What is Probate Administration?
Probate is a system created and managed by state government that ensures:
1. payment of valid debts and taxes of the decedent;
2. the legal transfer of the decedent’s property to his intended beneficiaries, in accordance with directions stated in his Will; and
3. that the will admitted to probate was genuine, executed legally, not procured by fraud, and was executed when the decedent had the mental capacity to dispose knowingly of his assets.
What is a probate estate?
That is, what is subject to probate administration:
1. A decedent’s probate estate consists of all property of the decedent (at his death) that the decedent held the title solely in his name or as tenants in common with another (not as tenants with right of survivorship) and for which there is no valid beneficiary designation;
2. Excluded from a decedent’s probate estate is property: (i) held with another as joint tenants with right of survivorship; (ii) with a valid beneficiary designation (e.g., life insurance, IRA, qualified employer pension plan); (iii) constituting homestead property; or (iv) held in trust.
What actions occur during probate administration?
1. Advising the personal representative (i.e., executor or executrix).
2. 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.
3. When 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.
4. Notifying beneficiaries and potential creditors of the estate.
5. Processing claims for payment of debts owed by the decedent.
6. Planning for liquidity of estate and scheduling actions.
7. Perhaps selling some property in order to raise cash or to enable distribution according to the will.
8. Preparing tax returns, including income tax, gift tax, estate tax.
9. Managing investments and other property.
10. Obtaining homestead exemption.
11. Obtaining order determining property exempt from creditors.
12. Paying expenses of administration our of assets of the estate.
13. Protecting the personal representative from incurring liability for serving.
14. Distributing property to the correct persons in the correct amounts.
Trust administration: how does it relate to probate administration?
1. Trust administration is similar and often works in tandem with probate administration. Processing of claims for debts owed occurs in probate, not as part of trust administration, but the personal representative of a probate estate is authorized to require the trustee of a trust to pay valid debts of the decedent. An order determining homestead is obtained via the probate proceeding, not as part of trust administration.
2. During administration of a trust, the trust property must be distributed outright to the beneficiaries or retitled in a manner consistent with the trust agreement.
Can a Trustee be Personally Liable?
A trustee has fiduciary duties usually not identified in a trust agreement or in a will that creates a testamentary trust. A trustee must adhere to his 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. The trustee’s lawyer must advise the trustee concerning these duties and the related risks.