Probate has a reputation for being costly and for taking forever – up to two years in some cases. It’s a public proceeding, and all documents are filed with the court, so anyone and everyone can find out what you owned and what you left to others when your will is probated. You can help your loved ones avoid this process with a little planning, but laws vary from state to state. Avoiding probate in Florida comes down to what is and is not permissible here.
Set Up a Revocable Living Trust
Establishing a living trust is a pretty common way of avoiding probate in most states, including Florida. Once the trust is set up, you can move ownership of your property into the name of the trust. That way, you retain control of that property by acting as trustee if you create a revocable trust, moving property in and out as necessary, changing beneficiaries or even dissolving the trust if you decide the whole concept isn’t working for you any longer.
Your property will pass to the beneficiaries you named in your trust documents when you die without the necessity of probate. Your trust technically owns the property and since the trust didn't die, it can legally transfer your gifts to others without court involvement. This isn’t to say that your estate isn’t still responsible for paying your debts, however. Florida law requires that your successor trustee – the individual you name to take over management of your trust at your death – must file a Notice of Trust in the county where you lived at the time of your death. This notice alerts your creditors so they can make claims for payment from the trust’s cash and assets. And this is where trusts have one shortcoming: The Florida probate process allows just three months for creditors to make claims, whereas creditors can make claims against a trust for up to two years.
Read More: Can an Heir Sell Property When the Title Is in a Revocable Living Trust?
Joint Ownership of Property
Joint ownership of property also avoids probate in Florida. If you and another individual hold title as joint tenants with rights of survivorship, the property will transfer directly and automatically to the other owner on the asset's title when one owner dies. The risk in doing this is that it makes the property vulnerable to the other person’s creditors during your lifetime. You’re also making a gift, so you might incur a gift tax – the donor pays this tax, not the recipient. And in the case of real property, you could potentially lose your Florida homestead exemption so check with a local lawyer before you take this route.
The situation changes if the co-owner on your property is your spouse. Florida law recognizes spouses as tenants by the entirety, and creditor claims can only be made against the property when spouses jointly owe a debt. Holding title to property in this way also carries rights of survivorship, so the asset would avoid probate. The property will also pass directly to your spouse via rights of survivorship if it qualifies as your protected homestead under Florida law.
Some assets allow you to name the person who you want to receive them at your death by contract. You do this by designating beneficiaries. These include retirement accounts, pensions, life insurance policies and annuities. As with joint deeds, these assets move directly to your named beneficiary at the time of your death so they do not require probate. Just be sure to name contingent or backup beneficiaries to each of these assets. Otherwise the account would be payable to your estate and would therefore have to be probated if your initial beneficiary predeceases you.
Transfer-on-Death Deed in Florida
The Florida transfer-on-death statute allows you to create a transfer-on-death deed in Florida to avoid probate of a particular asset or property. Assets such as securities can carry these TOD or POD registrations, automatically moving the account into another person’s ownership at the time of your death. Florida law allows these registrations for stocks, bonds and brokerage accounts. The benefit here is that the other individual does not become an owner until your death, so the asset is not vulnerable to his creditors and it’s not a lifetime gift that can incur a gift tax.
The same applies to “in trust for” and “payable on death” designations on bank and other financial accounts. These are most commonly used on savings, checking accounts and certificates of deposit. Your beneficiary has no legal access to the money while you’re alive – it transfers to him directly without probate at the time of your death. While joint ownership of a car in Florida is permitted – two or more people can own the same vehicle – cars can’t carry TOD or POD designations under Florida law.
Another Probate Option – Simplified Administration
Your estate will qualify for Summary Administration in Florida if the total net value of all your other assets is less than a certain amount. Yes, it’s still probate, but it’s very simplified. It doesn’t take as long – maybe as little as a week, although a couple of months is more common – and it’s not as expensive. And, Florida is pretty generous with its value cap on property. Your estate will qualify if the total value of your property that requires probate is less than $75,000.
- Keep accurate, clear records including time, date and name of person contacted. If your plans are contested, an orderly mind impresses the court.
- Key in an in case of emergency, or ICE, number on your cell phone to reach the person you would want notified if anything happens to you.
- Florida safety deposit boxes are still not sealed as of 2010. This could change; stay current with the law.
- Do not name your estate as beneficiary. This will automatically put assets at risk from creditors.
- Be wary of joint tenancy. Splits happen with spouses, children or caregivers and you could find yourself in court fighting charges of incompetency.
- Probate courts can still reach you. If a creditor wants to collect, or one or more heirs want to contest the distribution of assets, they can open the case as long as it is within the two year limitation period.
- If you are trying to reduce your estate to qualify for any government programs such as Medicaid or Section 8 housing, be aware the changes in timing. Assets transferred within two years were once at risk. Beginning in 2007, the time frame was increased to five years under the Florida Deficit Reduction Act.
Beverly Bird is a practicing paralegal who has been writing professionally on legal subjects for over 30 years. She specializes in family law and estate law and has mediated family custody issues.