedent's assets, paying taxes, claims and expenses and distributing assets to beneficiaries. The Florida Probate Code is found in Chapters 731 through 735 of the Florida Statutes.
Florida law establishes three types of probate administration:
1. Formal Administration, with which most of this article deals;
2. Summary Administration and
3. Family Administration. However, as of January 1, 2002, Family Administration will no longer be available. Any Family Administration filed before January 1, 2002 may be completed as a Family Administration. Florida law also establishes a nonadministration proceeding called "Disposition of Personal Property Without Administration."
2. WHAT ARE PROBATE ASSETS?
Generally, probate assets are those assets in the decedent's sole name at death or otherwise owned solely by the decedent and which contain no provision for automatic succession of ownership at death. For example:
• a bank account in the sole name of a decedent is a probate asset, but a bank account held in-trust-for (ITF) another, or held jointly with rights of survivorship (JTWROS) with another, is not a probate asset;
• a life insurance policy, annuity or individual retirement account that is payable to a specific beneficiary is not a probate asset, but a policy payable to the decedent's estate is a probate asset;
• real estate titled in the sole name of the decedent is a probate asset (unless it is homestead), but real estate held as joint tenants with rights of survivorship or as tenants by the entirety is not a probate asset;
• property owned by husband and wife 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.
3. WHY IS PROBATE NECESSARY?
Probate is necessary to wind up the affairs the decedent leaves behind. Probate also serves to transfer assets from the decedent's individual name to the proper beneficiary. Florida has had probate laws in force since becoming a state in 1845. Florida law provides for all aspects of the probate process, but allows the decedent to make certain decisions by leaving a valid will.
4. WHAT IS A WILL?
A will is a writing, signed by the decedent and witnesses, that meets formal requirements set forth by Florida law. A will usually designates a personal representative and names beneficiaries to receive probate assets. A will can also do other things, including establishing a trust and designating a trustee.
To the extent a will properly devises probate assets and designates a personal representative, the will controls over the automatic provisions set forth under Florida law. In the absence of a valid will, or if the will fails in either respect, Florida law designates the beneficiaries and designates the way to select the personal representative.
5. WHAT HAPPENS TO PROBATE ASSETS
IF THERE IS NO WILL?
• Surviving Spouse and No Lineal Descendants. If there is a surviving spouse and no lineal descendants, the surviving spouse takes all.
• Surviving spouse and lineal descendants.
1. If there is a surviving spouse and one or more lineal descendants (with the lineal descendants all being the lineal descendants of the surviving spouse as well as the decedent), the surviving spouse receives the first $20,000 of the probate estate plus one-half of the rest of the probate estate, and the lineal descendants share the remaining half. Beginning January 1, 2002, the $20,000 amount referred to above changes to $60,000.
2. If there is a surviving spouse and one or more lineal descendants (one or more of which lineal descendants are not also lineal descendants of the surviving spouse), the surviving spouse receives one-half of the probate assets and the lineal descendants share the remaining half.
• No Surviving Spouse, But Lineal Descendants. If there is no surviving spouse, but there are lineal descendants, the lineal descendants share the estate, which is initially broken into shares at the children's level, with a deceased child's share going to the descendants of that deceased child.
• No Surviving Spouse, No Lineal Descendants. If the decedent left no surviving spouse or lineal descendants, the probate property goes to the decedent's surviving parents, and if none, then to the decedent's brothers and sisters and descendants of any deceased brothers or sisters. The law provides for further disposition if the decedent is survived by none of these.
• Exceptions to Above. The above provisions are subject to certain exceptions for homestead property, exempt personal property, and a statutory allowance to the surviving spouse and any lineal descendants or ascendants the decedent supported. Regarding homestead, if titled in the decedent's name alone, the surviving spouse receives a life estate in the homestead, with the lineal descendants of the deceased spouse receiving the homestead property upon the death of the surviving spouse. If there are no lineal descendants, the surviving spouse receives full ownership of the homestead outright.
6. WHO IS INVOLVED IN THE PROBATE PROCESS?
While there may be others, the following is a list of persons or entities often involved in the probate process:
• Clerk of the Circuit Court (See Question 7).
• Circuit Court (acting through a Circuit Court Judge, See Question 8).
• Personal Representative (See Questions 9 through 11).
• Attorney for the Personal Representative (See Question 12).
• Claimants (See Question 13).
• Internal Revenue Service (IRS) (See Question 14).
• Florida Department of Revenue (See Question 15).
• Surviving Spouse and Children (See Question 16).
• Other Beneficiaries (See Question 17).
• Trustee of Revocable Trust (See Question 21).
7. WHERE ARE PROBATE PAPERS FILED?
Probate papers are filed with the Clerk of the Circuit Court, usually for the county where the decedent lived. A filing fee must be paid to the clerk to commence the probate administration. The clerk assigns a file number and maintains a docket sheet which lists all papers filed with the clerk for that probate administration.
