Avoiding probate in Florida and elsewhere only requires a few simple steps. Learn how to avoid probate now to spare your beneficiaries the stress and expense later.
How do you spare your family the hassle and expense of probate?
Court fees, attorney expenses, and the time-consuming nature of our legal system may seem unavoidable. After you have passed away, the last thing your family needs is to endure the process of probate.
Following these simple steps now will minimize the probability that your estate will be subjected to probate.
How to Avoid Probate and Why It Matters
Probate is the legal process of administering the estate of a deceased person—resolving all claims and distributing that person’s property.
This is the legal way of passing ownership of your assets to your beneficiaries.
It also includes utilizing your assets to pay off your debts, any funeral expenses, and the cost of the probate proceedings.
Your beneficiaries will only receive what’s left after all the payments are deducted from your estate.
This is why many people choose to create a last will and testament, or a legal document, outlining what you would like to happen to your assets when you pass away.
But this may not be the best idea if avoiding probate is your goal.
Does Will Avoid Probate?
No. Unfortunately, your beneficiaries will still be required to go through probate even if you have a will.
Valid wills must be “proved” in a court of law and accepted as a valid public document as the true last testament of the deceased.
There will be several court dates that your loved ones will need to attend and there will be costs for each court date. If you have properties in different states, your beneficiaries will need to go through this process in each state.
That’s why it could easily take a year for your beneficiaries to receive what you have bequeathed. If the will is contested during the probate process, the cost will increase and the timeline might extend for many years.
Or you can avoid probate altogether by taking strategic steps in your estate planning now.
3 Simple Ways to Avoid Probate
These steps will help you avoid probate:
#1. Name Beneficiaries on All Your Accounts that Let You
You can do this first step to avoid probate without professional assistance.
Many of your financial accounts allow you to designate a beneficiary who will be payable on death. This means all the proceeds from your accounts will be given to them rather than going through probate after you pass.
Certain accounts are referred to as a "payable on death" (POD) accounts while non-retirement investments are known as a "transfer on death" (TOD) accounts and include:
- Bank accounts
- Brokerage accounts
- Life insurance policies
- 401k plans / pension plans
- IRA accounts
You only need to complete a form or two with the name of your beneficiary, and after your death they will have access to the accounts without probate.
Another way to avoid probate with a simple formality is by holding your property with a beneficiary.
#2. Set Up a Trust to Leave Property and Assets Upon Death to Your Beneficiaries
An easy way to avoid probate when you have substantial assets is to create a trust.
A trust outlines what will be done in terms of asset distribution without the courts being involved.
While a will distributes your assets and property after your death, a trust allows you to place your assets and property “in trust” while you’re alive so they will not require distribution after your death.
You will personally appoint a trustee to manage your trust and s/he will make decisions for your beneficiaries.
Besides avoiding probate, a trust makes a smart estate planning tool because:
A Trust is Private
Probate records are public court records, which means that anyone can look up how your assets and properties were distributed in a will following your death.
None of this information will be publicly available when you create a trust because your beneficiaries will not need to go through the court system.
Trusts Can be Less Expensive
Your estate will need to pay for the court fees associated with probate, which can cost anywhere from 2% to 10% of your total estate. The percentages tend to be higher for smaller estates, because many costs are fixed.
You do have to hire a lawyer to set up a trust, which can run into the thousands of dollars. Then you must be sure to retitle your accounts into the name of the trust, or you will have paid the trust drafting fees for nothing, and you will still incur probate costs. To totally avoid probate, all assets need to be titled into the trust or to “transfer on death” accounts, including the often-forgotten cars.
Benefits are Distributed Sooner
Probate is a process that may require a year or more. If you own homes in multiple states, your family must comply with each state’s specific probate laws, additional court dates, and fee structures if you only create a will.
Your beneficiaries may need to wait a substantial time to receive what you leave them, which could put them in financial strain.
Since a trust avoids probate, distributions take only a few weeks instead of several months or years.
Setting up a trust is the best way to leave property upon death if you are leaving a large inheritance, but you’ll need the help of an estate planning attorney along with an experienced financial planner to get it right. You need to make sure there are assets available to pay any outstanding liabilities before the trust assets are disbursed.
#3. Hold Your Property Jointly
Owning a property with your spouse, significant other, or a beneficiary allows it to automatically pass to him/her without going through probate after your death.
You do not have to be married to take advantage of this, but you do need to clearly designate the jointly held property with right of survivorship.
Follow these steps to keep your beneficiaries out of probate, and these next steps if you’re trying to avoid probate in Florida specifically.
Avoiding Probate in Florida
Whether you’ve retired to the sunshine state or have a seasonal beach house here, these three tips are key to avoiding probate in Florida:
Remove Your Florida Property from Your Estate
If you own real estate in Florida, but you’re not a resident, you may be able to avoid probate if you gift your property to your beneficiaries. This will also reduce the value of your estate. However, beware that once you gift it, it is no longer legally yours. If you need money, it is not yours to sell, and your heirs can legally sell it and keep the entire proceeds. So tread carefully.
Use Tenancy by the Entirety
If you’re married, tenancy by the entirety is a form of joint ownership in real estate with rights of survivorship. You both are considered to own the property 100%. When one spouse passes away, the surviving spouse becomes the sole owner of the property, and it will go directly to them outside of probate.
However, tenancy by the entirety has strict limitations:
- It’s only allowed between legally married couples
- Not all areas extend this benefit to same-sex partners
- Only 26 states recognize this concurrent ownership
Florida allows tenancy by the entirety -- and it’s only one of five states to recognize this next way to avoid probate too.
Ask About a Lady Bird Deed
The “Lady Bird Deed”, which a lawyer from Florida named after President Johnson's wife, is an enhanced life estate deed.
This allows you to keep ownership of your property throughout your life and then designate a beneficiary to inherit it when you die without going through probate.
Unlike tenancy by the entirety, you do not have to be married and your beneficiary does not have to be your spouse. You do need to have the deed recorded before you die, and there are costs incurred in doing so.
These are just a few ways an expert will help you avoid probate.
Let a Financial Planner work with your attorney to help you implement a plan to avoid the probate process.
The time you spend organizing your plans now will spare your beneficiaries and loved ones the stress, expense, and time of probate later, when you’re gone. We also suggest that you write a letter of wishes for your family which helps you share with them your thoughts on burial versus cremation, etc. and how you might like any personal possession to be distributed. Your last will and testament can reference that the most current letter should be followed.
Despite there being so many ways to avoid probate, the right ones for you will all depend on what’s best for your estate, assets, and goals.
So now it’s time to consult a professional to help you think through these issues. And if you’re avoiding probate in Florida, a local expert will be even better.
To get in touch with our consultants and financial planners, please visit this page or call 561-686-9604 today.
