In old England, the King owned everything. Land was leased from the King. Noblemen obtained rights to pass their leasehold to their oldest son. Commoners were granted more property rights over time, but one concept that remained was only through the grace of the sovereign could someone give assets at death. That concept of law was inherited from England. It is alive and well today. Even the State of Louisiana (purchased from France) has statutory requirements for Wills and administration of the estate of a decedent. Florida not only has an extensive statutory framework for administration of estates, but also statutes that address formalities that must be met for a Will to be effective.
Any person who is of sound mind and at least 18 years of age may make a Will in Florida. The person making a Will is known as a testator. The Will must be signed at the end by the testator or must be signed at the end by another person in the testator’s presence and by the testator’s direction. The Will must also be signed by two witnesses who must sign in the presence of the testator and in the presence of each other. The witnesses must be present during signing or when the testator acknowledges that the testator previously signed the Will or another subscribed the testator’s name to it. A witness can be any person who is competent and can even be someone who will receive a distribution under the Will.
A Will does not take effect until death of the testator. It can be changed or revoked as long as the testator is alive and competent. A Will includes the testator’s direction for distribution of assets, but only governs assets referenced in the Will. In some cases, a person will direct that specific assets go to specific beneficiaries. In others, distribution is directed on a percentage or fractional basis.
Professionally prepared Wills include a clause which is intended to distribute everything that is not otherwise specifically addressed. That is known as a residuary clause and the portion of an estate for which no specific distribution is provided is known as the residue. When there is no provision for distribution of a particular asset (no specific bequest or residuary clause) the asset or assets are distributed as if there is no Will. The same is true of any attempt to distribute assets that is ineffective under Florida law.
Direction for distribution to a trust is only effective if the trust exists at time a Will was signed. Distribution to a pet is not allowed, as a pet is property and not capable of receiving a gift or legal ownership. A few years ago, Florida adopted a statute allowing creation of a pet trust, so that problem can be solved indirectly. Gifts to groups or entities that do not exist are a problem.
Florida’s legislature understands that some people do not make Wills, and some that do try, make ineffective gifts. Florida statutes contain directions for distribution of those portions of an estate which are intestate. Contrary to popular belief, the statutes do not provide that the assets go to the State of Florida. An intestate estate as any portion of the estate of a decedent not effectively disposed by Will. Statutes direct that such assets pass to the decedent’s heirs, including spouse and children. In the absence of a spouse and children, distribution goes to parents and generally follows the family tree.
What about a gift to someone who dies? Florida statutes provide that a bequest to someone who is dead at time the Will is executed or fails to survive the testator lapses, which means the gift is not made. The gift tumbles into the residue and is distributed by the residuary clause or, absent a residuary clause, is an intestate distribution. That makes it important for a testator to specifically provide how an asset is to be distributed if the beneficiary does not survive the testator.
If formalities of a Will are met, effecting distribution requires probate. Probate is the court administration of a decedent’s estate. Probate administration is a mini business of marshalling the decedent’s assets, paying the decedent’s bills and distributing what is left to the beneficiaries.
Probate is started by filing a petition for administration with the court, accompanied by a $400 filing fee in Collier County. A Will must be accompanied by the oath of one of the witnesses. That can be a problem, since witnesses are often secretaries that work in an attorney’s office. Probate can be opened if a witness to the Will cannot be located, but it is more cumbersome and expensive. To avoid the problem all together, a Will can be made self- proving, if acknowledged by the testator and affidavits of the witnesses (which means the Will is notarized in a specific manner). The personal representative (also known as an executor) must also file an oath along with a designation and acceptance of a resident agent. If the court is satisfied, the court issues letters of administration which are the personal representative’s authority to act on behalf of the estate. The personal representative has no authority until letters are issued.
After receiving letters, the personal representative goes about the business of estate administration. The personal representative marshals the decedent’s assets. Statutes require certified mail notice on known creditors and published notice in the newspaper for unknown creditors. Creditors have 90 days from date of actual notice of publication to file a claim in the probate estate. If a claim is filed, the personal representative must address the claim by payment or objection. That part of probate provides an avenue for creditors of the decedent to get paid.
After the decedent’s bills are settled and the expenses of administration are paid (including a fee to the personal representative and any professionals assisting with probate), the personal representative is in position to distribute what is left per the Will’s directions. If there are not enough assets to pay all of the bills and distribution to beneficiaries, the statutes provide a pecking order for eliminating distribution. The residuary distribution is eliminated first and specific distributions eliminated last. If there is not enough money to pay all claims, the statutes also provide an order of priority for paying claims.
When the bills are paid and the distribution complete, the personal representative can obtain an order of discharge and the estate is closed.
Because of the expense and complexity of probate, many people look for ways to avoid it. Some place beneficiaries on bank accounts and even add them to title to real estate by deed. That can create a myriad of unexpected problems. Others utilize a revocable living trust, which is generally a better method to avoid probate. The pit falls of do-it-yourself probate avoidance and advantages of a living trust are for a yet to be written column.
William G. Morris is the principal of William G. Morris, P.A. William G. Morris and his firm have represented clients in Collier County for over 30 years. His practice includes litigation and divorce, business law, estate planning, associations and real estate. The information in this column is general in nature and not intended as legal advice.