Probate administration is often complicated and time-consuming processes that the personal representative of a probate estate is required to undertake during an emotionally difficult time. It also involves many state laws and court rules and many forms that are unknown outside the realm of probate administration or trust administration. Our firm is extremely knowledgeable on the subject of probate and trust administration. This knowledge allows us to guide personal representatives and trustees in an efficient and seemingly painless way.
Trust administration does not involve the court unless someone feels aggrieved and files a lawsuit. Use of the many forms used in probate administration is not required in trust administration, deadlines are few, and the process is not public. However, the trust agreement must be implemented fully, tax returns required by law must be prepared and filed, trust property must be preserved and distributed as provided by the trust agreement, and the trustee must faithfully fulfill his fiduciary duties. The trustee must be advised of his duty to accept the trusteeship within a reasonable time, limitation periods within which a beneficiary must sue the trustee for breach of trust and that he has a duty to keep good records, provide annual accountings to beneficiaries, and pay income taxes out of trust assets and/or income. Also, the trustee must be advised in detail of his numerous fiduciary duties. The beneficiaries of a trust should be informed of their right to challenge the validity of the trust within the limitations period, the limitation of liability of the successor trustee, and their rights to receive certain information from the trustee.
Sound advice gained from extensive experience
You can rest assured that, if you hire us to advise and represent your probate estate’s personal representative or your trustee, your fiduciary will receive sound, practical advice and experienced representation that supports effective and efficient administration of your estate according to your wishes.
What is Probate?
Probate is a system designed to ensure:
- Admission of the true, properly signed, witnessed, and notarized last will and testament to probate;
- payment of valid debts and taxes of the decedent;
- legal transfer of the decedent’s property to his intended beneficiaries, in accordance with directions stated in his Will; and
- that the Will admitted to probate is genuine, executed legally, not procured by fraud, was executed when the decedent had the mental capacity to dispose knowingly of his assets, and was not procured by undue influence.
- Distribution to the beneficiaries named in the Will of decedent’s net assets in the correct amounts and under the terms specified in the Will.”
It is managed by our state circuit courts, but the personal representative of a probate estate has authority to act independently, without securing prior approval of a judge.
How does property change ownership upon death?
All property owned by the decedent at the time of his/her death, in which the decedent held the title solely in his own name or as tenants in common with another (not as tenants with right of survivorship) and for which there is no valid beneficiary designation goes through probate and is subject to distribution as stated in the decedent’s Will. It becomes part of the decedent’s “probate estate”. Assets that are excluded from a decedent’s probate estate and so not pass according to the decedent’s Will, include:
- property that is held with another as joint tenants with right of survivorship or as husband and wife;
- property distributed via a valid beneficiary designation, which is available with life insurance, IRA, annuities, qualified employer retirement plans;
- the decedent’s homestead real property; or
- property held in trust as of the date of death.
What actions occur during formal probate administration?
- Advising the personal representative (i.e., executor or executrix).
- Protecting the personal representative from incurring liability for serving.
- Commencing the probate estate by causing the court to admit the will to probate and to appoint as personal representative the person nominated in the will.
- When a person dies intestate (there is no will), causing the probate court to appoint as personal representative a person described in Florida statutes as having priority to serve as personal representative.
- Notifying beneficiaries and potential creditors of the estate.
- Processing claims for payment of debts owed by the decedent.
- Planning for liquidity of estate.
- Dealing with creditor claims when the estate is insolvent.
- Preparing tax returns, including income tax, gift tax, and estate tax.
- Managing investments and other probate property.
- Obtaining a court order determining the homestead exemption, if the decedent’s real property qualifies.
- Obtaining an order determining property exempt from creditors.
- Paying expenses of administration out of income and assets of the estate.
- Distributing property to the correct persons in the correct amounts.
- Preparing formal accountings that satisfy the requirements of Florida law.
- Obtain release of PR from liability for income tax owed by the decedent or his estate.
Can a Trustee of a trust or a Personal Representative of a probate estate be personally liable for his actions as trustee or personal representative?
