Video Summary

How does a lady bird deed help my heirs avoid probate?

Well first let’s define what a lady bird deed is.  That is a name that an author of a treatise gave to a life estate deed.  A life estate deed means that you convey your property to your children or to anyone. However, you reserve to yourself a life estate, meaning that you own the property, or you get to use the property during your lifetime.

Now what is known as a lady bird deed has additional powers besides being able to use the property during your lifetime. Those powers include, which are reserved to you with your life estate is the ability to sell the property without the joinder of these remaindermen.  So that is the definition of a lady bird deed when we’re talking about it.

So how does it avoid any kind of probate when a person passes away?  Well, you signed the deed and you conveyed it to whomever, your children or your heirs and reserved a life estate.  And you have certain rights to convey or transfer the property during your lifetime.  But if you do not sell or convey it during your lifetime upon your death all they need is a death certificate and they will own the property, “they” being whomever you have conveyed the property to.  And the deed, they will own it, and all they need to do is record the death certificate and they will automatically own the property.

So that’s how your heirs will avoid any probate proceeding if you sign a lady bird deed conveying the property to them during your lifetime.

If you would like to discuss this further well give me a call at 727-847-2288.  Thank you.

Video Summary

What is the difference between a formal administration and a summary administration? Well first, both of those are probate proceedings and that’s probably a four-letter word to most folks in that they don’t want to spend any money on lawyers or pay the government any money. A lot of that has been blown out of proportion, I think, over the years by the Reader’s Digest where they say that the government takes half the money and the lawyers take the other half, and it takes them six years to do it. In Florida, that is not the case. First, there are no estate taxes in Florida and furthermore the attorney fees can be negotiated. The statutes suggest that an attorney fee for handling an estate is 3% of the assets that are being probated and that usually has to do with the formal administration.

Formal administration is when you have creditors and you file a notice to creditors send it to the creditor and give them a period of time, which is three months from the date you first sent out a notice of the publication of creditors, and they can file their claims in the estate. So the personal representative will pay the claims and then the administration costs. There are no taxes unless your estate is in excess of $5 million dollars and then they distribute the balance of the money to the beneficiaries.

There is a short form of administration called a summary administration and that’s available when the assets that are subject to probate are less than $75,000 and some provision has been made to pay any creditors or there are no creditors involved. Usually this is done for a flat fee rather than based upon a percentage. If there’s homestead property and it’s passing to the various children or heirs of the decedent, that’s not counted toward the $75,000. Usually those fees are in the neighborhood of about $2,000 or $2,500 in attorney fees for summary administration plus the court costs.

So a formal administration will take probably four to six months and here again the attorney fees will be in the neighborhood of 3% of the assets with certain minimums of about $3,500 plus court costs. So if you need to have an estate probated, give us a call at 727-847-2288 and we’ll be glad to discuss what the fees will be, how long it will take and what assets are subject to administration. The big thing is to do some planning ahead of time to avoid having to worry about probate, so here again, give us a call at 727-847-2288.

Thank you.  

Video Summary

What are the estate taxes for 2013?  Everyone’s heard a lot about the fiscal cliff.  Well, what happened as far as our estate taxes?  They were due to be reduced to $1 million, meaning that if your estate exceeded $1 million, there would be Federal estate taxes.  Well, in the bill that was passed through Congress, they adopted an exclusion for Federal estate taxes of $5 million, which takes care of most of my clients anyway.  And so if you have less than $5 million in assets whenever you pass away, there is no Federal estate tax.

Florida does not have an estate tax.  And in fact, the $5 million has been adjusted for inflation, so for the year 2013, you can have up to $5.25 million and have no estate taxes.  It even gets better than that if you’re married and you leave all your assets to your spouse.  When your spouse passes away, the two of you can leave to your children or whomever you would like up to $10.5 million.  That’s called portability, meaning that the unused portion of the estate tax exemption that you did not use, that portion of the $5.25 million, can be transferred to your surviving spouse so that that can be applied to the assets which they leave behind for your children or whoever they leave them to.

So what does this mean to you?  If you already have a trust, you need to call and make an appointment and come in and see about us revising your trust because more than likely, it has a provision in there that you provide that  your assets are to be held in an irrevocable trust upon your death for your spouse.  That was in an effort to avoid estate taxes when it was less than the present dollar amount.  And you probably want  your spouse to have the use of all those funds and discretion, which they will not have under your current trust provision.

