1.What is probate?
a.A process where a deceased person’s assets and liabilities are identified. In Florida, the court provides oversight to the process to make sure that proper debtors are paid off and the remaining amount is distributed to the proper parties
b.If the decedent failed to prepare a will, the court has a method of distributing the assets to the heirs.
c.If the decedent prepared a valid will, then the will dictates how the assets will be distributed to the beneficiaries.
2.What do the terms “testate” and “intestate” mean?
a.Testate means the deceased person prepared a will and the will determines how the decedent’s estate will be handled.
b.Intestate means the person died without a will and the assets will be distributed according to Florida law.
3.What are the different ways of administering an estate?
1)the estate is valued at less than $75,000
2)the decedent has been dead for more than two years
ii.It is usually easier, less expensive, and takes less time than Formal Administration
iii.However, the executor needs to be careful that there are no “lurking debtors” that may come back and ask to be repaid after the Administration is complete
1)The executor needs to inform the probate attorney about all debtors
2)Those debtors must be contacted and allowed to present their claim
3)If there is enough money to pay off debts, those debts must be dealt with
iv.Summary Administration can take between four weeks to one year
b.Formal Administration is required when an estate is valued at more than $75,000
i.An executor or other interested party asks to be appointed the “personal representative” of an estate
ii.The personal representative hires an attorney to assist with the Administration process
iii.The personal representative asks the court to provide “Letters of Administration” which will allow him or her to settle the estate
iv.The personal representative (or an attorney) must file the will with the court and the will must be shown to be valid (in other words, that it was properly signed and witnessed and that the will that is submitted to the court is an original will)
v.The personal representative then gathers and inventories the decedent’s assets
vi.A Notice to Creditors must be published in the county where the decedent lived; those creditors then have three months to submit a claim to the court
vii.The personal representative then settles the claims with the creditors on behalf of the estate
viii.After the assets have been distributed to the debtors, heirs, or beneficiaries, the personal representative must file paperwork with the court asking that the estate be closed
ix.Formal Administration can take six months to a year, and sometimes longer
4.What is the cost of Probate
a.Filing fees with the Circuit Court
b.Attorneys’ fees, which are set out by Florida law, (see Florida Statutes, Chapter 733.6171)
i.Estate valued at $40,000 or less, the fee can be no more than $1500
iv.$100,000-$999,999: $3000 + 3% of the value over $100,000
v.See the Florida Statutes for estates over $1million
5.What are some of the responsibilities of a personal representative?
a.Collect and protect assets, including the decedent’s business
b.If the decedent owned a business, the personal representative must decide whether to continue the business, hire someone to manage it, or sell it
c.Inventory the assets and assign a fair market value to them
d.Collect outstanding debts that are owed to the estate
e.Prepare a tax return
Tips for Managing Probate
Acting as executor of an estate (also called “personal representative” in some states) doesn’t have to be an overwhelming task if you’re organized.
As the chief administrator, so to speak, the executor is legally responsible for protecting the assets of the decedent, or deceased, until the probate process is completed and the assets are disbursed. Acting in good faith won’t get you in trouble if the assets in the estate drop in value (with investments, for example), but you could be found liable if you allow assets to be tampered with before the probate process is complete or you sell off assets at fire-sale prices to raise cash. So it’s important to know that if you are unable or unwilling to serve as executor, you can refuse, and the contingent executor will step in, or the court will name a new one.
State probate and tax laws vary, but if you set up a checklist and seek appropriate tax and legal advice, settling an estate can be orderly. Read on for seven tips to keep you on track.