Video Summary

What type of assets go through probate?

Assets that are titled in the decedent’s name alone are the assets that go through a probate proceeding.  Saying it another way, that if you have – the decedent owns assets, and they have a designated beneficiary, those assets don’t go through probate.

A prime example of that is a life insurance policy where they designate a beneficiary.  Then that is controlled by that contract, and the money is paid the designated beneficiary.  However, if you have a life insurance policy, you designated a beneficiary, the beneficiary dies before you do, well then that life insurance proceeds would be probated and follow your estate, your will or be probated and go to your designated beneficiaries.

Another example of assets that may be in the decedent’s name that don’t go through probate is if you set up a savings account that says it’s payable on death, or in trust for and you designate to whom you would want that bank account to go to.  And even though the asset is in your name alone at your death, you by contract have designated who would receive the asset.

Also they have a similar designation, as far as a brokerage account.  That’s called a TOD account, that’s transfer on death.  So if you would designate someone to receive it upon your death, then it would not go through probate.  However, if you have a brokerage account, savings bonds, any kind of stock that are titled just in the decedent’s name, then those assets would go through probate.

One of the things that I get many questions on is what about the household furniture and furnishings, and crystal, china, silverware, collectables – all of that is untitled personal property.  And I cannot remember, and I don’t believe I’ve ever handled an estate wherein we had probated the untitled personal property assets.  And that usually the beneficiaries will take care of doing that without going through a probate administration.  Also, I just comment on that to my clients whenever we talk about that, that they can prepare a list and designate who they want to receive certain assets or specifically designate that; but the big question is, is the asset there whenever, you know, the decedent passes away, did they give it away beforehand, or did someone come in, another family member come in and remove it before you arrived and you knew you were supposed to get that.  It’s very, very difficult to prove what was there and that you are to be the rightful owner.  I say that this sort of the U-Haul effect, that whoever gets there first with the U-Haul is the winner, and so hopefully you all have a functional family when it comes to untitled personal property that can be distributed amongst the beneficiaries pursuant to the decedent’s wishes, or having it distributed equitably as far as all of the parties involved.  It’s also problematic with untitled personal property, whenever it has sentimental value.

So the assets that have to be probated are whenever you have a titled asset just in the decedent’s name alone.  There are some other exceptions, such as automobiles, that can be transferred without going through a probate proceeding.  So if you have questions about probate, well give me a call at 727-847-2288.

Video Summary

Who is responsible for the debts of a deceased person? The deceased person is – if they signed for a service or a credit card, they’re the ones that have the liability and, therefore, if they have an estate, their estate assets are the ones that would have to be used to pay their creditors. If no one has signed as a co-obligor, or to be responsible along with the deceased person, then there isn’t anyone that has to pay the debts.

So if you have a loved one, or any person who’s passed away, and they have a will and you’re named as a beneficiary or the personal representative, you need not worry about being responsible for their debts. That’s the whole purpose of the probate process, wherein you send out – open up a probate estate proceeding with the Court. You send a notice to the reasonably ascertainable creditors – which you check the mail, and if they sent a bill – sent ’em a bill – and you send them a notice that they’re to file a claim within the probate proceeding, or in the Court proceeding. And so they have three months in which to do that from the date that the first notice is published. So it’s important that you send ’em this notice.

And so then, once the estate is wound up, you put the claims in a category. And there’s priority as to which claims which get paid first out of the estate assets. The first category of claims that gets paid first is the fees of the personal representative and the attorney who are handling the administration of the estate. Next in line is the funeral bills, and the bills of the last illness, and burial. Then we have – you have the federal tax liens – if there’s any taxes that they owe – and then you go on down any number of other categories.

Credit cards and general bills are a Class 8 creditor. So the first money out of the estate, before anything’s paid to the beneficiaries, is paid to the Class 1, 2, 3 creditors, in that order. If there aren’t enough assets to pay all the creditors, the creditors do not get paid, or they get paid pro rata, meaning that they only get a portion of their claim.

The personal representative, or the executor –we now call them personal representatives – has no personal obligation to pay those bills, with the exception of the Internal Revenue Service, which they need to take certain precautions to verify what the tax bill is. But if they do that, they’re not responsible for the new taxes. And so the beneficiaries nor the personal representative has any personal liability whatsoever for a deceased person’s bills or debts.

Now if, however, you – like, say, in the – if you have a spouse that passes away and you’ve signed on the credit card or signed any bills that you’re a responsible party, or agreed to be obligated, well, you have continuing obligation because you signed along with the deceased person to be obligated for that.

