Good morning, everyone. Welcome to our February installment of Lunch with a Lawyer. My name is Jaleh Piran-Vesseh and I am an attorney here at the Law Firm of Waller & Mitchell. We are located in downtown New Port Richey, near the intersection of Main Street and US 19. Every month, we like to provide our clients and prospective clients, friends, and family, with a little bit of information regarding what types of services our firm offers. We have our Lunch with a Lawyer each month, once a month, which is generally on the second Tuesday of every month, but this month, we do apologize, we are a little tardy. We are doing our Lunch with a Lawyer today, on Friday. We appreciate you joining in. We appreciate you watching and liking our Facebook page, as well as sharing our Facebook page with your friends and your family.
A little bit more about myself, again, as I stated, my name is Jaleh Piran-Vesseh. I am an attorney here at Waller & Mitchell. My practice is primarily elder law as well as real estate law. Elder law does encompass quite a few things, including estate planning, guardianship, medicaid planning for skilled nursing care, probate administration, as well as trust administration, so a little bit about myself. Our other partner here at Waller & Mitchell, Roland Chip Waller, unfortunately, he’s not here with us today. He is at a conference for the Real Property Probate and Trust Law section of the Florida bar, which is currently being held in Arizona, so I’m sure he’s staying nice and warm there in Arizona, as we are here in Florida.
A little bit about our topic today … So the topic I’m going to discuss today is, how can I successfully avoid a probate of my estate. That is a very, very common question that I am asked pretty much on a daily basis by clients and prospective clients, even family and friends. I wanted to share with our audience here today a couple different ways in which we can successfully avoid probate in its entirety for your estate. I’m going to go through a couple of the options, and then if you guys have any questions, please go ahead and feel free to write on our Facebook page or to write a question on the live stream and I will do my very best to answer your question.
The first component that we have to talk about when we’re talking about successfully avoiding a probate would be how your assets are titled. That’s really going to be [desposit 00:02:42] of that question. First and foremost, we will talk about a very general type of asset and that would be a bank account. Your bank account, typically, let’s say, we’ll use the situation that you are an individual person. We’ll use Jane Doe. Your name is Jane Doe and you have a checking account at XYZ Bank. Jane Doe singly owns this account. Now, in that sort of a situation, if you do not put either a payable on death beneficiary designation on that account, or a transfer on death designation on that account, in the event that you pass away, you’re Jane Doe, your heirs will have to file a probate proceeding in order to transfer title of the assets contained within that account to your beneficiaries names.
How are your beneficiaries determined? Well, really there’s two ways that a beneficiary would be determined. The first way that it would be determined would be pursuant to your last will and testament, who you’ve named in your will to receive certain assets. The other way would be in the event that you die, what’s considered intestate, and you don’t actually have a last will and testament. In that sort of a situation, your heirs or your beneficiaries are going to be determined pursuant to Florida statute. Generally speaking, the way that that works is it’s going to go based upon blood relation or based upon marriage or adoption. I won’t get into the specifics of how that’s determined but essentially, that is determined by virtue of Florida statute. That would be the way that your beneficiaries would have to go about getting, if there was money in that account, getting basically that money. That’s one way that we want to consider as far as assets are titled, so your bank account.
Let’s use that same example and let’s say it’s a joint account. Let’s say Jane Doe owns this account but she owns the account with her husband, John Doe. That account is a joint account. In that sort of a situation, if Jane Doe predeceased her husband, John Doe, John Doe would not have to file a probate proceeding because by operation of law, he would be the surviving owner of that account. Even though Jane had an interest in that account, her interest would pass at death and her entire percentage of the account would go directly by operation of law to her husband who survived her. In that sort of a situation, you’re not going to need a probate, with respect to that asset.
