How to avoid probate in Florida

How to Avoid Probate in Florida

What Is Probate?

Probate is the legal process by which a deceased person’s will is validated, their financial affairs are settled, and their assets are distributed to heirs and beneficiaries.

This process involves proving the validity of the will, identifying and inventorying the deceased’s property, paying debts and taxes, and distributing the remaining property as the will (or state law, if there is no will) directs.

Probate can vary in complexity and duration depending on the size of the estate and the clarity of the will.

Why Should You Avoid Probate?

You may want to avoid probate because it can be a time-consuming, public, and potentially expensive legal process that can delay the distribution of assets to beneficiaries.

You might want to avoid probate due to its potential drawbacks. It can be time-consuming and costly.

Also, probate proceedings are public, which means the details of the estate and the identities of the heirs become part of the public record.

Avoiding probate helps maintain privacy, reduces expenses, and expedites the distribution of assets to beneficiaries.

How Do You Avoid Probate?

Here are the main ways to avoid probate in Florida:

1. Establish a Revocable Living Trust

One of the most reliable ways to avoid probate is to place your assets in a revocable living trust. When you create a trust, you transfer ownership of your assets to the trust but maintain control over them as the trustee. Upon your death, the assets in the trust can be transferred to your designated beneficiaries by the successor trustee without going through probate.

  • Benefits: Avoids probate for all assets held in the trust, maintains privacy, allows for immediate management of the assets if the grantor becomes incapacitated.
  • Considerations: Requires upfront legal work and costs, but saves time and money associated with probate in the long run.

2. Designate Beneficiaries on Accounts

Many financial accounts, such as retirement accounts, life insurance policies, and bank accounts, allow you to name beneficiaries directly on the account. These are often referred to as “payable on death” (POD) or “transfer on death” (TOD) accounts.

  • Benefits: Simple to set up and usually requires only filling out a form provided by the financial institution.
  • Considerations: Only covers specific accounts and does not apply to property or other types of assets.

3. Joint Ownership with Right of Survivorship

Ownership structures such as joint tenancy with right of survivorship or tenancy by the entirety (for married couples) allow property to pass automatically to the surviving owner(s) when one owner dies.

  • Benefits: Avoids probate on the property or account shared.
  • Considerations: Loss of control over the property, as all owners have equal rights and responsibilities.

4. Enhanced Life Estate Deed (Lady Bird Deed)

A Lady Bird deed is a special type of life estate deed used in Florida that allows you to retain control over your property during your lifetime, including the right to sell or mortgage the property, and upon death, the property automatically passes to the named beneficiaries.

  • Benefits: Avoids probate, retains control during the grantor’s lifetime, can be revoked or changed.
  • Considerations: Must be drafted correctly to ensure validity and achieve the desired outcome.

5. Gifting During Your Lifetime

You can also transfer ownership of your assets while you are alive. This reduces the size of your estate and the assets that would potentially go through probate.

  • Benefits: Immediate transfer of assets, potential tax benefits in reducing the size of your estate.
  • Considerations: Loss of use and control over the gifted assets, potential tax implications for the giver and receiver.

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Beneficiary Accounts

Beneficiary accounts are financial accounts where the owner names one or more beneficiaries who take over the account upon the initial owner’s death. In other words, the initial owner states who will inherit the account upon death. On the death of a sole owner, or the last to die of multiple owners, ownership of assets registered in beneficiary form passes to beneficiaries who survive the initial joint owners.

Accounts that transfer in this way upon death are not part of the decedent’s probate estate. Florida Statute 711.507 provides that financial accounts are made beneficiary accounts by adding a “payable on death” or “transfer on death” designation. These financial accounts are referred to as “POD” or “TOD” accounts. 

Using POD and TOD checking and savings accounts avoid probate, but they have disadvantages. First, the accounts are not protected from the lifetime creditors of the initial owner. Second, the immediate transfer on the initial owner’s death precludes using money in these accounts to pay death-related funeral, probate, and trust administration expenses. The POD/TOD beneficiary is not required to contribute their inherited money to share death-related expenses imposed on the family.

A retirement account is a type of beneficiary account. Retirement accounts, such as 401k and IRA accounts, typically include a named death beneficiary. The beneficiary has several years under current law to withdraw and pay taxes on inherited retirement money.

Retirement accounts are creditor-protected. And the retirement account value is part of the decedent’s estate for purposes of estate taxation.

Avoiding Probate of a Florida Homestead

You can avoid probate of homestead property in Florida with lady bird deed. A lady bird deed allows the property owner to retain a life estate in the property with full control, use, and enjoyment of the property. Upon the owner’s death, the title to the homestead will go to the holder of the remainder interest (often the property owner’s children). No probate or court proceeding is needed.

Under section 196.031 of the Florida Statutes, the remainder interest should still qualify for homestead creditor protection as well as the tax exemption.

Florida residents can also put their homestead into a living trust, but a lady bird deed is much simpler.

Using Living Trusts to Avoid Probate

The most often used tool to avoid probate is a living trust. A living trust is a trust set up during the settlor’s lifetime by preparing and signing a trust agreement. A living trust agreement typically provides that the settlor may amend or revoke the trust during their lifetime. The settlor is the sole beneficiary and recipient of trust income as long as they are alive. The settlor also serves as trustee over trust assets as long as they are alive and mentally competent. The trust agreement names the person who becomes successor trustee and trust beneficiary at the settlor’s death.

Trust assets automatically pass to the named successor beneficiaries without probate. Living trust agreements are administered privately and are not filed with a court after the settlor’s death—on the other hand, the settlor’s will must be filed in court and becomes publicly available.

A living trust does not protect the settlor’s assets from creditors during the settlor’s lifetime. The trust agreement may be drafted to protect the beneficiaries’ interest in inherited trust assets after the settlor’s death. This protection is not afforded by other means of probate avoidance discussed above. Secondly, even though living trust assets pass to heirs outside of probate, the trust assets are still subject to claims of the settlor’s creditors incurred during the settlor’s lifetime.

Using a living trust to avoid probate

Joint Tenants With Rights of Survivorship

Two people may own real estate or personal property as joint tenants with rights of survivorship (or JTWROS). Joint ownership with survivorship means that the two people listed on the title share ownership while they are both alive, and after either joint owner dies, the legal title passes to the surviving owner automatically. Probate is not required to convey JTWROS property to the surviving owner.

Married couples commonly own marital assets as JTWROS. The married couple wants their joint property to automatically pass to the surviving spouse, quickly and without probate, so that the survivor has uninterrupted access to the assets upon the first death. Another advantage of joint marital ownership is that JTWROS assets of married couples are presumed to be tenants by entireties property and are exempt from creditors of either spouse during their marriage.

Some parents make their children joint owners of their property so that the property automatically passes to their children upon death. The problem is that, unlike joint marital property, ownership property titled jointly with a child is not exempt from the creditors of either the parent or the child during the parent’s life. A judgment against either the parent or the child may result in the asset being lost to creditors.

The overriding goal of probate is to convey the decedent’s assets to whom they wanted, how they wanted, and free and clear of creditor claims. But other legal tools can avoid probate and accomplish the same objectives faster and without court proceedings or attorney fees. These legal tools all involve having property owned during lifetime in a manner other than the name of an individual person. Only property owned individually in the name of a deceased person is part of the decedent’s probate property.

Gideon Alper

About the Author

I’m an attorney who specializes in asset protection planning. I graduated with honors from Emory University Law School and have been practicing law for almost 15 years.

I have helped thousands of clients protect their assets from creditors. Before private practice, I represented the federal government while working for the IRS Office of Chief Counsel.