Things related to money and finance
A lot of folks are shocked to learn that the probate process might be necessary despite the decedent having left a will. Contrary to popular belief, wills do not eliminate legally-required probate procedures. Instead, a will is the primary instrument that courts utilize during the probate process. Probate is a court-supervised legal procedure for acknowledging and gathering the assets of a deceased individual, settling their debts, and dividing any remaining assets among legal heirs and/or beneficiaries.
A Circuit Court probate judge supervises all probate-related matters. The judge will appoint a personal representative and issue him or her “letters of administration.” These documents provide the world with official notice that the personal representative has full legal authority to act on behalf of the decedent’s estate. The court may also conduct hearings when necessary and respond to any questions presented while the estate is administered via the entry of special instructions known as “orders.” The law requires the probate process in order to ensure that all the deceased’s affairs are properly attended to. This legal procedure guarantees that each one of the creditors of the deceased person receives payment. This include IRS tax obligations. It usually costs between 3 and 7 percent of the total estate value to go through probate. Asset transfers from the deceased person to the appropriate beneficiary(ies) is the primary purpose of probate.
When someone dies without leaving a will, the law refers to him or her as “intestate.” If a person dies intestate, executing their estate will be conducted per state statutory mandates. Probate courts ensure compliance with all such statutory requirements. If someone dies after having prepared and executed a legally valid will, their estate is called a “testate” estate. In such cases, the probate court will ensure that the will was properly executed and that all assets of the estate are disbursed per the terms of the will. It is vital to keep in mind, however, that wills may be challenged. Such will contests can cause asset distributions to be delayed for years and result in the decedent’s estate incurring high costs.
In many cases where the estate is large, family members or other legal heirs might have conflicting interests. All interested parties with a conflict of interest typically hire a lawyer to protect their legal interests in the estate. The plaintiff is the party who originally files a complaint, while the defendant is the personal representative named in the lawsuit. A frequently used ground for objecting to a will is diminished mental capacity on the part of the deceased. Alleging that the decedent was coerced into making the will is another common ground of objection. Among other legal objections that frequently arise are inauthentic will; non-original will; improper design, witness, or signature of the will per official state requirements. Once litigation commences, the will is publicized and becomes accessible to anybody. Besides associated costs and embarrassment, assets may not be distributed according to the wishes of the deceased if the plaintiff ultimately prevails against the estate.
Probate can be an expensive process. It need not be complicated, however. Planning an estate ahead of time is the best means of reducing or avoiding time spent in Probate Court. Adequate advance planning requires much more than visiting the local OfficeMax and buying a generic fill-in-the-blank will form or downloading one for an online website.
Never forget that you have to comply with state probate laws. Probate statues that govern will execution are quite clear. Such laws address issues such as who may or may not be a witness, and when and were you and/or any witnesses to your will may sign. The precise terminology used in a will might be legally accurate. The will could still be challenged if it is executed incorrectly, however. An experienced and knowledgeable probate. attorney has the necessary skill and expertise to draft a valid will that with comply with all state laws and meet your personal needs.
What is a trust? A trust is a document, made legalized through the power of an attorney and application of law principles, which specifies the assignment of declared assets upon the death of an individual. A trust should not be used as a substitute for a will but instead, in conjunction with it. Furthermore, a trust helps protect the assets that the beneficiaries would receive and so as decrease the burden of estate tax.
There are different types of trust and the most common is the living trust. This type of trust is activated while the person, who applied for it, is still living. The process taken here is simple. The person would just have to move the assets into the trust and they would immediately become a part of it.
There are two categories under a living trust. These are revocable trust and irrevocable trust. The difference between the two is very clear. Revocable trust can be changed or revoked while the other one is not. However, the definition of the two is quite intricate.
A revocable trust is a legal document stating that a set of assets will automatically be directed to the declared beneficiary upon the death of the applicant or trust holder. Most of the time, revocable trust includes cash but it can also be tied up with a checking or savings account. Since it is revocable, the trust holder can change the terms of the trust anytime as long as he/she is still living. Also, the holder can access the assets in the trust in case of emergencies.
The word “revocable”, when applied to financial organizations such as the IRS, refers to bank accounts with payable-on-death provisions. Interested applicants can simply fill out the forms provided by the bank and state who will receive the funds contained in the account upon the applicant’s death. This provision works similarly like a trust. Also, this is a great account management scheme where the applicant is given the power to allocate his/her account.