Another thing that you want to consider, with respect to avoiding probate, same sort of idea in mind, would be any other assets that you have. Let’s go kind of down the list of assets. We have life insurance. If you have a life insurance policy, you want to ensure that you’ve named a beneficiary on your life insurance policy. That asset, again, would not be subject to a probate proceeding, as long as it has a beneficiary designation. It’s very, very important and I counsel people quite frequently on ensuring that you not only have a primary beneficiary person that you name on your life insurance policy, but that you also have a contingent beneficiary. There are many times in life where people purchase policies and they don’t change the policy for 20, 30 years. In that sort of a situation, in the event that your primary beneficiary predeceases you but you’ve not named a contingent beneficiary, that asset, although it did have the beneficiary designation, would need to be probated. That’s something that you definitely want to think about.
Another type of asset that we’re going to talk about here would be stocks or stock certificates. Certain stock companies will allow you to have a transfer on death designation for your stocks. That’s something that you definitely want to explore with respect to your stocks to see if your company allows that sort of a designation, which most of them do. In that situation, again, your stock would not need to be probated once you passed away because that would transfer by operation of law once the stock company received your death certificate to whoever you’ve named as the transfer on death beneficiary.
Something else to consider when we’re talking about titling assets to avoid probate would be joint accounts. I do want to go back to that. A lot of times I have clients who insist on putting their children on joint accounts or generally, it’s one child. Let’s say you had the same example of Jane Doe and she wants to put her daughter, Jessica Doe, on her bank account because she wants to make sure that Jessica has access to her money and that, more than anything, if she passes away that Jessica won’t have to go through probate in order to receive those funds. That gets little bit complex. The reason that that gets complex is, what if this specific woman, Jane Doe, what if she has a will and what if she has more children? What if those children, she wants to share equally in her estate?
The main problem with having a joint account with one child and not including the other children on the account, but wanting to provide for the other children in your estate plan would be, that again, as I’ve stated, by operation of law when you, Jane Doe, would pass away, that account would transfer just to Jessica Doe. So, her other two children that she may have wanted to provide for, and she maybe did provide for in her last will and testament, would not be covered because that asset is not going to be subject to probate. There are so issues there. That is really determined on a case by case basis, depending on your specific familial situation. That’s something that you want to consider, though, when putting a child, specifically, one child on a joint account.
Another thing that we want to talk about is real property. Is there a way that we can transfer real property or to prevent real property from having to be probated once someone passes away? Well, absolutely, there is. The first example I want to use with real property is a husband and wife situation. There are many, many times where you potentially have a partner that has a piece of real property that they’ve purchased prior to the marriage. In that situation, you may have just the husband’s name or just the wife’s name on the actual deed and it’s going to reflect that at that time when they purchased it, that they were an unmarried person. That person gets married. They’re living happily ever after in the home with their spouse and let’s say out of nowhere an accident occurs and that person passes away. A lot of times, the wife, let’s say the husband owned the property in that situation, the wife will assume that she owns the property now because they were married, so she can do what she pleases with the property.
Unfortunately, that’s not the case. In that sort of a situation, a probate proceeding would need to be filed in order to transfer title. There are a whole other host of questions there with respect to what exact interest the wife would have in the property. Would she have 100% interest in the property for the foreseeable future, for forever, to do what she pleases with it. That’s unfortunately, not a question that I can answer here today in our Lunch with a Lawyer segment, only due to the fact that it depends. It depends on whether or not they have minor children in common, whether or not the husband had children from a previous relationship, so there are a lot of components there with respect to that question. The most important thing that I would recommend would be that you come see an attorney such as myself, if that’s your situation so you can ensure that your spouse has the proper interest in the property based upon your situation. Do we have a question, Josh?
Josh: Yes, we have two that have come in.
Josh: The first one, if you have a will, do you still need the payable on death beneficiaries named on the account?
Jaleh: The question that we have coming in is that if you have a last will and testament, do you still need to have the payable on death beneficiary designations on your accounts? To answer that, absolutely, because the will is only going to govern what needs to be probated. If you, hypothetically, put, you know, let’s say you have three children, and you put all three children or your husband, it’s a single account, and you put your husband as the payable on death, that person or those people that you’ve put as the payable on death beneficiaries will receive that asset. If there does need to be a probate, let’s say that there are other assets that person has that they are holding solely in their name, and a probate does still need to be filed, that specific account that has that payable on death designation is not going to be subject to the probate proceeding and will not be included in the probate proceeding. I highly recommend that you make sure that your designations on your payable on death and transfer on death accounts are in accordance with what you want in your estate plan. That’s really important to consider. Did we have another question there, Josh?
