Most of the work by Florida estate planning attorneys is guiding and assisting clients avoid having their assets go through a Florida probate administration. Sometimes, depending on what needs to be done, the cost of arranging your assets and drafting the required documents can be several thousand dollars. When we have clients for initial consultations and tell them that they can avoid probate, many people ask “Why should I avoid probate?” It’s an important question and one that any person should consider when he or she is creating an estate plan. There are several important considerations to evaluate when determining whether to create a Florida estate plan designed to avoid probate.
Should I try to avoid probate?
The place to start out is whether it makes sense for a person to try to avoid probate in the first place. For some people with very small estates, or estates only consisting of exempt homestead, it may make sense for the estate to go through probate. This means that the person’s estate plan only consists of a simple will, which will require all assets of the estate to go through probate in order to be transferred. The attorney’s fee for a small estate may not be more than the cost to create a revocable trust or utilize other estate planning techniques. Therefore, if a person has a relatively modest estate, it may not make sense to go through the trouble of avoiding the probate process.
What about larger estates?
The value of avoiding probate really shows when a person has a more complex estate. Complex estates, or large estate administrations, typically involve a large number of estate assets. Usually these estates contain a real property (land) in addition to bank accounts, investments, businesses, and other assets that need to be probated.
In these cases avoiding probate may be the best option for several reasons. First, a trust will make the transfer of your assets after your death faster than going through probate. A typical formal administration, without litigation, takes at least six months. With a trust, your assets can be transferred within a much shorter amount of time.
Second, a trust, even a revocable trust, can provide some protection from the claims of creditors. When a person who has a trust passes away and all of his or her assets are in a revocable trust, the trustee must file a notice of trust with the appropriate probate court under section 726.05055, Florida Statutes. Although the purpose of the notice of trust is to notify creditors that the decedent had a revocable trust, the notice itself is not required to disclose the value of the assets within the trust, nor does it need to list any of the assets in the trust. As a result, a creditor will only know that a trust exists, but will not know if it is worthwhile to try to collect from the assets of the trust. This strategy works well for smaller claims against an estate because it is not economically worthwhile for a creditor to go after a trust for smaller debts.
Third, avoiding probate does not put your estate assets into the record of a probate proceeding. The probate process is semi-public. This means that the assets of the estate must be filed with the probate court and certain people may be able to see what assets are part of the estate. If you value your privacy, then you want to avoid probate in order to limit who can see the assets in your estate. For example, a trust will avoid the public disclosure of the assets within it at the time of death.
Fourth, avoiding probate lowers the probability of litigation between beneficiaries or with creditors. Sometimes, the probate process can bring out negative feelings between beneficiaries or can trigger creditor collection procedures against your estate (if it is indebted). If you avoid probate, these problems may be avoided. As long as a trust is drafted and executed properly and the trustee if a trustworthy individual, in our experience the likelihood of litigation over the trust is lower than litigation in a probate proceeding. Additionally, smart people who create trusts do it through an attorney, which should further decrease the probability of a problem with the trust document or administration.
Finally, avoiding probate can be less expensive in the long run than going through probate. According to section 733.6171, Florida Statutes, the minimum reasonable compensation for an attorney in a probate is $1,500. This reasonable fee increases in relation to the value of the property of the estate. This does not include costs associated with a probate administration such as the filing fee, mailing costs, and notice costs. For example an estate with a value of $200,000 can cost $6,500 to probate, including costs and attorney’s fees. Often times, the cost for an attorney to create a revocable trust or use other estate planning techniques to avoid probate is much less than the cost to complete a probate administration.
When should I consider taking steps to avoid probate?
If any of these situations apply to your assets, you should seriously consider meeting with an estate planning attorney about taking steps to avoid probate:
- There is only one person you want to transfer your assets to after your death.
- You own property in multiple states, especially real property (land or buildings).
- You own one or more businesses.
- You want to provide for a minor child after your death.
- You want to provide for an adult after your death, or put special conditions upon the adult’s receipt of your property. For example, you can condition a beneficiary’s receipt of his or her distribution upon the completion of college or getting a job.
- You anticipate that you will have many creditors after your death and your estate includes non-exempt property.
- You want to exclude someone from distribution who is an heir, such as a son or daughter.
- You want to care for a pet through a pet trust after your death.
If any of the above situations apply to your property, you should talk with an estate planning attorney about taking steps to avoid probate of your assets.
Contact us today to schedule a free Florida estate plan review and consultation.
Contact us today to schedule a free estate plan review and consultation about either creating a new estate plan or about possible revisions to your existing estate plan. We will schedule a free consultation with you and one of our attorneys at our office in Clearwater, Florida to review your estate plan and assets. At the consultation, you will be able to ask our attorney any questions you may have about your estate plan, the probate process, and steps that you can take to avoid probate or make it easier on your beneficiaries. Our attorneys want to make the estate planning process as low stress and straightforward as possible.