Estate Administration

While every state varies on how they handle taxes during the probate process, Florida has no estate tax, or death tax, on the state level and no inheritance tax for beneficiaries. For Florida estates, the only tax concern is potential federal estate tax liability, as well as potential capital gains exposure. The federal estate tax only comes into play for an individual who dies having an estate with assets valued over $11.18 million. An estate worth more than $11.18 million has a potential estate tax liability and will be required to file a 706 estate tax return.

It is advisable that the personal representative, aka executor, of the estate set aside a sufficient reserve of assets to cover potential taxes. If you are not sure whether your estate will be impacted by taxes or not, consider reaching out to an experienced probate attorney that can guide you through the process and advise you in the best plan for transferring your assets to your loved ones after death.

The estate tax is a tax levied on certain assets left to your beneficiaries after death. The estate tax, sometimes referred to as a death tax, is imposed on the federal level and can also be applied on the state level, depending on the state in which the decedent was domiciled at the time of death. The current estate tax exemption on the federal level is rather large, amounting to $11.18 million per individual, or $22.8 million for married couples. As long as you have less than $11.18 million at the time of death, your estate will not be subject to any federal estate tax. Florida is such a popular choice for retirees and senior citizens, in part because the state has no state level death tax, nor any income tax, unlike many states in the northeast, which are known for taxing quite heavily.

The closing of the estate signifies the end of the probate process and involves the discharge of the personal representative, aka executor. It is prudent to always obtain an order of discharge in order to cut off any potential liability associated with the personal representative or the attorney on record for the estate. Every county has slightly different procedures or requirements for closing an estate.

The final pleadings involved in closing an estate will be a petition for discharge, a final accounting and a statement regarding creditors. The final accounting will identify any assets coming into the estate, any and all expenses associated with the administration, as well as any increase and decrease in the value of assets. The final accounting will be served via formal notice on all residual beneficiaries, unless the beneficiaries execute a waiver and consent to the discharge of the personal representative, specifically waiving the right to receive a final accounting. In the event there are unpaid creditors of the estate, the final accounting will also be served on those creditors, often informing them that the estate is insolvent.

The petition for discharge will typically include a proposed plan of distribution of estate assets according to the provisions of the Last Will and Testament, or intestate statutes. In order to expedite the closing process, most estate beneficiaries receive some type of informal accounting of what assets are left in the estate after the payment of administrative expenses, such as attorney’s fees, and will execute a full waiver to consenting to closing the estate. The waivers are very common, since they allow the beneficiaries to receive their inheritance without further delay.

To start, let’s understand what the probate process entails. Probate, or probate administration, is the process of retitling assets held in the sole name of the decedent, into the names of the appropriate beneficiaries, or alternatively the process of having the probate assets sold and the proceeds distributed among the appropriate beneficiaries. Probate occurs whenever there are assets held in the sole name of the decedent and those assets have no joint owners or designated beneficiaries. One common misconception is that probate will be required whether the decedent left a Will, or died without a Will.

The probate process can unfortunately be time consuming and expensive. In Florida, all formal probate administrations must include a 90-day creditor period in which potential creditors can file claims against the estate. Due to this requirement formal probates at a minimum will remain open for approximately 4 months, but on average most probates will stay open anywhere from 7-9 months. Probate assets should never be distributed before the creditor period has expired and all creditor claims have been dealt with appropriately. All litigation against the estate should also be settled prior to any distributions. The procedure for closing the estate involves the creation of an inventory and a final accounting, which documents all administrative expenses accumulated via the probate process. The final accounting must be served on all beneficiaries via formal notice and each interested party will have 30 days to contest the accounting. If the beneficiaries are interested in expediting receipt of their share, they can each sign a waiver of the final accounting, consenting to the discharge of the personal representative.

The simple answer is that there will need to be a separate probate proceeding in each state in which the decedent owned real property, aka real estate. If the real estate was owned in the sole name of the decedent, only the appropriate court in each state can authorize the distribution or sale of real property owned by a decedent in that particular state.

Upon the death of the decedent, the proper procedure is to first initiate the domiciliary probate in the state in which the decedent was domiciled at the time of death. Often the last known address listed on the death certificate is utilized to determine which state is the appropriate venue for the domiciliary proceedings. A petition for probate will be filed in the county of last residence. The domiciliary probate will control all real property located in that state, as well as all tangible and non-tangible personal property located anywhere in the United States. The vast majority of estate property is generally controlled by the domiciliary probate, including most liquid assets such as bank and brokerage accounts.