Josh: Yes. Second question is, can a guardianship case be settled between the parties if the defendant is accused of stealing money from the ward?
Jaleh: Okay, so we have a little bit of a complex when it kind of goes beyond the [inaudible 00:11:56] of our conversation here today on probate so my understanding based on the question, Josh, is can a guardianship be settled and could you repeat the rest for me?
Josh: Can a guardianship case be settle between the parties if the defendant is accused of stealing money from the ward?
Jaleh: So, necessarily, the answer is going to be no, because in a guardianship proceeding, that is subject to court monitoring. That’s the best way that I can put it so the court essentially is going to be … The judge is going to be the final determiner as far as what can be settled in a guardianship. Now, the parties can come to a settlement agreement, in fact, if the guardian has misappropriated funds belonging to the ward but the court is still going to have to approve, essentially, whatever settlement agreement that the guardian and the guardian’s attorney … In that situation, let’s say the ward has independent counsel, which more than likely would be the case in that sort of a situation, if they come to an agreement, then again that’s still going to be subject to the courts’ oversight and to the courts’ approval. That’s definitely something you want to consider but I will make sure in our next Lunch with a Lawyer topic that we delve further into guardianship law and the interplay between the courts’ role in guardianship law and the guardian’s role as well as the guardian’s role with respect to the ward. Did we have any other questions, Josh? Or were those our only two questions at this time?
Josh: Only two at this time.
Jaleh: Okay. I will continue talking about probate and the interplay with real property in probate. We’ve talked about the husband and wife situation. Another thing that I want to discuss is joint ownership of property. Let’s say it’s not the husband and wife context. Let’s say two sisters … I have a sister myself. Her name is Laurie. Let’s say Laurie and I owned a piece of real property together. If we own the property just as Jaleh and Laurie, in that sort of a situation, and let’s say there’s no other designation, just our names, then in that situation, if I pass away prior to my sister, then my family is going to have to probate my 50% interest in that property. That is not going to transfer by operation of law to my sister. A lot of times people say, Well, that’s not what we intended. We purchased the property together. We’re holding it together, even if, let’s say, we’re renting it out, you know, we’re splitting the rent proceeds. We want, if one of us passes away, the other person to retain 100% ownership interest of the property and we want that person to not have to go through a probate proceeding and the time and costs involved, in order to transfer that half interest.
In that sort of a situation, what you would need is you would need a deed that specifically says that the property is being held by these two people, so Jaleh and Laurie, as joint tenants with full rights of survivorship. That’s the only way that the deed can be titled to prevent a probate of the person who, more than likely, people will not simultaneously pass, one will pass before the other, so that’s the only way to prevent a probate of that half interest of the person who predeceases the other person’s estate. We always recommend to people when we do deeds because our practice here is very heavily involved in real estate, both transactional and litigation, we do recommend to people, that in the event that they do want to avoid probate for that half interest, and they want to hold title that way, we do need to confirm that the deed is titled as joint tenants with full rights of survivorship because that will prevent a probate proceeding with respect to that real property, so that’s something to consider.
Another way to avoid a probate of real property, and we’ve talked about this before on our prior segments of Lunch with a Lawyer, is to do what’s called an enhanced life estate deed, also known as a lady bird deed. A lady bird deed will prevent the necessity of a probate of the estate, and essentially what that does is that retains for the grantor, so the person wanting to give the property, not give the property, but only give the property once they pass away to someone else. That will allow them to do that and to retain that interest for their lifetime, so they can do what they want with the property while they’re alive.