8. WHO SUPERVISES THE PROBATE ADMINISTRATION?
A Circuit Court Judge presides over probate proceedings. The judge appoints the personal representative and issues "letters of administration," also referred to simply as "letters." This document shows to the world the authority of the personal representative to act. The Judge also holds hearings when necessary and resolves all questions raised during the administration of the estate by entering written directions called "orders."
9. 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 court to be in charge of the administration of the estate. The generic term "personal representative" has replaced such terms as "executor, executrix, administrator and administratrix."
The personal representative is directed by the court to administer the estate pursuant to Florida law. The personal representative is obligated to:
• Identify, gather, value and safeguard probate assets.
• Publish a "notice of administration" in a local newspaper, giving notice of the administration of the estate and of requirements to file claims and other papers relating to the estate. Beginning January 1, 2002, this notice will be called a "notice to creditors."
• Beginning January 1, 2002, serve a "notice of administration" on specific persons, giving information about the estate administration and giving notice of requirements to file any objections relating to the estate.
• Conduct a diligent search to locate "known or reasonably ascertainable" creditors, and notify them 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.
• Pay taxes.
• Employ necessary professionals to assist.
• Pay administrative expenses.
• Distribute statutory amounts or assets to the surviving spouse or family.
• Distribute assets to beneficiaries.
• Close probate administration.
10. WHO CAN BE A PERSONAL REPRESENTATIVE?
• The personal representative could be an individual, bank, or trust company, subject to certain restrictions.
• An individual who is either a resident of Florida, or is a spouse, sibling, parent, child, or certain other close relative, can serve as personal representative.
• 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 personal representative.
11. WHO HAS PREFERENCE TO BE PERSONAL REPRESENTATIVE?
• If the decedent left a valid will, the designated personal representative nominated in the will has preference to serve.
• If the decedent did not leave a valid will, the surviving spouse has preference, with second preference to the person selected by a majority in interest of the heirs.
12. WHY DOES THE PERSONAL REPRESENTATIVE NEED AN ATTORNEY?
In almost all instances the personal representative must be represented by a Florida attorney. Many legal issues arise, even in the simpliest estate administration.
The attorney for the personal representative advises the personal representative on rights and duties under the law, and represents the personal representative in estate proceedings. The attorney for the personal representative is not the attorney for the beneficiaries.
A provision in a will mandating that a particular attorney or firm be employed as attorney for the personal representative is not binding on the personal representative.
13. HOW ARE ESTATE CREDITORS HANDLED?
Prior to commencement of probate proceedings, a creditor can file a caveat with the court. Upon publication of notice of administration (or after January 1, 2002, a notice to creditors), a creditor or other claimant may file a document called a "statement of claim" against the estate with the Clerk of the Circuit Court where the estate is being administered. This claim is generally required to be filed within the first three months of publication of a prescribed notice in a countywide newspaper. This three-month period is often referred to as the "nonclaim period." The personal representative or any other interested person may file an objection to the statement of claim, after which the claimant must file a separate independent lawsuit to pursue the claim.
The personal representative is required to use diligent efforts to give actual notice of the probate proceeding to "known or reasonably ascertainable" creditors, to afford them an opportunity to file claims. A valid claimant is not viewed as an adversary of the personal representative but rather must be treated fairly as a person interested in the estate until the claim has been satisfied or otherwise disposed of.
14. HOW IS THE INTERNAL REVENUE SERVICE ("IRS") INVOLVED?
For federal income tax purposes, death triggers two things. It ends the decedent's last tax year for purposes of filing a federal income tax return, and it establishes a new tax entity, the "estate."
The personal representative may be required to file the following returns, depending on income of the decedent, income of the estate and size of the estate:
• Final Form 1040 income tax return, reporting income for the decedent's final tax year.
• One or more Form 1041 income tax returns for the estate, reporting income for the estate.
• Form 709 gift tax return(s), reporting certain gifts made by the decedent prior to death.
• Form 706 estate tax return, reporting the gross estate and deductions, depending upon the value of the gross estate. The personal representative may be required to file other returns. Additionally, the personal representative has the responsibility to deal with issues arising from tax years prior to the decedent's death (including tax returns that were filed by the decedent or that should have been filed).
The personal representative has the responsibility to pay amounts due to the IRS from the decedent and the estate and may be personally liable for those taxes. If a federal estate tax return is required to be filed, an estate tax closing letter is necessary to clear title to Florida real property, and in some instances in order to close the probate administration with the court.
15. HOW IS THE FLORIDA DEPARTMENT OF REVENUE INVOLVED?
The personal representative is required to send a copy of the probate inventory to the Florida Department of Revenue. "If the decedent died prior to January 1, 2000, the personal representative is also required to file a Preliminary Notice and Report with the Floirda Department of Revenue. If the decedent died after December 31, 1999, and a federal estate tax return is not required to be filed with the IRS, then the personal representative is requied to record in the public records (and file in a formal estate administration) an Affidavit of No Florida Estate Tax Due. If the decedent died after December 31, 1999 and a federal estate tax return is required to be filed with the IRS, then the personal representative is required to file a Florida estate tax return, Form F-706, with the Florida Department of Revenue."