Any real property, aka real estate, owned in a state other than the domiciliary state, will require a second probate initiated in that other state, referred to as an “ancillary probate proceeding.” The ancillary proceedings should always start after the domiciliary probate is underway, since exemplified or certified copies of the domiciliary proceedings will be filed in the ancillary states. In order to obtain clear title to potentially sell the real estate while in the name of the estate, or at some future time, a title company will require that the necessary probate proceedings be conducted to document proper chain of title. It is not uncommon for families to avoid the probate process for many years after the death of a family member, choosing to instead live in the home without removing the decedent’s name from the house. The family is then forced to conduct a probate many years down the road when it comes time to sell the piece of real estate. Waiting extended periods of time to initiate the probate process can create significant problems, chief among them is the possibility that beneficiaries will also pass away, which can create a situation in which multiple probates must be conducted simultaneously in order to clear title.

Estate planning involves making an all-encompassing plan that provides for the transfer of specific assets that you own following your death, and occasionally before death. Transferring assets can be accomplished by numerous mechanisms including beneficiary designations, joint ownerships, wills and/or trusts (both revocable and irrevocable).

Having a competent personal representative, aka executor, nominated in your estate planning documents will go a long way to ensuring your wishes are honored as far as the distributions of your estate are concerned. However, not just anyone can be appointed as a personal representative by the probate court. There are a few rules that must be adhered to, and it is important to know all of the fundamental elements of the probate process to fully understand who should and can be appointed as a personal representative, aka executor.

In order to be appointed the nominated party must be:

1.) Over the age of 18 2.) Non felon (must not have any felony convictions) 3.) Must be a Florida resident, or if a non-resident he or she must be a family member of the decedent.

It is important to note that the specific limitations as to who may be appointed as personal representative are in place to help ensure that a responsible party will be put in charge of the estate’s finances and will treat all interested parties fairly.

Typically, the nominated personal representative, aka executor, is someone close to the decedent, generally a family member or relative that is also a beneficiary of the estate. In Florida, the executor will owe a fiduciary duty to the estate and should be someone that can live up to this duty. Sometimes more than one person will serve jointly in the role of co-personal representatives.

When a person, agrees to be appointed as the personal representative of a particular estate, they will be required to execute an Oath of Personal Representative in which they swear to follow all applicable laws in order to administer the estate. If the personal representative breaches his fiduciary duty to creditors, or to beneficiaries, the personal representative can be sued on behalf of the estate in order to address the grievance. In extreme situations, the personal representative can even be held personally liable for damages to the estate. For example, if the personal representative collects $1,000,000 of estate assets into a bank account in the name of the estate, and then flees the country with all of that money, the beneficiaries can sue the personal representative and that person will be personally liable for up to $1,000,000, which should have come into the estate.

A personal representative should also execute an Affidavit of No Felony Convictions. If it is discovered that the personal representative does in fact have a felony record, such information should be presented to the probate court and the judge will remove the acting personal representative.

Planning for end of life is often an uncomfortable subject to address. Establishing your estate plan and confirming how assets are to be divided and distributed amongst various parties can be a tedious task. Selecting the correct person to be in charge of your estate is pivotal, since that person will be responsible for initiating the probate process and enforcing the provisions of the Will. Probate administration is simply the legal process for retitling assets that belonged to the decedent into the names of the correct beneficiaries. The personal representative, aka executor, will be appointed by the probate court to begin the process of administering the estate, which entails identifying and collecting the estate assets, creating an inventory, initiating the creditor period, and eventually making distributions. The role of the personal representative comes with a great deal of power and discretion to act on behalf of the estate, but also a large amount of responsibility. First and foremost, a personal representative is there to protect and secure, as well as accumulate all of the probate assets. Probate assets are only those items which are titled in the sole name of the decedent, without a joint owner or a designated beneficiary. Second, the personal representative will initiate the 90-day creditor period in which potential creditors can file claims in the estate for money that is owed to them by the decedent. The personal representative will review each claim to confirm the legitimacy of any and all creditor claims that materialize during the probate process. The personal representative is not personally liable for the debts, but instead he or she is responsible for utilizing the decedent’s assets to pay the debts, as required by Florida Statute or court order. Lastly, the executor is there to ensure that the final distribution of the assets is accomplished as stipulated in the decedent’s Last Will and Testament. Being empowered to collect assets, pay administrative expenses and eventually responsible for making distributions, puts the executor in an extremely influential position. As such, a person looking to name a personal representative in their estate planning documents, must look for someone reliable and trustworthy to serve in the role. Ideally, you want someone who is familiar with the beneficiaries of the estate and who will treat all interested parties fairly. You also want someone who is capable of expeditiously moving forward with the administration, since unnecessary delays will only increase the likelihood of disputes, as well as increase costs of the probate proceeding. If you don’t have a family member, or close friend, that fits the bill, you should consider appointing a professional personal representative, such as an attorney from the Florida Probate Law Firm.

