Trust and Estate Administration
Probate is the estate administration of a Last Will. Trust administration is the estate administration of a trust.
All estates require some form of administration. Essentially, there are three (3) distinct steps:
- Gathering, identifying, and valuing estate assets.
- Identifying and satisfying creditor claims and paying final taxes.
- Distributing the balance of the estate assets to the intended beneficiaries.
The primary difference between probate and trust administration is the administration of a trust is a private matter, not open to public scrutiny. This could be an advantage or disadvantage depending on the skill and integrity of the persons nominated as your successors. Probate administration is monitored by a judge and can offer a higher degree of certainty. Gone are the days when probate was a “four-letter word.” It’s just a process for administering a person’s estate. It is NOT a process where the State is entitled to any of your hard-earned estate. This is a myth many people believe – but it is not true. The only time the State gets involved in your estate is if you don’t have a plan. In that case, they will determine your plan for you.
A common misconception about probate is the State of Florida will take your assets. This is simply not the case. The probate process is designed to make sure your beneficiaries (if you have a will) or your family (if you don’t have a will) receive your assets.
Regardless of the means of administration utilized, it is important to work closely with your trusted legal and professional advisors. We are committed to creating and fostering a relationship that will provide long-term assistance to you and your loved ones.
What are the different types of administrations?
Formal Probate Administration
If a Florida resident dies owning assets in his name alone, there must be a probate proceeding to administer the probate estate. The probate estate consists of those assets that do not pass by beneficiary designation or were not jointly owned with another person. Most life insurance policies, retirement plans, and annuities have a designated beneficiary who will receive the benefits upon the death of the insured or plan participant. If the designated beneficiary is the “estate,” the benefits must pass through probate and be distributed according to the deceased’s Last Will. Jointly held accounts pass by operation of law to the surviving owner.
Probate is a regulated process with each step guided by the Florida Statutes. Unlike some legal proceedings, you must have an attorney represent you in a probate proceeding. The benefit of court supervision is the actions of your successors are monitored by the court to ensure your wishes and desires as expressed in your Last Will are carried out. A formal probate administration is required if your non-exempt probate assets exceed $75,000 in value and/or a person has been deceased for less than two (2) years.
A primary advantage of a formal administration is the ability to accurately ascertain creditor claims. One step in the probate process is to publish a Notice to Creditors in the newspaper and formally serve a copy of the Notice on known or reasonably ascertainable creditors. This procedure reduces the creditors’ claim period from two (2) years to only ninety (90) days. It’s like the part in a wedding where the question, “speak now or forever hold your peace,” is asked. It provides assurance to your representatives and survivors that all debts have been identified.
Probate fees are governed by statute. The Florida Statutes sets forth the “reasonable” fees an attorney can charge to administer an estate. On average, probate fees run three percent (3%) of the value of the probate estate.
Summary Probate Administration
A summary administration is an abbreviated version of a formal probate administration. Florida Statute 735.201 provides the requirements for a summary administration. If the decedent’s estate does not exceed $75,000 or if the decedent has been dead for more than two years, the estate may qualify for a summary administration.
If the decedent had a will (testate), the assets will pass according to the terms of the last will and testament. If the estate is intestate, the assets will pass according to intestate succession as provided by the Florida Statutes.
Many people create a living trust with the expectation their estate will avoid probate and there will be nothing to do when they die. Unfortunately, this is not true. If an individual’s assets are not “funded” or titled to the name of their trust and are held in a person’s individual name when they die, those assets must pass through probate before they can be distributed by the trust.
Funding is the process of re-titling assets from an individual’s name to the name of their trust. It may also include re-designating beneficiaries on insurance policies, retirement plans, and annuities so the trust is the primary beneficiary and the instructions in the trust will be followed. Even if a trust is fully funded and all assets are owned by the trust, there must still be a trust administration to transfer trust assets to the beneficiaries of the trust. Unlike probate, a trust administration can be handled privately, without court supervision. Hiring legal counsel is still recommended to make sure all trust administration steps are followed properly and the successor trustee is not exposed to personal liability for failure to act within the requirements of the trust and the law.
The successor trustee has the responsibility to ascertain the claims of potential creditors and make the appropriate distributions to the intended beneficiaries. If an error is made and assets are distributed prematurely or inappropriately, the successor trustee may have personal liability.
Most people know that dying without a Will guarantees probate. What is surprising to many, however, is that even if you have a Will, you don’t avoid the probate process. If you die with property in your individual name or without a beneficiary designation, the process of determining your beneficiaries and satisfying your creditors is probate.
Common complaints about the probate process include the following:
- It takes too long.
- It costs too much.
- It’s a totally public process.
As a result, people go to great lengths to avoid probate, often inadvertently creating more potential problems than the probate process itself. Talk with a qualified attorney about your options to determine what will work best for you and your family.
Telephone Conference (Optional)
Below are two flow charts of the administration process that our attorneys and team members will help guide you through step-by-step.
Estate Administration Process
Our estate planning process begins with education. You are invited to attend a complimentary educational workshop on Estate Planning, Medicaid Planning, Special Needs Planning, or Pet Planning. This choice is yours. Workshops are helpful in answering questions before you meet with an attorney, but they are optional and not required.
and Planning, and Mediation.