Probate Estate

A probate administers that property considered part of the “probate estate.” The probate estate includes all personal property, all real property other than homestead, and legal rights of action against third parties (i.e. existing or potential lawsuits). All of a decedent’s property within the above categories is included in the probate estate and is subject to probate administration.

There are also many types of exemptions or exclusions of property from the probate estate. The first and most important exemption is a person’s residential real property, or homestead. Another significant exclusion from the probate estate is property which is transferred under the terms of contracts between the decedent and third parties. This exemption includes many well-known financial products. For example, life insurance proceeds, annuity proceeds, and qualified retirement plans are paid on death to designated beneficiaries outside of the probate estate.

Another important exemption from the probate estate is property owned by the decedent jointly with another person where the ownership includes rights of survivorship. Property owned by two or more individuals with rights of survivorship passes automatically to the surviving joint owners upon the death of one or more other joint owners. A common example is joint bank accounts between a client and his wife or one of his children. Upon the client’s death, all money in the account is automatically owned by the surviving joint owner.

Property held in trust with designated survivorship is also not part of a probate estate. Florida statutes provide for “pay-on-death” accounts for checking deposits, certificates of deposits, or security registrations. In a pay-on-death account, the account is owned solely by the account owner(s) during his lifetime. The account, however, designates that upon the owner’s death, all the money in the account should pass to a designated third party. The owner may designate his spouse, a child, or any other third party as the owner upon his death. During the owner’s lifetime, the designated death beneficiary has no rights to the assets in the account. Florida Statute 655.82 establishes pay-on-death accounts for banking institutions. Chapter 711 of the Florida statutes establishes a uniform transfer-on-death security registration which affects assets held in brokerage accounts or other securities account.

Although this property is not subject to Florida probate, it may be subject to probate administration in the states where the property is located. Likewise, a resident of a foreign state who owns real property in Florida may have his primary probate proceeding in his home state, but he will have to go through what is known as “ancillary probate” in Florida to transfer to his heirs ownership of his Florida property. This means that an individual who dies owning property interests in several states could create more than one probate administration. This would likely give rise to an expensive and frustrating experience for his family.

The “probate estate”is sometimes confused with the concept of the decedent’s “gross estate” or “taxable estate.” A person’s gross estates includes those assets subject to estate taxation, and the gross or taxable estate is more encompassing than the probate estate. The gross estate includes all property in which the decedent had an interest or over which he had control. Unlike the probate estate, the taxable estate includes the decedent’s interest tenancy in common property and part of his joint ownership with survivorship; it includes financial products involving contracts with third parties (life insurance, etc.); and it includes the property over which the decedent exercised any control or power.

Jon Alper

About Jon Alper

Jon is an attorney focusing on bankruptcy and asset protection in Orlando, Florida.