No, you do not need the original Last Will and Testament in order to start the probate process. It is always recommended that you file the original Will if you can find it, but you can start the probate process with a copy of the Will or with no Will at all. If you cannot locate a copy of the original Will, it is a good idea to speak with an experienced Florida probate attorney. The best places to locate a Will are the following:

1.) In the decedent’s home

2.) In the decedent’s safe deposit box

3.) Originals or copies held with the decedent’s estate planning attorney

The personal representative will be responsible for filing the final individual income tax return (Form 1040) for the person who passed away, as well as any necessary estate income tax return (Form 1041). Estate income tax returns are only required if estate assets generate more than $600 of income annually.

In Florida, there’s no state-level death tax or inheritance tax, but there is still a federal estate tax requirement, so if an estate is valued at more than $11 million, there is a potential federal estate tax bill, and then a return would have to be filed (Form 706). The number of estates that require a Form 706 to be completed is minuscule. For any probate tax matter, it is important to work with an experienced Florida probate attorney and accountant.

Florida allows a process called “disposition of personal property without administration” for any estate’s with probate assets that are valued at less than the reasonable funeral expenses and medical bills for the last 60 days. It is a process mainly intended to allow a person who has paid for the decedent’s final expenses to be reimbursed through the assets of a decedent’s estate.

Unlike many northern states, Florida does not have a “Small Estate Affidavit or Application”. Instead, Florida allows “summary administrations” for estates with assets less than $75,000 which do not qualify for disposition without administration. Summary administrations are only a good option in a narrow set of circumstances, often when there is only one asset which is being transferred to a single beneficiary. One of the major drawbacks of the summary administration process is that an executor, or personal representative, will not be appointed, so there is no fiduciary who can sign off on paperwork or file claims on behalf of the estate.

Formal probate administration is the typical and recommended route for most estates. During a formal probate administration, a personal representative (PR) is appointed by the court. The personal representative will be empowered to collect probate assets, as well as financial records and medical records on behalf of the decedent. A 90-day creditor period is required during a formal probate administration, but once the creditor period has expired most, if not all, claims will be barred. A formal probate provides the greatest flexibility for the surviving family members or beneficiaries.

In Florida, it is unusual for a Last Will and Testament to be deposited with the court prior to death. Most original Wills are held by the decedent among their personal belongings, so the first place to search for a Will should be inside the decedent’s home, or possibly in a safe deposit box owned by the decedent. You should also contact any estate planning attorney the decedent might have had during life in order to request a copy of the Will. Once the abovementioned routes have been exhausted you can search the probate court docket for the decedent’s name in order to determine if someone deposited a Will, or if anyone initiated a probate. The correct court to contact is the probate court located in the county of the decedent’s last residence. Most counties in Florida have probate court records available online.

Assuming there is no Last Will and Testament on the public record, many families would choose to move forward with an intestate probate administration. If you are certain there is a Will and/or Revocable Trust but the interested parties will not provide you with a copy, you can consult an attorney regarding petitioning the probate court to force production of the document. Keep in mind, you must be an interested party to make such a request. If you are not named in the Last Will and Testament as a beneficiary, you are generally not entitled to a copy simply because you make a request.

A Will has no expiration date, and upon the decedent’s death, the document becomes binding and it then has the power to direct the disposition of probate assets. At the top of most Wills, there is a sentence which states “I revoke all previously executed Wills.” This language establishes that the most recently executed version of the Will is meant to control the distribution of the estate. Any assets in the decedent’s sole name will now be subject to that provisions of the Will. It’s important to remember that a Will is valid during the life of the testator but has no power until death. A potential beneficiary or family member cannot contest a Will prior to the death of the testator, since their beneficial interest has not vested. The testator maintains the ability to change his/her Will and estate planning documents up until the time of death.

When someone dies and they leave a valid Last Will and Testament which is submitted to the probate court, the estate is referred to an “testate.” When someone dies and they have no Will or estate planning documents, the estate will pass “intestate.” Each state has their own intestate statutes, which dictate how a decedent’s assets will be distributed upon their death. You can think of intestate as the default, or fall back, rules which dictate how assets will be distributed to family members when there is no Will. Intestate statutes often give preference to the surviving spouse and any living children.

Some people are surprised to learn that there is no centralized depository where wills are required to be filed before someone’s death for safekeeping, unlike in some other states. In Florida, after someone passes away, it is the family’s responsibility to file the original last will with the relevant probate court, which will be the circuit court located in the county of last residence associated with the decedent. For example, if you pass away and your home is located in Boca Raton, someone will have to find your last will and testament and file the document with the Palm Beach County probate court. Once the will has been filed, it automatically becomes a public record and can be viewed by anyone at the local courthouse, or a copy can be purchased from the clerk’s office and mailed to a designated party.

If you are a named beneficiary in a will, you have the statutory right to request and review a copy of the document, but only after the death of the decedent. You should submit your request in writing to the attorney who drafted the estate planning for the decedent, to the nominate executor of the estate, or to the attorney on record for the probate administration.