Probate: What is it?


Probate is often discussed in a negative way. Most financial planners, attorneys and even relatives who have been through the process will advise you that you should avoid it at all costs. The simple fact is, more than likely, at some point in your life, you will end up becoming familiar with the Probate process. While there are a variety of reasons for avoiding Probate, this post aims to inform readers about what probate is and how it works, not the ways to avoid it.

What is probate?

At the core, Probate is a judicial procedure. It exists to ensure that beneficiaries, heirs, and creditors have an organized and official way to receive what they are due when an individual passes away. Probate occurs whether the deceased has a will or not. While it is possible to navigate the sometimes complicated probate process alone, hiring an attorney can certainly help relieve you from any additional stress. In general, attorney's fees are based on the value of the estate. Much like the Personal Representative (discussed below), there are statutory provisions regulating reasonable attorney's fees.

DISCLAIMER: What follows is not intended to be a "how-to" guide, but merely a 30,000 foot view of what probate is and how it works. if you have questions about any portion of this post, please feel free to contact us.

Venue of Probate

Fortunately or unfortunately, probate proceedings don't always take place in a venue that is convenient for the personal representative. According to Florida Statute, venue is decided based on the following:

733.101 Venue of probate proceedings.—
(1) The venue for probate of wills and granting letters shall be:
(a) In the county in this state where the decedent was domiciled.
(b) If the decedent had no domicile in this state, then in any county where the decedent’s property is located.
(c) If the decedent had no domicile in this state and possessed no property in this state, then in the county where any debtor of the decedent resides.
(2) For the purpose of this section, a married woman whose husband is an alien or a nonresident of Florida may establish or designate a separate domicile in this state.
(3) Whenever a proceeding is filed laying venue in an improper county, the court may transfer the action in the same manner as provided in the Florida Rules of Civil Procedure. Any action taken by the court or the parties before the transfer is not affected by the improper venue.

With a will v. Without a will

There is a difference between having a will and not having a will. Certainly, some of the differences are merely terminology. However, depending on your personal preferences, passing away without a will could result in a drastic departure from your actual wishes.

Without a will = Intestacy

In every state, there are "intestacy statutes" to provide guidance in the distribution of an individuals assets after they are deceased. The word "intestate" simply means that a person has died without a will. In Florida, you can find our statutes under Chapter 732 (Click the link to read more). Some might say that the state of Florida has written a will for you should you die without one. Those people would be correct. If you die without a will, your assets will pass in accordance with the statutes. For the sake of this article, I will spare you the finer details, but those that inherit in this circumstance are known as "Heirs" as they are the rightful "heir" to the asset under Florida Law. To get a feel for the statute, I have provided a small snippet below.

732.103 Share of other heirs.—The part of the intestate estate not passing to the surviving spouse under s. 732.102, or the entire intestate estate if there is no surviving spouse, descends as follows:
(1) To the descendants of the decedent.
(2) If there is no descendant, to the decedent’s father and mother equally, or to the survivor of them.

With a will = Testate

When an individual dies with a will, they may be referred to as the "Testator". Instead of notifying the court of the individual's death, and following the statute from top to bottom, the personal representative and the court work to settle the estate in a manner honoring the wishes of the deceased as expressed in the will.

You may have heard horror stories from friends or family about a will contest, or something of that nature. Probate court would be where these contests are heard and decided. It is not uncommon for relatives or friends to challenge the validity of a will, whether the testator understood what he or she was doing at the time the will was written, etc. These contests are just one reason why many believe avoiding probate is essential to a quality estate plan.

Designation of Personal Representative & Letters of Admin

The first order of business when beginning probate is naming a Personal Representative (PR). If the will names a PR and/or alternates, as far as they are identifiable, they will be the first choice of the court. In the event they are unwilling or unable to act as the PR for the estate, an individual will be named by the court. The PR is then given Letters of Administration. These letters represent the PR's legal standing to settle the affairs of the estate, including negotiating with creditors, etc. In general, the PR is entitled to a "Commission" based on the value of the estate for their services. This "Commission" is based on the overall value of the estate. In addition, the PR is entitled to additional compensation related to actions taken on behalf of the estate for things such as; continuing on of the deceased business, sale of real or personal property, litigation, etc.

Notices to Creditors, Beneficiaries and Heirs

Perhaps the most essential part of the probate process is the settling of any outstanding debts of the deceased. During the probate process, creditors to the estate are permitted to "make a claim" against the estate. Creditors have 90 days from the date of "notice" to bring their claim against the estate, or else forfeit the opportunity to collect on thatdebt. Those claims are evaluated for their validity and settled by the Personal Representative. Once all creditors have been satisfied, the remnants of the estate are distributed to the Heirs and Beneficiaries in accordance with Florida Statute, or the will.

Estate Taxes (Florida & Federal)

As relates to Estate Tax, there is good news! In the state of Florida, an estate is only required to pay taxes if it exceeds the Federal limit. For 2015, the threshold is 5.43 million dollars. If your estate, or the estate of a loved one exceeds the Federal limit, or may at some point in the future, please contact a financial planner, and/or an attorney today!

Closing the Estate

Once the process is followed through to its completion, the PR is discharged of their duties and the estate is closed. Once closed, the business of the estate is considered settled, and in the case of Formal Administration, it is highly unlikely that the estate would ever be opened again absent very special and specific circumstances.

Final Thoughts...

In general, Probate can be, and often is, a somewhat long and complicated process. As if losing a loved one wasn't enough, some very large and complicated estates can take years before being closed for good. Many others can be settled in a matter of weeks or months. Avoiding the financial and psychological costs of probate is certainly a good idea when possible, but passing on without a will can leave things in even greater disarray.

Moral of the story:

Plan for the future. Have a will. Know what to expect if you, or a loved one is or becomes the Personal Representative of an estate.