They can deed it, they can convey it, they can mortgage it, they can sell it. They can do whatever they want with it during their lifetime but if they’ve done none of those things, then that does provide that when they pass away, the person that they’ve left the property to will retain that property, what’s called in fee simple basically, in perpetuity forever. What you would need to do in that situation is you do the deed during your lifetime, you record the deed, and then once you pass away, someone would need to record your death certificate in public records in the county in which the property is located to effectively transfer title. That’s all that would need to happen. You would not need to do a probate to transfer title to that real property. Did we have any other questions, Josh?
Josh: Yes. Can you title a deed the way you mentioned if there is a mortgage on the property?
Jaleh: Absolutely. You can absolutely retitle your deed if there’s a mortgage on the property. The only thing that you have to take into consideration is if there is a mortgage on the property and you’re going to convey a present interest, not in the lady bird deed context, but only in the context of conveying a present interest, you will have to pay documentary stamps with respect to how much is still owed on that mortgage and that does get paid to the state of Florida, the Florida Department of Revenue, so that’s something to consider. Now, will you have to pay the full value of what you owe on a mortgage? No.
In a situation where, let’s say you had the husband and a wife but the husband owned the property prior to the marriage but you want to make sure that wife gets on title. In that situation, if the mortgage is only in the husband’s name but the husband’s still retaining his half interest in the property, you’re only going to have to pay documentary stamps on half of what’s owed on the mortgage because, again, you’re only going to be conveying in that situation a half interest to someone new because a husband already has a half interest or whole interest, rather, at that point, so he’s not going to have to pay documentary stamps on his half of that conveyance, so yes you can, but you want to take into consideration the cost of the documentary stamps when you do that. Anything else, Josh, at the time?
Josh: Nothing in the queue.
Jaleh: Okay, great. So, we’ll go on to talking a little more about what other effective tools you can use. We’ve talked about the titling of your accounts, we’ve talked about real estate, next I want to go into trusts. A lot of times we have clients that come into our office that have either looked it up on the internet, have heard of trusts, or have a family member or friend that has a trust and they’re very, very interested in potentially having a trust because in their mind, they believe the only way to prevent probate is to have a trust. Well, as I’ve stated here today, that is definitely not the case. There are other ways to avoid probate other than a trust but a trust is a very, very viable tool, especially a revocable trust to effectively avoid probate. Well, why does that avoid probate? Well, essentially, what you’re doing is you’re … During your lifetime, you’re going to be retitling assets that you currently own in the name of your trust or you will be retitling payable on death designations or transfer on death designations to your trust. That’s really important because people have the misconception that if I have a trust and I’ve executed the trust then my family avoids probate, right? No. That’s not the answer unfortunately.
You have to make sure that during your lifetime that you retitle those assets. Let me give you an example. If I have I’ll use another name, so let’s use Josh Smith. Okay, that’s the name we’ll use today. With Josh Smith, he has a bank account and it’s held solely in Josh Smith’s name. Josh Smith has two children and he has a wife but Josh Smith wants to make sure that his children are provided for, in addition to his wife being provided for, because in this situation, let’s say one of the children is not actually a child in common with his current wife. Let’s say that a child from a previous relationship. Josh Smith comes into my office and he says, you know, “Miss Piran-Vesseh, I want you to draft me a revocable living trust because I want to ensure that my child is provided for, because as much as I love my wife, I don’t necessarily know if my wife will provide for this child because it’s not a child that we have in common if something were to happen to me.”
In that sort of a situation, we could draft a revocable trust for this gentleman, essentially, putting what he desires, making sure that his wife receives income for the trust for her lifetime, maybe she receives no principle, but she receives income, but then upon her passing, that his two children are provided for. In that sort of a situation, what is Josh Smith going to have to do to ensure practically that that occurs? Well, Josh is going to need to make sure that he goes to his bank because the bank account is the substantial asset that Josh has in his estate. In that situation, Josh has really two options.