Regarding Florida's intangible tax, the Florida Department of Revenue may review the inventory to determine whether the estate, or the decedent while alive, failed to file a required intangible tax return or to pay intangible tax.
Regarding federal estate taxes, the Florida Department of Revenue may receive all or a portion of the "state death tax credit" amount allowed by the IRS.
For estates required to file a Florida estate tax return, a nontaxable certificate or a tax receipt from the Florida Department of Revenue is required in order to clear title to Florida real property and in order to close a formal probate administration.
16. WHAT RIGHTS DO THE SURVIVING FAMILY HAVE IN THE PROBATE ESTATE?
Florida public policy protects the surviving spouse and certain surviving children from total disinheritance. Absent a marital agreement to the contrary, a surviving spouse may have homestead rights, elective share rights, family allowance rights, and exempt property rights. In addition, certain surviving children of the decedent may also have homestead rights, pretermitted child rights, family allowance rights, and exempt property rights. The existence and enforcement of these rights is often best handled by an attorney.
17. WHAT RIGHTS DO OTHER POTENTIAL BENEFICIARIES (OTHER THAN THE SURVIVING SPOUSE AND CHILDREN UNDER CERTAIN CIRCUMSTANCES) HAVE IN THE PROBATE ESTATE?
Under Florida law, as with most other states, a decedent may entirely disinherit other potential beneficiaries.
18. HOW LONG DOES PROBATE TAKE?
For estates not required to file a federal estate tax return, the final accounting and papers to close the probate administration are due within 12 months of issuance of letters of administration. This period can be extended, after notice to interested persons.
The federal estate tax return is initially due nine months after death and may be extended for another six months, for a total of 15 months. If a federal estate tax return is required, the final accounting and papers to close the probate administration are due within 12 months from the date the tax return is due. This date is usually extended by the court because often the IRS' review and acceptance of the estate tax return are not completed within that period.
Estates that are not required to file a federal estate tax return and that do not involve litigation may often close in five or six months.
19. HOW ARE FEES DETERMINED IN PROBATE?
The personal representative, the attorney and other professionals whose services may be required in administering the estate (such as appraisers and accountants) are entitled by law to reasonable compensation.
The fee for the personal representative is usually determined in one of five ways: (1) as set forth in the will; (2) as set forth in a contract between the personal representative and the decedent; (3) as agreed among the personal representative and the persons who bear the impact of the fee; (4) as the amount presumed to be reasonable as calculated under Florida law if the amount is not objected to; or (5) as determined by the judge, applying Florida law.
Likewise, the fee for the attorney for the personal representative is usually determined (1) as agreed among the attorney, the personal representative and the persons who bear the impact of the fee, (2) as the amount presumed to be reasonable calculated under Florida law, if the amount is not objected to, or (3) as determined by the judge, applying Florida law.
20. WHAT ALTERNATIVES ARE AVAILABLE TO FORMAL ADMINISTRATION?
Florida law provides for four alternate, abbreviated procedures other than Formal Administration.
Until January 1, 2002, Family Administration is generally available if beneficiaries consist solely of a surviving spouse, lineal descendants (i.e., children, grandchildren, great grandchildren, etc.) or lineal ascendants (i.e., parents, grandparents, great grandparents, etc.), and the value of the gross estate for federal estate tax purposes is less than $60,000.
Summary Administration is generally available if the value of the estate subject to probate in Florida (less property which is exempt from the claims of creditors) is not more than $25,000 or the decedent has been dead for more than two years. Beginning January 1, 2002, the $25,000 amount referred to above changes to $75,000.
Under Family Administration and Summary Administration, the persons who receive the estate assets remain liable for claims against the decedent for two years after the date of death. This period may be reduced in Summary Administration by publication of notice in a local newspaper. In a Family Administration, the two-year period may be reduced by using Formal Administration until all claims of creditors have been barred.
The third alternative to Formal Administration is "Disposition Without Administration." This is available if estate assets consist solely of exempt property (as defined by law and the Florida Constitution) and non-exempt personal property, the value of which does not exceed the combined total of up to $6,000 in funeral expenses, plus the amount of all reasonable and necessary medical and hospital expenses incurred in the last 60 days of the last illness.
The fourth alternative to Formal Administration is only available for decedents who were not Florida residents as of death. This proceeding is to admit the will of a nonresident decedent to record, if certain requirements are met and the will devises Florida real estate or any right in Florida real estate. When admitted to record in any Florida county where the real estate is located, the "foreign will" serves to pass title to the real estate as if the will had been admitted to probate. This procedure is available only if either two years have passed from the decedent's death or the domiciliary personal representative has been discharged and there has been no estate administration in Florida.
21. WHAT IF THERE IS A REVOCABLE TRUST?
If the decedent created a revocable trust, in certain circumstances, the trustee may be required to pay expenses of administration of the decedent's estate and enforceable claims of the decedent's creditors. In any event, the trustee is required to file a "notice of trust" with the court where the decedent lived, giving information concerning the settlor and trustee.
Source: The Florida Bar