ESTATE PLANNING UNIVERSITY

     Probate is a court-supervised process for identifying and gathering the assets of a deceased person (decedent), paying the decedent’s debts, and distributing the decedent’s assets to his or her beneficiaries. 

     Probate is statutory in nature, meaning that the rules and procedures for probate were established by the Florida legislature and are expressed in The Florida Probate Code found in Chapters 731 through 735 of the Florida Statutes, and the rules governing Florida probate proceedings found in the Florida Probate Rules, Part I and Part II (Rules 5.010-5.530).

     Creditors are notified and invited to file claims for money owed in probate court. Creditor claims must be paid or resolved before the court will allow the transfer of the decedent’s assets to their heirs. Probate ends with a court order discharging the personal representative and conveying legal title to probate assets as directed in the will.  Because probate entails filing legal documents, court hearings, and attorney representation, probate in Florida is lengthy and expensive. Families typically must wait six months or more to complete the probate legal process and receive their inheritance.  

      Probate is expensive because formal proceedings mandate your executor retain an attorney and fees are statutory and will be paid out of the estate first.

     This is a document you will keep under your control, but you will tell your spouse and/or child that there is a Power of Attorney authorizing them to act if you are alive, but incapacitated for an indeterminate period of time. This document will allow your designated agent to pay your bills, and any other tasks you designate. The power of attorney allows your agent to perform only those acts expressly granted in the document and terminates upon your death.

     This is a document that states that if ever a guardian is necessary, you desire it to be your spouse or your child or friend. If, for example, you became incapacitated in a major automobile accident and the other driver was sued and his insurer paid a half million dollars into a future medical fund, they would most likely require a court supervised guardian. You can now designate who that person should be and that you prefer that your present investments not be liquidated and reinvested by the court.

     This document allows you to designate who will make medical decisions should you not be able to.  This is sometimes called a Health Care Power of Attorney. The person you designate should also eventually sign the form to indicate they consent to act on your behalf. This person is usually the same person that you designated as your Power of Attorney.

     The Living Will, so called, is really entitled "Declaration Pursuant to Life Prolonging Procedures Act." It reflects your desire that you not be connected to the "machine" if you are brain dead, terminally ill, or with no chance of recovery. Your spouse or family would have to bring the declaration to the hospital where two doctors would be required to verify that you are terminally ill with no chance of recovery, whereupon you would be disconnected from life-support machines. One of the reasons it has become so important is that it prevents a hospital from keeping you alive by artificial means just to collect several thousand dollars per day.

     The most often used tool to avoid probate is a living trust.  A living trust is a trust set up during the settlor’s lifetime by preparing and signing a trust agreement. A living trust agreement typically provides that the settlor may amend or revoke the trust during their lifetime. Like a last will and testament, a living trust designates beneficiaries of your assets. The settlor typically serves as trustee over trust assets as long as they are alive and mentally competent. The trust agreement names the person who becomes successor trustee at the settlor’s death, at which time the trust becomes irrevocable and assets are distributed in accordance with the trust. 

     Trust assets automatically pass to the named beneficiaries without probate. Living trust agreements are administered privately and are not filed with a court after the settlor’s death - on the other hand, the settlor’s will must be filed in court and becomes publicly available.

It’s also important to understand that a living trust does not protect the settlor’s assets from creditors during the settlor’s lifetime. The trust agreement may be drafted to protect the beneficiaries’ interest in inherited trust assets after the settlor’s death. This protection is not afforded by other means of probate avoidance discussed above. 

     The short answer is, yes!  All of these legal documents work together to satisfy various legal needs. It’s best to have them as life has a way of throwing “curveballs.”

     It may be beneficial to record your deed into either an enhanced life estate (“Ladybird Deed”) or Joint Tenancy with Right of Survivorship. In these instances, the transfer of ownership is automatic and goes into effect immediately the moment you are no longer with us. Other acts could include ensuring any insurance or benefit policies have stated beneficiaries and that any financial institution accounts you may hold are held as either joint accounts or have a Pay on Death (“POD”) designation.