Probate is the court supervised legal process that includes determining the validity of your will, gathering your assets, paying your debts, taxes, and the expenses of will administration, and then distributing the remaining assets to those persons entitled to them.
Probate Avoidance Through Proper Planning
An important part of the estate planning process is to find ways to make the distribution of your assets after your death easier on your beneficiaries. Probate is a judicial process for disposing of your assets after your death, but there are many ways to avoid probate and make the distribution of your assets to your beneficiaries simpler.
Assets that are established with beneficiary designations avoid probate. These include bank and investment accounts, retirement plan accounts, annuities and life insurance. After death, upon proof to the company holding the asset that the owner has passed away, the beneficiary is able to have the asset transferred to him or her. Beneficiary designations generally take precedence over any other instructions in a will or RLT.
A transfer-on-death (TOD) account is similar to a beneficiary designation in that it provides that the named beneficiary receives the asset after the owner’s death. The beneficiary provides proof of death to have the asset transferred to him or her. TOD accounts are often available at investment companies. Banks usually offer a similar transfer designation, which is described as being held “in trust for” (ITF) a beneficiary.
Assets such as bank accounts and brokerage firm accounts held in two (2) or more names become the property of the survivor or survivors on the death of a co-owner. Joint bank accounts are a simple way to avoid probate but often have unintended consequences when a parent puts a child on a checking account so that the child can pay the aging parent’s bills. After the parent’s death, the funds remaining in the account belong to the child, and siblings not on the account do not have a legal right to share in the account.
Ownership and Titling of Real Property
- Tenancy by the Entirety. In the case of ownership of real property by husband and wife, such as “John Doe and Mary Doe, husband and wife”, ownership in the names of both spouses vests title in them as tenants by the entirety. This means that, when one spouse dies, his or her undivided one-half interest in the property passes to the surviving spouse. This is a very effective way to avoid probate.
- Joint Tenancy with Right of Survivorship. This method of joint ownership provides also that the real property automatically passes to the survivor(s) upon the death of one of the joint tenants. It is critical that the property be properly titled to reflect that the tenancy includes a right of survivorship. Otherwise, under Florida law, when there are two (2) or more co-owners of real property and the documents establishing the ownership simply show the names of the co-owners without further designation, the presumption is that they are tenants in common, which does not avoid probate. With property simply held in common in two (2) or more names, at the death of the first co-owner, his interest would become part of his estate and would be governed by the provisions of his will. The deed to the real property governs whether ownership is by survivorship or as tenants in common.
The Law Office of Dye Harrison – Generations of Vigorous Legal Representation