An irrevocable trust is a complex type of legal agreement. It is considered as a separate entity. Here, a federal tax identification number is required. This is usually filed by the tax attorney or the accountant. The applicant would have to go to the state’s Bureau if Internal Revenue and comply with the documents needed for this transaction.
Since the trust is irrevocable and is a separate entity, the creator of the trust will have no access to the assets deposited under it. These assets will also not be owned or could not be touched by the beneficiaries until they are released. For example, if the creator has established a $200,000 trust account and the agreed term is that $10,000 will go to the beneficiary every year, no one could receive and release the money prior to that term. So, the beneficiary would just have to wait another year before he/she will get the other $10,000 until such time that the whole account will be empty.
An estate plan is important in order to properly assign one’s assets to intended beneficiaries. Estate planning may cover both revocable and irrevocable trust. Considering which one is right for you would entail an understanding on how you want your assets to be handled upon death, how flexible you would want them to be while you are still alive and what type of assets you will be leaving behind. Any of these trusts has different consequences and benefits. You can consult a legal consultant (such as an attorney) in order to have a clearer view on the type of trust that you can avail and their agreements as well.
A well-planned trust is a critical component of asset protection in estate planning. With a trust, assets are placed under protection to ensure that the Grantor can maintain a certain amount of control over their use and distribution. Assets that are placed into a trust can be managed more effectively during the lifetime of the Grantor, and protected in order to ensure that the financial interests of the beneficiaries are taken care of.
In its most basic form, a trust is a type of agreement that allows an individual known as the Grantor or Trustmaker to enter into an agreement with a Trustee, who is an individual or entity that will manage the properties and assets that the Grantor will place in the trust. Normally, the Grantor will name a person, company or other entity as beneficiary. The beneficiary is the legal recipient of the assets named in the trust.
Traditionally, a trust is considered a reliable form of asset protection. Once the Grantor transfers assets into a trust, he or she no longer has these assets in his or her name. Instead, the Trustee becomes the legal controller of the assets and is responsible for its management. This action helps protect these assets from potential loss.
Setting up a trust also allows the Grantor better control over common estate issues, such as how the asset will be settled, used and distributed, how much, when and to whom. Other than family members and friends, the Grantor may also specify certain entities such as charitable institutions and name them as beneficiaries. In case of the grantor’s death or incapacitation, the trust can be used as a substitute for a will, allowing the trustee to settle the estate quickly and privately. The terms of a trust can also ensure that the Grantor’s assets remain in the family. For example, in case the surviving spouse decides to remarry, there is a risk that the assets could be passed on to the spouse’s new family. Setting up a trust helps prevent this from happening. A trust can also protect the assets from expensive state and/or federal estate taxes and avoid probate.
Estate planning generally requires setting up either a revocable or an irrevocable trust. Initially both trusts are considered inter vivos trust, which means that either one will go into effect while the Grantor is still living. The Grantor can then decide whether to keep the trust irrevocable or revocable. Essentially, an irrevocable trust is a trust with terms that remain in effect and cannot be changed while a revocable trust can be revoked and the terms changed.
An irrevocable trust, once in effect, prevents the Grantor from retrieving an asset or property. A revocable trust, on the other hand, still places the asset or property into the trust but allows the Grantor to cancel the transfer, modify the details and even take back the asset. He or she can then terminate the trust.
A basic trust agreement is usually simple enough to be drawn by the Grantor. Once the transfer of assets into the trust is completed and the agreement is notarized, it will then take effect. However, if certain issues and questions exist about the estate that need to be addressed, getting advice and assistance from an estate planning lawyer may be a good choice. An experienced lawyer will be able to provide the most important information about estate law that will be valuable for creating and executing an effective and fair living trust.
The probate process is the method of which an estate, including assets, is legally processed and administered after a person’s death. Probate processes provide a legal, organized and supervised manner for estate transfers and ensure debts or taxes are paid prior to beneficiaries receiving their portion of inheritance. Probate is applicable whether or not the deceased individual made out a will in his lifetime.
Florida provides four different probate processes. The formal or summary administration processes can be implemented whether or not a will exists. Formal administration is the most commonly used process involving a personal representative. The process is only considered formal administration if it begins within two years of the date the person passed away. Additionally, it can only be used if the assets of the deceased are worth more than $75,000, without his primary residence included. The formal process is urged in any case that also involves a law suit associated with the estate, or if money is owed to creditors.
