Bob and Kate are an unmarried couple, neither of whom have children, and who live together in a home owned by Bob, individually. Let’s say Bob dies. The good news is he has a signed will. The bad news is he prepared the will himself, without consulting an attorney. The will leaves his home to Kate, who intends to continue living there just as she has for many years.
The will also nominates Kate as personal representative (PR) to carry out Bob’s wishes and the instructions contained in his will. Kate retains an attorney and opens a probate proceeding in the county where Bob lived. The home is Bob’s only individual asset and therefore the only asset of his estate, subject to the probate proceeding. Typically, homestead property is not a true probate asset and if left to a person’s heirs, is not subject to the claims of estate creditors. However, because Kate was not married to Bob, she is not Bob’s heir, and as a result the house will now be subject to the claims of creditors that are timely filed in Bob’s estate.
As PR and beneficiary of Bob’s estate, Kate is not required to pay creditor claims from her personal resources. The only asset subject to the claims of a creditor is Bob’s home. So, if there are valid creditor claims, the home may have to be sold to pay the creditors, leaving Kate without a home. The alternative, even though not required by law, would be for Kate to pay the claims from her personal funds, in order to keep the home. Likely, this result was not Bob’s intent but because Bob was a do-it-yourself guy, he did not consult with any attorney and was not aware of these potential issues.
As an alternative, let’s say Bob did not leave a will but died intestate (without a will). Bob’s estate will pass pursuant to the intestacy provisions of Florida law. Remember, although Bob and Kate lived together, they are not married and therefore, no legal relationship exists between them. Bob has a brother who is still living. Bob’s brother is the legal beneficiary of Bob’s estate. Bob’s brother opens a probate proceeding and files notice to take possession of the house. In this scenario, Kate is once again left without a home.
These are only two possible scenarios. There could be others. The bottom line and take-away: proper estate planning is the key to making sure your assets pass as you intend, to those you intend, as efficiently as possible, taking into consideration all the possible alternatives.
About the Author: Peggy Hoyt Peggy R. Hoyt practices in the areas of family wealth and legacy counselling, including trust and estate planning and administration, elder law, small business creation, succession and exit planning, real estate transactions and animal law.