Wednesday, September 23, 2020

Probate Explained

Law Matters


Most people have heard about probate, but many do not understand what it is. In simplest terms, probate is the process by which assets and debts of the decedent are distributed and paid. A Will does not automatically transfer assets. A Will must go through probate.  

The concept of probate is inherited from England, where the sovereign owned all land and only by the grace of the sovereign could a nobleman pass on right to use the land to the nobleman’s oldest son. Although modern probate is intended to make sure assets are properly distributed and a decedent’s debtors satisfied, its genesis is in the concept that one can only pass assets to heirs by the grace of the sovereign. 

Probate starts by filing a petition with the court. The petitioner requests the court to open a probate proceeding. The death certificate and the original Will are generally required, but in limited circumstances either or both may be excused. If the decedent had no Will, probate is intestate under a statute which states who gets the decedent’s property if the decedent did not have Will. 

The intestate distribution statute provides for distribution of assets to the decedent’s relatives as legislature believes a typical person would intend. That means a decedent’s spouse and children come first, and if none, more distant relatives until the family tree is exhausted. Not having a Will does not mean the decedent’s assets go to the state. 

Petition to open probate for a Florida resident is filed with the Clerk of Courts in the county where the decedent was domiciled. In Florida, Will must be signed by the decedent at the end along with two attesting witnesses who must sign the Will in the presence of the decedent and in the presence of each other. If the Will was signed when the decedent was not a Florida resident, it will be valid in Florida if it either meets the Florida signature requirement or the laws of the State where the Will was executed. 

Statutes and probate rules require the petition include much critical information to get the process started. The petition must include a statement of the interest of the petitioner along with the petitioner’s name and address, how the petitioner qualifies to act as personal representative (Florida statutes require Florida residency or familial relationship) and the petitioner’s attorney. The petition must also include the name and last known address and last 4 digits of social security number of the decedent, names and addresses of beneficiaries, priority under the Florida probate code of the person seeking to be appointed personal representative, approximate value and nature of the assets of the estate and a statement that the original Will accompanies or was already filed with the court or that the decedent had no Will. 

A notice of probate must be provided to every interested person. Different methods of notice are required depending upon the significance of the particular aspect of the case. The court need not delay opening probate and appointing a personal representative while the notice is pendingbut interested persons may later challenge the appointment of the petitioner as personal representative and that person may be removed after the initial appointment. Time for challenge depends upon the type of notice provided. 

To be admitted to probate, an oath of the witness to the Will must be filed or the Will itself must be self-proving. In layman’s terms, self-proving Will is one which has been notarized in conformance with statute. If the Will is accepted for filing, a judge will review the petition along with the Will and determine if a bond is needed. If a bond is required, the bond must be posted for the next step. 

Once the bond issue is addressed and everything is in order, the judge will review and issue an order admitting the Will to probate and appointing the personal representative. That does not give the personal representative authority to act on behalf of the estate. The personal representative must file an oath confirming that the personal representative will faithfully administer the estate and designate a resident agent for service of process and notices. After all of this is satisfied, the judge will issue letters of administration to the personal representative. Letters of administration are the personal representative’s authority to act and the personal representative is thereafter authorized to deal with estate assets, access bank accounts, address creditors and the like. 

The personal representative goes about gathering all of the decedent’s assets. That usually means putting accounts into one estate account and selling or otherwise disposing of assets that will not be distributed in kind. The job of personal representative is running a mini business of closing out the decedent’s financial life. 

Probate does not deal with all of the decedent’s assets, but only those in the decedent’s name alone and which do not pass to another by contract or law. That means accounts with beneficiary designations (IRA) and life insurance made payable to named beneficiaries do not pass to probate. Assets owned as joint tenants with right of survivorship do not pass through probate. Assets in a revocable living trust do not pass through probate, although such assets are to be made available to pay creditor claims.  

The personal representative not only deals with assets, but is also charged with a duty to the decedent’s creditors. The personal representative must provide actual notice probate is open to all known creditors and publish newspaper notice to reach unknown creditors. Years ago, statutes only required newspaper notice until the United States Supreme Court ruled newspaper notice was not designed to give anyone actual notice and that more was required. After that decision, Florida amended its notice requirement. 

Creditors have later of 30 days from receipt of actual notice from the personal; representative or 3 months from date of publication in the newspaper to file claims against the estate. Claims are unpaid debts of the decedent. If not timely filed, a creditor loses the ability to pursue collection from the estate. A mortgage or other secured claim survives to the extent of its security in a particular asset, but if no timely claim is filed against the estate even those creditors cannot do anything other than foreclose the security interest against the collateral.  

Creditor claims against a decedent and the decedent’s estate are also barred 2 years after the date of death. That means creditors do not get paid automatically and a personal representative is well advised to consider withholding payment until the creditor claims period has expired and the personal representative can determine which claims should be paid. Some claims will be paid by insurance, others may have been paid by the decedent before death and some may even be fabricated. If the personal representative believes a claim should not be paid or simply needs more time to investigate, the personal representative must object to the claim within the later of 30 days from filing of a timely claim or 4 months from date of publication in the newspaper. 

Much can happen during the course probate. Contested claims can result in litigation. Dispute among beneficiaries and those cut out of the Will may result in litigation. There can be liquidity issues and even concerns about proper time to sell. Florida probate rules state deadline to complete probate is 12 months from issuance of letters of administration in an estate that falls below the level for imposition of federal estate tax. Most probates meet that deadline. 

When the personal representative is ready to close out the estate, the personal representative must file a final accounting and send it to all remaining interested parties. The accounting is to include incomeexpenses and specify the personal representative’s fee and that of the personal representative’s attorney. The personal representative must also file a proposed distribution and/or receipts from beneficiaries that distribution has been completed. An interested party may object, and a hearing is held for judge to decide the objection if any objection is not resolved amicably. 

After all of the foregoing, the personal representative may petition for discharge and, if the court agrees, is discharged and probate is closed. 

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.  

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