The summary administration process is usually implemented if the estate is worth less than $75,000 without including the value of the primary residence. If the deceased individual passed away more than two years prior to beginning the probate process, summary administration is the typical route. In the summary process, a personal representative is not necessary. The process allows for a simple title transfer directly to the beneficiaries.
The third probate process is referred to as the admission of foreign will to record. This method is used when a will regards real property assets in the state of Florida, such as a condominium or vacant lot, and has been probated in a state other than Florida. Admission of foreign will to record is frequently used when the beneficiary is attempting to sell the property in Florida. The beneficiary requests the title be legally transferred to him in order for him to properly transfer it to the buyer. However, this process cannot be implemented if the estate owes any amount of money to creditors.
The final probate process is referred to as no probate, or disposition without administration. This process occurs when the funeral expenses combined with the final sixty days of medical costs are paid for by a person other than the deceased individual, and those charges amount to a larger sum than the deceased person’s property is valued.
A number of details factor into which probate process is implemented in each case. Regardless of which method is used, several professionals play a role in completing the probate process. Aside from the personal representative, guardian or executor, a circuit court judge and a clerk of the court in the county of the deceased person’s primary estate are usually involved. An attorney for representative purposes, or a lawyer providing legal advice, is common. Any parties filing claims for debts incurred by the deceased are also involved, including health care providers and issuers of major credit cards.
Additionally, it is possible for the Internal Revenue Service to become involved in a probate process. This may occur if the deceased individual owes any federal income taxes, if the will detailed a financial federal gift or if the probate process includes any transfer tax matters.
A specific executor or personal representative may be named in the deceased person’s will. This person is eligible to perform the executing duties if he or she is legally qualified to do so. If the person is not qualified to carry out probate executions, or if there is no valid will, the surviving spouse retains the initial right to serve as the personal representative following approval from the judge.
If the deceased individual is not survived by a spouse or if the spouse gives up the right to serve, the personal representative is chosen by the beneficiaries. Should the beneficiaries disagree on their preference of the personal representative, a hearing is held for the judge to review the information. The judge then makes the ultimate decision of who to appoint as the personal representative.
Personal representatives or guardians of deceased individuals must be represented by a lawyer legally practicing in the state of Florida. In the event that the personal representative or guardian is also an attorney that legally practices in the state of Florida, he is eligible to represent himself.
If the personal representative or guardian of an estate is the only party interested and involved in claiming the assets, then an attorney is not mandatory. The individual can still decide to hire an attorney for representation or a lawyer for legal advice, but it is not a requirement.
Although each attorney may provide slightly different services, they all carry out the same primary functions. In a formal administration process, the services dramatically vary by case circumstances. In the summary administration process, the role of a probate attorney is more structured.
All attorneys begin by reviewing the case information. If the probate attorney decides to take on a client, he sends a letter of engagement with an accompanying fee agreement. Once the client signs off on the fee agreement, the attorney is then responsible for preparing the estate orders, associated pleadings or petitions and other necessary paperwork for the court. These documents must be signed by the client before they can be sent to the court.
Once the files are gathered and signed by the client, the probate attorney submits the paperwork to the court in the estate’s corresponding county. The court judge reviews the documents and if everything is in order, signs off on the final orders. The probate attorney follows up by obtaining certified copies of the file and submitting it to official public record books, along with any applicable third parties.
In some cases, a public notice may be required. The probate attorney usually takes on the responsibility of finding the cheapest eligible publication and submitting the notice. If there are creditors owed by the estate, the attorney often contacts the creditors after he has published the notice. Dealing with creditors is a second detailed process within the lengthy probate process. The probate attorney may handle the claim validations and client consultations to discuss objecting, paying or settling the resounding debt with the creditors. Probate attorneys may work with clients to remove claims from a case entirely.
Depending on the circumstances of each case, the probate process can take as little as three months to complete. The process can also be extended to last longer than a full calendar year. Gathering the necessary documentation is one of the key components that results in a lengthy probate process. Technically, the documents that are needed to legally close a probate estate are not due for an entire year following the court’s issuance of the Letters of Administration to the personal representative. However, this deadline can be extended in most situations. According to the Florida Bar, it is most reasonable to assume that the average probate process for a normal estate will last between five and six months.