The first option that Josh has is that Josh can retitle that bank account into the name of his revocable trust with him being the trustee of that revocable trust. The other option that he has is that he can retitle the payable on death designation for that account to his revocable trust. That’s something that you want to really think about. It’s not enough just to have a trust drafted. You have to ensure that you practically take care of the other components, which include retitling your assets and your beneficiary designations to ensure that those assets go directly to your trust after your passing.
Well, what happens if you don’t do that but you have a trust. Well, in that sort of a situation, will the asset still go to your trust? The answer is, yes. But how will they get to your trust, you’ll have to file a probate proceeding to transfer those assets. The only way that they’re going to get to the trust, to add a little be more complexity to this situation, is to ensure that your will has what’s called a pour over provision, which will pour over all of the assets in your estate in your name alone to your revocable trust. But again, that still requires a probate proceeding, which more likely than not, you’ve chosen a trust as a vehicle to avoid a probate. It’s important to follow through even after the attorney drafts the trust for you to ensure that your goal of avoiding probate occurs. Did we have another question, Josh?
Josh: Yes. What sort of assets commonly pass non-probate or outside of your will to your heirs?
Jaleh: What assets pass outside of probate … Did you say with your will? I apologize I didn’t hear that part.
Josh: Outside of your will.
Jaleh: Well, again, those assets are going to be assets that are jointly titled. The real estate, if it’s held as joint tenants with full rights of survivorship, that’s going to pass outside of probate. Any titling of payable on death or transfer on death designations, that’s going to pass outside of probate. It’s important to know it’s not asset specific, it’s really how the asset is held and whether or not there is a designation of a payable on death or transfer on death. If an asset, no matter what kind of an asset, is held solely in an individual’s name but doesn’t have any designation as far as transfer on death, payable on death or isn’t a jointly held asset, it is almost a certainty that that asset will have to be probated in order to pass to that person’s heirs, to their spouse, or whoever they’ve designated either in their trust or in their last will and testament. I hope that answers your question. Did you have any other questions for me, Josh? No. Okay.
We’ve talked about trust, we’ve talked about real property, we’ve talked about titling of assets, we’ve talked about lady bird deeds. These are just a few of the ways that you can successfully avoid the probate of your estate by doing some pre-planning during your lifetime, obviously while you have capacity. One thing we love to do here at Waller & Mitchell during our estate planning consultation and our appointments is to explain these things in detail to our clients because it’s simply not enough in our opinion, to just draft documents for you, give you the documents, if you really don’t know how to enable yourself to avoid the probate process and that’s why you’ve come here to see us.
We highly encourage everyone watching here today, if you don’t have a state planning documents in order such as a last will and testament, power of attorney, living will, or healthcare surrogate, or a trust, please come and see us here at Waller & Mitchell. We’d love to take care of you. In the alternative, if you have these documents but let’s say the documents are very outdated or are from another state and may have been drafted before you had a major life circumstance change, I would highly also encourage you to come see us here at Waller & Mitchell. We can go ahead and view those documents and if the documents are going to still accomplish what you need, then there’s no need to change them and we won’t encourage you to change them but if there is a real need to change them, based upon what your best interest is or what you’re trying to accomplish, then we will more than likely recommend amendments to those documents or new documents in their entirety.
I really appreciate everybody tuning in today for our installment of Lunch with a Lawyer. I hope everyone has a wonderful Friday, an absolutely wonderful weekend, and we will see you next month for March’s addition of Lunch with a Lawyer. Have a great day.
Josh: Jaleh, we have one-
Jaleh: Oh, I apologize. We do have one more question.
Josh: What are the basic charges?
Jaleh: There really are no basic charges. The question was what are the basic charges to avoid probate. There really are no basic charges. Unfortunately, it really is individual circumstance situation depending on the complexity of your situation. If you have questions regarding a potential fee, please give our office a call. You can speak to myself, Jaleh Piran-Vesseh, or you can speak to Roland Chip Waller. Based upon your situation, we will advise you what we believe the anticipated fee would be. Again, I appreciate everyone joining in with us here today, and we hope that you have an absolutely wonderful weekend, and again, thank you.