Blade & Blade P.A.
Most people have both assets and debt when they pass on. Every state has its regulations dictating what happens to a person’s estate when they pass away. The process is handled by the probate court system in that state.
Probate administration can be defined as a supervised process for identifying a deceased individual’s assets, paying their debt, and disbursing the remaining assets to their beneficiaries. Generally, a decedent’s assets are used to settle probate costs, funeral expenses, and outstanding debt.
In Florida, probate administration is covered in the Florida Probate Code – Chapter 731-735. The rules governing probate proceedings in Florida can be found in the state’s Probate Rules – Part I & Part II: Rules 5.010-5.530).
Types of probate administration in Florida
Under Florida Law, two main types of probate administration apply. They include formal and summary administration.
This type of probate administration is dependent on the size of a decedent's estate or how long there've been dead. For formal administration to take place, a decedent must have been dead for at most two years. They also need to have an estate exceeding $75,000.
When assessing estate value, everything a decedent had is considered regardless of the property's location or form. Formal probate administration considers everything a decedent had an ownership interest in. What's more, the assets must be solely owned by the decedent, i.e., their sole-named bank account/s, retirement account/s with no beneficiary, and home in their name.
Important: Jointly-owned assets don't go through a formal probate administration process in Florida. The same applies to assets that have a named beneficiary or assets held in living or revocable trusts. It's, therefore, possible for a person to pass on with millions in their gross estate and have a small probate, no probate estate or have a probate estate equal to the gross estate. Probate estate is dependent on how a person owned their assets.
The formal probate process in Florida begins with an application. A qualified fiduciary applies to be considered as the personal representative. The qualified fiduciary may need to post a bond. Alternatively, the court can ask for a restricted depository instead of a bond. A restricted depository can be a bank account where withdrawals have to be approved using a court order. The restricted depository and bond are supposed to protect beneficiaries from accidental or intentional maladministration.
The powers and role of personal representatives are determined in the statutes and the decedent’s will, if any. The same applies to methods for compensation for attorneys and personal representatives. Generally, creditors should be notified and allowed to present claims to personal representatives. After assets are gathered and all creditors are satisfied, personal representatives can distribute assets to beneficiaries.
Personal representatives are discharged from their duties after completing administration. Formal probate processes in Florida can last up to a year or longer. Closing an estate through formal probate can also take years in complex cases or where litigation is involved.
As per Florida State statute - 735.201, summary administration occurs when administrating a non-resident or resident estate when there is a will, or the will doesn't direct administration. Summary administration can also apply when a decedent's estate value is less than $75,000 or when a decedent died over two years ago.
For instance, decedents who die with assets worth $35,000 can have their estate subjected to summary administration solely due to the estate's size. If the decedent dies with assets worth $100,000 subject to probate and there've been dead for over two years, summary administration can also be used since they have been dead for more than two years.
The two-year rule in summary administration is applicable to limit claims against a decedent's estate for some time. According to Fla.Stat. 733.710, two years after death, a decedent's estate, personal representative, or beneficiary is not liable for claims or cause of action (against the descendent) regardless of the presence of letters of administration except as stipulated in Fla.Stat. 733.710. There are exceptions for creditors who file claims in a timely fashion.
Formal probate and summary administration aside, Florida also has an administration process that involves the disposition of personal assets/property without administration. This probate administration process applies to limited circumstances only.
The process is used to ask for a decedent's assets to be released to pay for final expenses such as medical and/or funeral bills. As per F.S.-735.301 & F.S.-732.402, the estate should consist of assets exempt from creditor claims as well as non-exempt personal belongings that don't exceed funeral/medical expenses. Disposition of persona assets/without administration can't involve real estate.
For this process to proceed, some qualifications must be met. For instance, the decedent must be a Florida resident at the time of their demise. What's more, the expenses in question should be out-of-the-pocket expenses. In such a case, pre-paid funeral plans or medical bills covered by insurance don't qualify. Fees should also be paid by persons seeking assets unless the persons who paid for the expenses fills-in a notarized consent for the petitioner to get the assets. Lastly, household furnishings and cars can be claimed in specific circumstances only, i.e., as exempt property by surviving children or spouse.
Some documents are needed for this process. They include a petition for disposition, notarized consent from children, spouse, or any other persons who have paid expenses and wish to consent to a petitioner receiving assets. A certified death certificate copy is also required to prove a decedent's residence at the time of their death.
Other documents include an original will (unless filed in court), a copy of all paid & unpaid funeral and medical expenses alongside proof of payment showing who settled such costs. The most recent documents of asset ownership should also be submitted. This includes bank statements, retirement accounts, insurance policies, etc. Such documents must have the correct details (name & account numbers.
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We’ve all thought about preparing our last will and testament.
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