So I urge you to set up an appointment to review your trust documents.  So give me a call at (727) 847-2288 and I’ll be glad to check with you about the taxes and also set you up an appointment to review your trust.

Video Summary

How long does probate take?  Well it doesn’t take six years and the lawyers don’t wind up taking 80 percent of the money and the government taking the other 20 percent, so the beneficiaries get nothing.

The usual time period or, in fact, the judges require probate administrations be closed out in a one-year period or the lawyer who is handling the estate needs to give an explanation to the court as to why the estate is still open after one year.

There is a short form of probate called a summary administration that can be used and a probate administration can be concluded in approximately 30 to 45 days or even sooner than that.  That’s if you have assets of less than $75,000 which would exclude the homestead property and that there’s no creditors.  Then you can file for a summary administration and have the assets passed to the heirs.

If you have creditors or other problems, different assets, multiple beneficiaries and have to open up a formal administration with assets in excess of $75,000 or any number of creditors that’s called a formal administration and in a formal administration you have to run a notice of creditors, and that creditors period runs for three months from the date the first publication in the newspaper is published, and so the estates usually will be open from four to six months.

Now a lot depends on the beneficiaries.  If the beneficiaries want to fuss about this and start being hard to get along with or they don’t agree, i.e. a non-functional family and want to fight about it, well, all bets are off as far as how long it’s gonna take to resolve the estate.

One of the other things that’ll keep an estate open is this real estate market and trying to liquidate real estate, and that’s another problem, or dealing with various assets, or even recovering all the assets also takes some time.

So there’s any number of factors that go into the time period in order to probate an administration, probate an estate, so but the rule of thumb is if you have a formal administration you’re probably looking four to six months.  If it’s a relatively simple estate it should be closed out in a year.

If the parties want to fuss and sputter about it well then you’re looking at spending a lot of money and the lawyers will take all the money while the parties want to fight over furniture and pots and pans or – and so it’s not good when we fight.  So if you have a functional family it should be wrapped up and board at 12 months.  If you have a question about probate please give me a call at (727) 847-2288, thank you.

Video Summary

What steps can I take to avoid probate?  Well, the quick answers for a lot of lawyers to offer to this is to set up a trust.  However, I have a little brochure that I pass out that’s called Simplified Estate Planning without the Necessity of a Trust in Order to Avoid Probate.

So you first have to look at the nature of your assets.  For example, if you have a life insurance policy it needs a beneficiary so that doesn’t go through probate ‘cause it’s controlled by the terms of the life insurance policy.

That’s the same that’s true about individual Retirement Accounts or IRAs.  You have a designated beneficiary so you don’t have a probate proceeding as far as IRAs, and that can also be said for annuities because the annuity contract will designate who’s to receive the death benefit or the benefits after the initial annuitant passes away.

When we turn to bank accounts, I suggest that you keep the bank accounts in your individual names and designate a payable on death for whomever you would like to receive it upon your death.

So the other designation is In Trust For or ITF account.  If you put someone on account as a co-owner, so if you’re by yourself and you put your son or daughter on the account with you, they become a half owner of the account and it could be subject to the claims of their creditors if they get in financial problems or domestic problems, being considered an asset in a divorce proceeding.  So I suggest that you simply designate a POD account or an ITF account for the benefit of that child or whoever you’d like to receive it and that will avoid probate.

One of the big sticking points is what do I do about real estate, particularly your home.  Well, what I have been doing is to prepare what they call a Life Estate Deed, whereby you convey your property to your child or children or whomever you would like to have it upon your death.  However you reserve all rights on the property during your lifetime.  You’ve reserved the right to sell the property and retain the assets.  Sometimes this is called a Ladybird Deed, and this again avoids probate.

And if you want your assets to be spread out over a period of time, let’s say you need a Special Needs Trust or a Spendthrift Trust for a child or a loved one that you want to care for, then certainly a trust is another way of doing it, although there may be a trust administration involved.

So those are some of the examples of how to avoid probate, is how you title your assets.  So if you’re interested in doing that give me a call at 727-847-2288.  Thank you.