Trustees of trusts and personal representatives of estates have fiduciary duties usually not identified in trust agreements or wills. Both types of fiduciaries must adhere to his/her fiduciary duties and to specific rules set forth in the trust agreement or will and in the state statutes. Breach of any of those duties could lead to personal liability of the trustee or personal representative. When we represent a fiduciary, we counsel him about his fiduciary duties and assist him to fulfill them. Unrepresented fiduciaries are more likely to breach their duties than fiduciaries who are represented by a capable experienced law firm. These breaches can lead to costly litigation, which the trustee or personal representative may have to pay for with his/her own personal assets. With the appropriate legal guidance through the probate and trust administration process, trustees of trusts and personal representatives of estates can fulfill all of their fiduciary duties and avoid personal liability.
Frequently Asked Questions
Q: Must I be bonded to serve as personal representative of an estate in Florida?
A: It depends on your particular case. If the decedent died with a Will that waives bond, then the judge assigned to the probate administration has discretion to waive bond. Some judges impose a bond in every case regardless whether the Will waives a bond.
Q: May a nonresident of Florida serve as personal representative of an estate in Florida?
A: No, not unless he is related by blood to the decedent or is a spouse, sibling, or one of certain other relatives of the decedent.
Q: Who may serve as a personal representative of an estate in Florida?
A: Anyone who has reached the age of majority, is not a convicted felon, and is mentally and physically able to perform a personal representative’s duties.
Q: Must a personal representative hire an attorney to advise him/her during the probate administration? A: Yes. Florida Probate Rule 5.030 (a) states: “every personal representative, unless the personal representative remains the sole interested person, shall be represented by an attorney admitted to practice in Florida.”
Q: What happens if the estate does not have enough assets to pay its creditors?
A: Estates that do not have enough assets to pay fully all claims filed by creditors, must pay the creditors in the order of priority prescribed by Florida statute. Creditors that have the highest priority claims would be paid first, and then subordinate claims would be paid ratably in proportion to their respective claims.
Q: As personal representative of an estate, would I be liable to pay debts owed to creditors of the decedent if the estate is insolvent?
A: No, unless the personal representative fails to perform his fiduciary duties, such as paying debts owed by the decedent prior to distributing assets to beneficiaries of the estate.
Q: If the decedent failed to pay taxes prior to death, would the personal representative be personally liable to pay such taxes to the IRS?
A: No, provided the personal representative performs his fiduciary duties, such as having necessary tax returns prepared and filed and taxes paid as required by law, using assets of the estate, prior to making any distributions to beneficiaries.
Q: As personal representative of an estate, would I be liable to pay fiduciary income taxes owed by the estate?
A: No, provided the personal representative has IRS Form 1041 prepared and filed according to law and pays the estate’s income taxes as required by law, using assets of the estate, prior to making any distributions to beneficiaries.
Q: What happens if the decedent died without a will?
A: The Florida statutes would govern who receives how much of the decedent’s assets.
Q: If I serve as personal representative, would I be compensated for my time?
A: Yes. The Florida Statutes provides guidance concerning the fee that a personal representative may be paid for serving.
Q: What is a testamentary trust? A: A testamentary trust is one created by Will upon the death of the decedent. Probate is not avoided because the personal representative must use his or her authority to transfer the assets into the name of the trustee of the testamentary trust.
Q: What happens if the decedent lived and died in Florida but owned property in another state or country?
A: Personal property is subject to probate administration in the county of residence of the decedent at the time of his death. Real property located outside of Florida may have to go through ancillary administration in the other jurisdiction. Whether ancillary administration is required is based upon the laws of the jurisdiction where the real property is located.
Q: What happens if the decedent lived and died in a jurisdiction other than Florida, but owned real property in Florida?
A: An ancillary administration in Florida would be required to transfer title of the real estate.
Q: Does a Will ever determine how life insurance gets paid?
A: No, not usually. Generally, life insurance policies are paid to those beneficiaries that the insured lists on a designation of beneficiary form that he/she provides to the insurer prior to the insured’s death. However, if the insured fails properly to designate beneficiaries, then the proceeds would be paid to the personal representative of the insured’s probate estate, where it would be distributed as other assets of the estate. Let us advise you.
We provide a free initial consultation regarding estate administration and/or trust administration. Contact the firm online or at (813) 983-0655.