But that’s a question I often get asked, is, “Am I responsible for my spouse’s debts when they pass away?” And the answer is no. You’re not, not unless you signed to be responsible. That even includes their hospital bills and any other bills that they have liability for. That is with a big asterisk, there, that says, “unless you signed and said that you would be responsible for them.”

So if you have – if there’s a person who’s passed away and they have lots of bills and have few assets, and you’re the beneficiary, well, don’t hesitate to call me, and I’ll be glad to discuss the probate of the will. There are certain assets which are exempt from the claims of the creditors.

So give me a call at (727) 847-2288.

Video Summary

If I have a will, does my estate have to be probated? Well, the question is not whether or not you have a will or you don’t have a will. The question is: do you have any assets that are titled just in your name that do not designate a beneficiary?

An example of assets that you have that name beneficiaries is, let’s say, a life insurance contract. That’s your asset. You designate a beneficiary, so it’s controlled by the life insurance contract and is payable to whoever you designated as a beneficiary. So that doesn’t have to be probated.

Same thing with IRAs, 401(k)s. They all – you’ve designated a beneficiary to receive the benefits of these, really, trust. An IRA, or a 401(k), or annuities, that’s all controlled by contract, and it says that when you pass away who’s to receive those assets.

Another example of assets that name a beneficiary: if you have a joint account, which is usually the case between husband and wife. They own their bank accounts jointly. They own their real estate jointly. And if they do, when one of the spouses pass away, well, the property automatically passes to the survivor. Any other assets that you own as joint tenants with right of survivorship passes automatically, or pursuant to the contract. You also look at bank accounts. You look at bank accounts that have a “payable on death” or your brokerage account, which is “transfer on death,” and so those assets pass pursuant to your contract with the brokerage house, or whatever financial institution.

However, if you have an asset that’s just in your name, then your estate must be probated. It doesn’t matter whether you have a will or you don’t have a will; that’s what determines whether or not you have a probate proceeding.

So what’s the advantage of having a will? Well, a will says – directs who you wish to receive that asset so that you don’t leave it to the state of Florida and the statutes to say who receives the assets. So you can name who you want to receive your assets under a will, and you can also designate who you wish to be in charge of your estate, which is called an “executor” or a “personal representative.”

So the question is not whether you have a will and it avoids probate, or whether you die without a will. It only matters whether or not you have your – you die with assets that are just in your name and we must have a probate proceeding to determine who the beneficiary of that asset would be. By looking at a will or looking at the Florida statutes, the Florida statute does set forth that if you die without a will, then it passes to all of your heirs, or your children, or, if you have deceased children, to their children or grandchildren. And it goes on to explain who else would receive it if you don’t have any children.

So if you have any questions about an estate proceeding, with or without a will, well, give me a call at (727) 847-2288.

Video Summary

Should a parent place their child on a deed, in order to avoid probate?

I get this question asked me probably once a week, or once every two weeks. And the answer is, I do not recommend that you place a child on your deed. Particularly if it’s the deed to your home, since your home is homestead, and that has particular status. By having the property as your homestead, it’s not considered as an asset, if you need to qualify for Medicaid purposes.

You don’t want to have conveyed that, ’cause there could be some issue of whether or not you transferred the property without full and fair consideration, as far as Medicaid’s concerned. Also, if you add a child’s name to your homestead property, they will not get what they call a step up in basis or an increase in the basis, as far as the property, whenever you pass away. And they may have to pay, and they sell the property, well, then, their basis is what you paid for it, particularly if you owned it for some time.

Also, if you sell the property during your lifetime, and you’ve added a child’s name to it, you can exempt up to $250,000.00 of gain, if you’ve lived in your home two out of the past five years. Whereas, the child who is on there hasn’t lived there, so they may have to pay taxes. So, that’s another reason not to do it.

Also, if it’s your home, and as homestead, if your child would have some kind of credit problems, or domestic problems, they’re half owner of your property. And if Capital One comes and sues them under their credit card, and they get a judgment, it may attach to a half interest in your home. And we wouldn’t want that to be a you be a co-owner with Capital One, as far as your home is concerned. That’s a little bit of a reach, but anyway, they could levy on the child’s one-half interest on the house.

What I’ve found very effectively to use, rather than adding a child to the title to your property, is to execute an enhanced life estate deed. And many people have heard of this as a nicknamed a “ladybird deed,” which basically leaves the property and the person’s name, the parent’s name, during their lifetime. So that they can sell the property, do whatever they want to with the property, and the child doesn’t have to have any interest in the property during their lifetime. And if the parent still owns the property at the time of their death, well, then, it’ll automatically pass to their child, and all the child needs to do is file a death certificate.

So if you would like to avoid probate, and have your property pass to a child, or your children, give me a call at 727-847-2288. Thank you.